The Tech Strategy That Thrives in a Recession
Over the past few months, venture capital funds have been predicting a recession that hits tech scale ups hard. Valuations will be worse, raise amounts lower and some scale ups won’t be able to raise at all.
The advice across the board seems to be to reduce spending and focus on surviving the next 18 months without needing to raise money. What this means for most scale ups is either:
- Not needing to raise because you achieve profitability (or are cashflow-positive) before your runway ends; OR
- Capping spending, but still hitting goals to maximise your prospects for the next raise
If you are looking at 2. as your realistic best case — and most scale ups will be — you need a tech strategy that can hit goals when you can’t hire the people you had on your roadmap.
As someone who has regularly been in a position of needing to do more with less, and building fast-growth companies through the wreckage of the last recession, and the (ongoing) pandemic, I’m sharing my approach in hopes it may help others looking to navigate a time of famine when you were expecting a feast.
🤦 …Oh it turns out hiring was the wrong strategy all along
Hiring is expensive, and it slows you down as you wait for notice periods and getting new hires up to speed. According to Workable, it takes an average of 62 days to hire in tech (more for senior roles). Add 1–3 months of notice period and 3 months of ramp up to be firing on all cylinders, and you’re looking at a minimum of 6 months lead time. This is more than some of us can afford to wait.
It’s glib to say that hiring was the wrong strategy, of course, but there are times when it’s a bit of a blunt instrument to solve a subtle problem. When we have funding burning a hole in our pockets, it’s easy to write a long wish-list of capabilities and create an imaginary set of perfect hires. But there are hidden costs. For example, when you hire an experienced dev, they’ll have *at least* the skills in your job ad, plus many others that you don’t need, but have to pay for anyway.
If, however, you develop your existing developers in the areas that are important to you, you can be precise and build skills up to that point. It’s cheaper than hiring that person with at least those skills, which makes it recession-friendly.
And it has other advantages.
Growing your existing team will make them more likely to stay, and be more engaged in their work because they feel themselves being invested in. This affects productivity and company culture in a hugely positive feedback loop.
A good friend of mine refers to this approach as ‘go slow to go fast’, which always makes me think of Steven Bradbury’s out-of-the-blue olympic gold medal.
Tech Strategy Needs Learning Strategy
But all of this only works as a genuine alternative to hiring if you have a robust learning strategy. So by extension, a recession-proof tech strategy needs to include a strong learning strategy.
First, ask yourself:
“What capabilities do my team need to build the product that will take us to the next funding round?”
Be precise. Experience in TypeScript is a bad answer. People who can write performant React / can debug Python is a better one. Someone who can weigh the pros and cons of inheritance vs composition, and who understands the SOLID principles and can judge whether they should be applied in a given situation, is an even better one.
When you have a picture of what precisely your team needs to be able to do, you can map out how far your team is from that profile and then fill any gaps.
If your tech strategy previously leaned heavily on specialisation, consider throwing that out. It might be time for full-stackers to shine.
Set a 100% retention goal (and achieve it by making a perceived perk into a real one)
People may be spooked by the notion of a recession and want to move to a more stable sector. When thinking about retention and the levers you can pull, it’s important to differentiate between perception perks and real (AKA ‘used’) perks. A perceived perk (e.g. as much holiday as you like) will diminish in value if it’s not a used perk (there’s evidence to suggest that people don’t take enough holiday when it’s unlimited, as CharlieHR discovered).
The same goes for learning. Telling someone they have unlimited access to learning content sounds exciting. Indeed, the 2018 HackerRank skills report showed that work-life balance, and professional growth and development opportunities were the top two elements considered by developers when job hunting. But, if that content isn’t accessed, it loses its shine and eventually becomes a meaningless line item on a list of ‘benefits’.
What you want is for your team to feel themselves growing, gaining mastery at a faster pace than they would organically through work. That takes more than a library card, it takes:
- Focus — mastering the right new skills that will actually impact their work
- Intentionality — a decision as a team to learn X and be better at Y in order to impact Z.
- Commitment — seeing their manager carve out time for their learning makes a much bigger statement than receiving a subscription to learn at their own pace. The hidden assumption is that work always takes priority, and work is never done.
Hire for great culture fit / add
If you were looking to hire experienced devs, have a look at why. If it’s mostly hard skills you were after, I’d recommend switching to less experienced folks and filling in the gaps. Don’t think of this as lowering your standards, but rather changing your profile. By focusing on people who are a culture fit / add, you prioritise the team’s well-being and morale — an important engine of productivity. By hiring less experienced devs, you can mould them to the hard skills profile you need. More on my general scepticism around experience here.
At Skiller Whale, we changed our hiring plan in May. We’re hiring slower and learning faster. I’m confident in our ability to fill hard skill gaps (that is our raison d’etre!) — personality and softer skills are harder and slower to change, so we’ve prioritised them in our screening process.
Now more than ever you need to focus on building the people you need rather than trying to discover them already perfectly formed.
If you’d like to know more about how I approach very targeted strategic up-skilling of tech teams, here’s an ebook I published recently.
