A better marketplace for talent
This post is in beta.
Your txn rate, org size, tech stack and market isn’t my txn rate, org size, tech stack and market. YMMV.
Hiring experienced software talent is extremely hard in India/SEA. This isn’t just engineering — experienced product managers, data scientists, designers and other functions are equally hard to find. Conversely, there is no shortage of folks who have all the requisite skills on paper, but cannot be depended on to deliver working software to a customer.
This is because the marketplace for software delivery talent in India/SEA does not meaningfully distinguish ‘real’ talent on the supply side that can ship software from ‘fake’ talent that can’t.
I believe that a useful mental model to apply is marketplace fraud: about 80%+ of transactions in the India/SEA tech hiring marketplace are effectively ‘fraudulent’, with either recruiters, employers, employees or all of the above unintentionally misrepresenting facts that help gauge a candidate’s ability to deliver given the history, objectives and culture of the prospective employer in an attempt to close a hire.
This is visible in the norm of bloated delivery teams, where India/SEA teams tend to be 5X to 10X the size of their counterparts in more mature markets.
The thesis
Most software product companies in the ecosystem do not have their software as a key competitive advantage.
They win despite their software, not because of it.
The thesis is simple — founders and operators that need to deliver software are forced into prematurely committing to the high fixed-cost challenge of building a reliable hiring pipeline, then a reliable delivery team, resulting in a substantial investment of time and capital with very little RoI because of the 80%+ fraud rate. It makes no sense that every Seed to Series C company in the ecosystem today is trying to build their own recruiting engine in order to build a team in order to deliver software. Investors have no choice but to endorse this highly risky and inefficient approach because there is no alternative. In the end, the hiring problem becomes all consuming while the real goal of shipping software that scales the business is sidelined.
In a hiring market with extreme scarcity, both employers and employees are being forced into a process that is high-friction, high-risk and demands high-up-front-investment from both. The recruiting agency ecosystem inadvertently reinforces this toxic setup because it maximizes the recruiter’s revenue.
The end result is founders and operators banging their heads against a wall for months or years, and then giving up on quality and hiring what they can. The goal of shipping software that scales the business is now lost forever.
It’s past time to centralise.
The segments and their problems
Employees: Experienced delivery folk struggle to stand out vs the ‘fake’ supply, and the marketplace does not help solve this problem. Visibility into startup work culture and processes is poor, so folks have to commit to jobs knowing that the risk that they will have a bad experience is very high. A bad job costs a year of lost time, usually, not to mention all the emotional costs. This is compounded by the pressure to secure the next job before quitting the current one. There is currently no way for someone to try before they buy, and get paid while doing so.
Employers: A full blown tech/delivery hiring pipeline only becomes cost effective at > 5 hires/month, which is usually only post Series-C. The rapid rise of early stage funding in India/SEA over the last five years has exacerbated the problem by increasing the number of contenders for a highly limited talent pool, each trying to solve the same hard problem from scratch.
Investors: Investors see fast growing companies in their portfolio stall, starved for talent locked up in slower growing companies. Moving talent from slow growth to fast growth companies is currently impossible — job commitments are usually for 1–4 years, even though startups are willing to pay a premium for people who can deliver, the marketplace does not facilitate this process. This leaves no choice but to have portfolio companies compete with each for talent in a slow, painful and wasteful manner.
As recently as 2015–16, capital was the critical path problem at an ecosystem level, and the ability to move scarce capital from slow-growing to fast-growing companies was the name of the game.
Now the bottleneck is shifting to talent.
A better marketplace is needed. One that facilitates liquidity.
What people need
Employers need a way to gauge a prospective employee’s real-world delivery ability before hiring.
Experienced employees need a ‘parking orbit’ — a way to try out jobs before committing, while maintaining a reliable income. They need help standing out, and they need to earn a premium given they are 1 in a 1000, a premium any growing startup would be happy to pay if they could be sure of the delivery.
Investors need talent liquidity — the ability to move experienced talent from slow growth companies to fast growth growing companies without going through the painful, slow and expensive process of having their portfolio compete with each other.