The Myth of the Millennial
Investing in the wacky world of HR tech
I grew up in Ireland, which in the mid eighties was a fairly bleak place. The radio was always on in our house and when I was about 8 or 9 I heard an ad for kiwis — the so-called “king of fruit” — which were being imported into Europe from New Zealand for the first time. All week I begged my mother to buy one of these rare luxuries, and the following Saturday we went grocery shopping and brought one home.
We placed it on the kitchen table and stared at it in wonder. How to eat this exotic delicacy? Having plucked up the courage to slice it in two, we gazed at its succulent green flesh. So this was the king of fruit! It’s going to taste like July strawberries and Cadbury’s Dairy Milk, all rolled into one. But better, much better. Because with just one taste we would be transported across the planet, far from rainy Ireland, to a land with glaciers and sunshine and volcanoes and maybe unicorns.
We ate a piece each and sat back, chewing cautiously and screwing up our faces as a wave of disappointment rolled over us.
It turned out to be an avocado, not a kiwi.
Which brings me to the much-maligned millennials, who — according to an Australian businessman — are so addicted to avocados that they can’t afford to buy houses anymore. This, and other wild generalisations, got me thinking about millennials in the workplace and startups that seek to satisfy their needs.
Many of these companies aim to transform how Human Resources works, so it’s worth taking a closer look at the HR function itself.
Two functions typically determine success in tech companies: Engineering and Sales. Usually in that order. You build products and sell them. But for a company to be successful in the long-term, all the major functions — finance, legal, support, facilities, PR, etc. — must fire in unison.
In my experience, the most maddening of all is Human Resources.
I’ve worked with a handful of world-class HR people in my career and they’ve shown me what’s possible. They’ve helped to create a culture of high performance; built metrics-driven recruitment machines to hire the best talent; pulled me aside before an All Hands to remind me what’s on everyone’s mind that week; pushed my management team to think about succession planning when all we seemed to talk about was revenue; with an ear to the ground, they’ve predicted employee attrition before anyone else.
The best HR people I’ve worked with have understood their privileged role as trusted advisors and their pivotal role as change agents. And they have therefore been essential members of any high-performing management team I have led or been a part of.
Yet great HR teams have been the exception in my career. More often than not, HR has lagged way behind the business, serving an administrative rather than leadership role.
As a result, HR is often belittled or ignored by business leaders. And, in the ultimate humiliation, it’s sometimes put in the corner, reporting to the CFO. Yikes.
Where there’s a gap between reality and potential, there’s an opportunity.
Over the past few months I’ve met a lot of startups that tackle people-related issues in the workplace. (Most of these companies refuse even to admit they’re in HR, which says something about the function’s image problem.) It’s a busy investment space, which has not yet coalesced into well-defined categories. Instead, there’s a kind of fog of overlapping solutions that seem to fall roughly into these areas:
- Feedback and Performance Management. The trend is towards feedback systems that are real-time (more accurate), lightweight (less work), and development-focused (more motivating).
- Culture and Engagement. Employee morale drives productivity and retention. While great managers have the emotional radar to monitor this intuitively, it’s hard to do at scale — which is where technology comes in.
- Health. Performance, mindset, stress, and wellness are connected to physical symptoms in ways that we don’t fully understand — yet.
- Learning & Development. The trend towards bottoms-up online learning produces two unresolved conflicts. (1) Employee-initiated learning generates a tyranny of choice and (2) instructor-led training is more expensive but when done well is more effective than online-only.
- Flexible working. The explosion in contingent workers — skilled and unskilled — means that more people are facing the joys and perils of being self-employed.
- Hiring. A top priority for every growing business. Although LinkedIn thankfully blew up opaque private talent markets, its airbrushed profiles result in insidious homogeneity. Good candidates and bad often look indistinguishable.
- People Analytics. Vast lakes of employee data lie untouched and unexamined. Insights that are obvious when you’re small disappear into your HR systems when you’re big. Does commute time drive employee churn, for example?
When I meet startups in any of these categories, the meetings have one thing in common. Someone mentions millennials and asserts that they are fundamentally different from previous generations.
I’m not so sure.
Most VC partners are in their 40s or 50s. I’m 41. We relate to millennials with all the understanding of a patronising older sibling. (I know a thing or two about older siblings. I have six of them.) And untested assumptions can cause bad investment decisions.
While it’s a truism that millennials are more attuned to digital media and tech, I don’t think that tells us much. They like taking selfies too. Does that make them more narcissistic than their parents? I don’t think so. Our ancestors drew themselves on cave walls! Smartphones simply give us tools to express our innate narcissism faster and more publicly than before.
I’m reminded of the quote: “The children now love luxury. They have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise.” This was attributed to Socrates two and a half thousand years ago.
When an investment decision hinges on the assumption that kids today are fundamentally different from kids yesterday, beware.
My view is this: young people are different from old people.
There is, however, one generational difference that is supported by research and I have observed in practice. According to Pew, millennials are less trusting than prior generations.
When asked, “Generally speaking, would you say that most people can be trusted,” just 19% of Millennials agreed.
Think about that for a moment.
Trust is the basis of so much in life and work. How do you behave in a world in which you trust nobody? Not your employer, not your bank, your church, your Government.
Young people are always idealistic. It was true of Generation X and Boomers and it’s true of millennials. They want to believe and to belong. But millennials are slower to trust authority, for good reason. They are sceptical, alert to corporate hypocrisy, more than willing to switch companies if they’re not fully engaged. They crave authenticity.
Which brings me back to the broader subject of investing in HR, and how to find companies that will unlock the talents of today’s workforce.
Trust is at the heart of high performance.
In fact, two of my favourite studies of high-performance teams put trust as their essential bedrock.
Patrick Lencioni’s 2002 classic, The Five Dysfunctions of a Team, referred to the absence of trust as the first dysfunction to be resolved by a leader.
And Google’s widely-quoted study from 2015 posited “psychological safety” as the foundation on which its successful teams are built.
Yet today’s millennial workforce is less trusting than those that have gone before.
This conflict at the heart of today’s organisations remains mostly unnoticed and unexamined. Nonetheless, it is a driver of dis-engagement, stress, and ultimately attrition in the workplace.
As I meet startups that seek to revolutionise the workplace, I’ll ask myself how they are attempting to repair the crucial bond of trust that has been lost between our largest generation and their employers.
And then I’ll buy myself a smashed avocado on toast for €12.
