Should early stage startups move to Silicon Valley for talent?
Founders of early stage companies are often enticed by the Silicon Dream, the startup equivalent of what Hollywood means to actors. However, founders should carefully consider moving to Silicon Valley based on whether it benefits the company. And a company can benefit from the move if it serves the three Cs — customers, capital, and competencies.
This is the third in a series of three posts that discuss the three Cs and focuses on recruiting for early stage companies in Silicon Valley. The first post looks at the importance of early stage companies working close to their customers and the second one at whether foreign startups should try to raise money in the Valley. The posts have been inspired by the European Entrepreneurship course at Stanford and I write them as a founder of BudgetMatador, a web app for collaborative financial management.
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Marc Andreessen believes that Silicon Valley is mission control for mankind. Looking at the fierce fight for talent in the Bay Area, he is on to something. The supply of incredibly clever and incredibly driven people is only exceeded by the demand for that breed. Do early stage startups outside of Silicon Valley stand a chance in this race?
Career choices in the Silicon Valley are usually trade-offs between perk-packed jobs at tech giants versus exciting opportunities to change the world and make a name at the next big thing. 30-somethings are mostly looking for the stability of a corporation or a well-funded startup, which is hard to compete with. Millennials, however, set purpose and career opportunities above money. Outsider startups need to figure out if the talent they need is uniquely available in SV and whether they have what it takes to attract them.
The tech scene in the Bay Area does come with competencies that are hard to find elsewhere. Firstly, Stanford and Berkeley churn out graduates who are often at the global forefront of whatever they do — and who can apply innovations in real life. Stanford has given rise to some, if not most, of the great tech companies in history, and the Stanford Technology Ventures Program continues to educate entrepreneurs who can commercialize ground-breaking research coming from the university's labs.
Secondly, SV has the world’s highest concentration of people who know how to build products as well as companies. Product management and user/consumer experience design have been turned into both fine arts as well as scientific disciplines. Uber is a brilliant example of designing a great product/consumer experience and scaling it up at unprecedented speed. The nimble thinking that goes into product, strategy and operations is one of the untold stories of why SV companies are so disruptive.
So how can outsiders tap into these competencies? To attract top tier engineering talent, a startup needs to offer technological leadership in their field. That is a big ask, but exciting technologies are hatching at institutions other than Stanford and can be used to pique the interest of engineers. Having said that, it usually makes sense for a non-SV company to keep development back home, where the company can recruit engineers from its existing network and avoid paying 6-figure salaries to an army of engineers.
Attracting product managers, designers and software engineers is somewhat easier, but by no means easy. If your company can offer purpose and opportunities for growth, you stand a fighting chance. That’s how Samasource, a technology non-profit, is able to recruit management consultants who give up massive bonuses at the Big Three in exchange for workplace engagement.
Hiring people to scale a company is not a concern for early stage startups, but will be a nice problem to have for businesses that lift off. You will be needing people who can scale your marketing, technology/development, organisation/culture, operations, etc. — at the same time and in diverse markets. If that is beginning to look like your bottle neck, it may well be worth setting up shop in Silicon Valley. From a European perspective, however, the East Coast tends to make more sense because of time zones. Wherever you move in the US, it will cost you dearly — but the potential growth trajectory can justify the investment.
