How do we bring global talent to meet frontier market needs?
Today, competition for talent is as fierce as it ever was. The phrase “war for talent” was coined by McKinsey in 1997, and it has only escalated. The fight has arguably been skewed in favor of individual talent who holds more influence and choices. This insatiable demand for talent is evermore felt in tech firms and startups at the engine of accelerating technological change. Silicon Valley has become famous for their cushy compensation with benefits and flexibility, while tech giants like Facebook and Google have made many acquisitions purely for the talent. The gap between supply and demand will only get worse, with demand for skills like agile to be 4x, and big-data to be 50–60% greater than that of supply. (Sorry, a McKinsey reference again.)
However, take a look at the startup ecosystem in developing countries in Asia — with far less money to be thrown around, the competition for talent feels much more dire. One almost feels a sense of resignation.
This wasn’t news when I joined Alter as a Fellow in July. In fact, Alter’s service offerings have evolved over the last three years to focus on talent, as the team repeatedly heard from entrepreneurs that their largest challenge wasn’t the lack of capital, but lack of talent. For this reason, as I would later learn, institutional VC firms also prioritize talent support for their investees, often via strategic advice, access to networks, and assisting executive searches. Alter has taken this a step further by offering a suite of talent solutions to its ventures: a mentor network, MBA internships, management consulting fellowships (which I’m part of, as a McKinsey secondee), diaspora events, executive coaching, and leadership training.
We were doing as much as we could, and we wanted to dig even deeper: where exactly are the ventures’ largest pain points in human capital, and what should Alter do about it?
I spoke with 20+ executives from 16 startups in Alter’s current markets of Pakistan, Myanmar, and Bangladesh as well as other developing markets in Asia such as India, Indonesia, Vietnam, and the Philippines. These tech ventures ranged from seed-stage to Series B, with the smallest having 6 employees and the largest, 1600.
Here are a few things I’ve learned about our current markets:
1. There’s a lack of domain experts in digital-specific fields.
Smaller and younger startups in our frontier markets have trouble finding and attracting anyone with any experience in skills required for digital businesses, such as digital marketing, UI/UX or data science. Given how our startups are leading the charge in this nascent ecosystem (Myanmar liberalized its telecom sector in 2013; 3G was introduced to Bangladesh and Pakistan only in 2012 and 2014, respectively), there are simply very few people who have this knowledge. Some VCs in more mature markets like Singapore, India, or the Valley provide advisory and close hand-holding through their in-house or partner experts of specific domains, but this level of support is rare to find in our frontier markets.
For more mature startups, there’s a lack of senior talent to grow a company. They need CFOs and COOs to think about fundraising and streamlining operations as the company scales, but the rare talent with relevant experience are often swept up by corporations that offer prestige, significantly higher pay, and job security. With few notable exits, the startup hype is foreign in most frontier markets, and so is the perceived value of equity and respect for entrepreneurial spirit.
2. Technical needs are universal and permeate all levels. The more senior the role is, the more pressing the needs are, and yet the more difficult they are to meet.
At the most fundamental level, startups struggle to fill roles like network engineers, data scientists, and those that require a coding language that isn’t prevalent in the country (FYI, Ruby developers: you’re in huge demand). This need becomes even greater for lead positions where there are fewer professionals with enough experience to lead and mentor teams. At the top, ventures cannot even afford to search for senior talent locally; they need to look internationally, competing with Singapore and Silicon Valley firms.
3. There’s a broad need for more managerial bandwidth.
Ventures I spoke with often bemoaned the challenge of executives having to oversee day-to-day operations, limiting bandwidth to drive growth. Many voiced concern with general lack of management-related soft-skills, particularly around the ability to foster a team environment (people management, communication) and maximize performance (results orientation, independence, data-driven decision making). Much of this was attributed to the ingrained professional culture and educational system.
4. Ventures are experimenting with ways to recruit talent. Sourcing is the largest challenge for more mature ventures, while screening is for younger ones.
As is the case for most startups, talent needs are filled externally and heavily dependent on (in)formal networks, often personal networks of founders and investors. (Internal talent development is a priority for all ventures I spoke with, but they often cannot keep up with the ventures’ growth.)
More mature ventures are able to experiment with more formal, cost-intensive mechanisms, often abroad: hosting job fairs in major cities abroad targeting diaspora (e.g. Singapore, Bangkok, Bay Area), employing regional executive search firms (only a few have global reach), hiring recruiters for in-house searches, to name a few. On the other hand, given their price sensitivity and lower specialization requirements, younger ventures are more likely to use mass local solutions like job boards.
For this reason, the pain points between more mature vs younger startups strike a stark contrast: all companies at Series A and beyond noted sourcing as their primary recruiting challenge, while earlier-stage startups indicated screening.
5. Certain parameters can be flexed to creatively find the right talent, but this varies by the size and maturity of the startup
Perhaps most insightful are the different constraints of earlier and later stage ventures. Of ventures I spoke with, all that are Series A and later are willing to consider temporary talent, often with the assumption that existing talent can be up-skilled to fill the position in time. They are willing, if not actively seeking, to tap into expat and/or repeat talent, who are more likely to have the advanced experience they need. At least half of the post-Series A ventures I spoke with are willing to pay at or above market to win talent.
On the other hand, earlier-stage startups are more constrained by the permanency, origins, and cost of the role to fill. This is no surprise. Prior to Series A, cash is king and expensive hires are hard to justify. The time and resources to on/off-board talent and the direct cost of talent are all precious. Furthermore, ventures are still finding product-market fit and therefore intimacy of local market and industry knowledge cannot easily be traded-off.
In countries outside of Alter’s current market, human capital challenges take different shapes and forms according to the maturity of the startup ecosystem. Ventures in the Philippines, for example, share many of the challenges around a dearth of tech talent and digital domain expertise, albeit to a lesser extent. But India, Indonesia, and Vietnam have a rapidly growing base of local tech talent, which is even exported abroad through “dev shops.” However, in the more mature ecosystems of India and Indonesia, demand for talent far exceeds supply, and especially younger ventures struggle to obtain niche digital talent. Growing regional tech giants like Go-Jek, on the other hand, can afford to actively recruit from Silicon Valley with globally competitive packages.
The lessons on talent pain points in our frontier markets have implications for us at Alter:
First, we should and will continue to primarily work with frontier market ventures at Series A and beyond, where we can bring the most value. While Alter is not positioned to find and cultivate the local talent that pre-Series A ventures need, we do have the Silicon Valley tech networks to support Series A and beyond. Second, we must remember the importance of recruitment for the ventures we serve. We can build on our current networking events to bring together the global diaspora in major US cities, from which our ventures have made successful hires. Lastly, our Fellows Program can be a powerful answer to many of our ventures’ needs. While temporary, Fellows can be a quick solution to inject much-needed expertise for ventures at a relatively low cost, transfer skills, and build capabilities. Based on these learnings, we’re expanding our current Fellows Program to offer both Management and Tech talent to fill the most critical needs of our ventures.
In a broader context, trends in startup human capital clearly follow the maturity of a country’s tech ecosystem, and there is no doubt that South and Southeast Asia are some of the most dynamic regions in the world today. As we work with ventures in markets at the cusp of explosive growth — “where great opportunity meets great need,” as we call it — Alter can play a powerful role to fill the talent gap of market-leading ventures. As each of these startup ecosystems grow, so will its energy around innovation and its local talent pool. I’m excited for the day that our ventures no longer search for talent or inspiration in Silicon Valley or Singapore, but can instead find it right in their own countries.
Elle Kang is an Alter Fellow, working with Alter Global as Head of Strategic Initiatives. She is based in Yangon, Myanmar, where she supports Alter and its portfolio companies on-the-ground. Originally from Seoul, Korea, Elle graduated from Georgetown University’s School of Foreign Service and was a consultant at McKinsey & Company. You can occasionally find her at Phoenix Gym, where she is attempting to learn Lethwei.