Startups that reach a certain size (and level of success) inevitably face a dilemma. Where do you find the new talent to keep growing and keep succeeding?
One solution is the hired-gun approach. Companies, usually larger, more established players, pay a premium to bring in proven, outside talent — pros who get the job done for a price and then, often, move on. The alternative, really the only option for many startups, is to nurture homegrown prospects, i.e. to find local employees and develop their skills over the long haul. As CEO of a late-stage startup straddling the line between each of these worlds, I’ve learned that both approaches make sense in different contexts. And both come with caveats.
The Hired Gun
In the Bay Area, the focus at many large, post-IPO companies is on recruiting and retaining top employees. This often comes at a cost, like the $3 million salary Google reportedly pays to keep one elite programmer. In fact, the incredible demand for engineers in the region means even fresh startups often find themselves in bidding wars for key employees. The result is an incredible concentration of tech all-stars — the best and the brightest, lured by chances to work in the Valley’s blue chips and be compensated accordingly.
For companies fortunate enough to land these prospects, the rewards are multiple. Experienced pros act as mentors to younger employees, diffusing expertise throughout the organization. There’s the enormous efficiency gain of bringing on high performers who know exactly what to do and how to do it. Plus, top talent can also help attract other prospects, powering a kind of virtuous recruitment cycle.
But this approach can also create complications. Hired guns motivated by a big paycheck and short-term payoff may have little reason to be invested in a company’s long-term vision. A mercenary focus on bottom lines and bonuses — at the expense of vision and value alignment — is hardly the recipe for a healthy company culture or a business built to last.
Then there’s the bigger picture to consider. Tech companies don’t exist in a bubble; they draw from and feed into a larger community. Ideally, the relationship is symbiotic. The challenge in San Francisco is that — at least to some observers — it doesn’t always seem that way. (The reality, of course, is much more complex: For each new tech job in the Bay Area, for instance, 4.3 other jobs are created, like cooks, dentists and teachers.) But, for better or worse, protesters have fixated on the meme of high-paid outsiders who seem to feed off the vibrancy of local communities while adding little in return.
The Homegrown Prospect
Of course, tech is increasingly decentralized. Around the world, new tech centers with younger companies are able to embrace a different approach to talent: recruit locally, identify homegrown prospects and, in a phrase, bring them along for the ride.
On one level, this is pragmatic: New startups generally can’t pay top dollar, so they instead sell junior prospects on youth, energy, generous options packages and the possibility of a payoff down the road. And they tend to attract workers whose spirit of hustle and entrepreneurialism matches their own.
This was certainly the case with my company. During our first years, we found recruits from our own backyard in Vancouver, who made up for what they may have lacked in experience with eagerness to learn and willingness to take a gamble on a company with a lot of potential.
Finding a Balance
Eventually, however, a successful startup has enough resources to get industry-leading expertise. At that point, the question becomes how do you bring in hired guns without upsetting homegrown chemistry? How do you preserve company culture and a spirit of entrepreneurialism while also incentivizing top recruits from outside to join your ranks?
There are no easy answers here. But I feel that, in part, success at this stage and beyond rests on staying true to the place — figuratively and literally — where a company comes from.
Understanding and respecting your roots is critical not only to winning the tech talent wars but leaving a legacy that transcends bottom lines. Tech companies have a finite lifespan: For the successful ones, an IPO or exit is never more than a few years off. But by recruiting locally and developing homegrown talent, companies can build something that remains after they’re gone. People, skills and a culture of innovation persist. Ideally, the city, having fed a startups’ success, gets something back.
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