Recruiting for start-ups

Hiring well is one of the most critical aspects of any startup. In the early days, you've only got a small team which means a bad hire can cause serious issues to your business. Recruiting for startups can be extremely tough because the type of people that will excel are few and you don't have the same budget that all those scaled companies have.

If you want to take hiring seriously, here's our guide on hiring specifically for startups:

Hiring isn't difficult. It just takes a lot of time. Seventy hours to be precise. We've shared our entire process which you are welcome to copy. But if you'd like some help hiring A-players without wasting a second of your time, feel free to get in touch with us

What type of person succeeds working in start-ups

Jason Lemkin famously said that the first 50 employees in your organisation should be pirates or romantics. These are candidates for reasons that don't make sense live and breathe startups. They are the candidates who actively leave restrictive environments and, freed from shackles, step in as owners.

“In the old days, only weird people worked at startups. It was so quirky.” 

As startups get significantly more glamour and press than mature companies, it's easy to think that a large number of the working population work in startups. That isn't true. In 2020, European tech start-ups employed 2 million people. This is 1% of the working population.

Although it's easy to romanticize the huge amount of ownership and freedom that startups can provide their top talent we forget that ownership comes with total accountability and freedom comes with a total lack of rules. Uncertainty leads to anxiety and few people are cut out (or want) that kind of stress.

The right candidates should have the following personality traits and it's important to keep an eye out during your recruitment efforts

• Internal locus of control

• The ability to think creatively

• Rule breakers

• Exceptionally hungry

• Humility

Hiring without an established brand

Without an established employer brand, it's unlikely you'll get many candidates responding to your careers page, no matter how pretty and informative it is. You're going to need a candidate marketing strategy that is extremely efficient and cost-effective.

General jobs boards

When active candidates begin looking for a new job, they will often start their job search with well-known job boards, which serve as an aggregator of all relevant opportunities.

Linkedin is the largest with 1.6 billion monthly active users and job boards like Indeed.com receive 350 million monthly users. Make sure you post jobs on these generalist boards but be aware that you will get a lot of irrelevant applicants.

Specialist jobs boards

Generalist job boards don't provide curated opportunities for candidates so numerous job boards specifically focus on attracting a certain type of candidate. For example, Otta.com targets candidates who want to work in tech while eFinancialCareers is great if you are looking for a job in equity sales. Every job search will have a specialist job board.

Outbound sourcing

Linkedin provides an almost exhaustive list of every candidate in the Western hemisphere. A Sales Navigator license costs $49 per month and allows you to search their database for people who fit your requirements. With a few hours of work, you can reach out to both passive candidates and those looking, providing some information on your company in the hope that some of those candidates may be drawn into reviewing your job postings.

Employee referrals

Often overlooked, great employees are an excellent source for new candidates. They will be able to recommend the best people they worked with previously as well as their friends who may be cut from the same cloth. To incentivize this behaviour, expect to give a £1,000 - £2,000 referral bonus to each employee who provides a successful candidate.

Candidate marketing

Content creation is a fantastic tool to build your employer brand and drive eyeballs to a careers page. It takes time to set up and deliver candidates but it is the most effective method for any long-term hiring strategy. Some content examples include:

• Founder videos - humanize your startup by getting the founders on the big screen to share their mission and their excitement

• Day in the life videos - Show candidates what existing employees get up to on a day-to-day basis.

• Media from social events - If you do after-work drinks, charity events or anything in between, take pictures and videos and share them on your various social accounts. Shine a light on your company culture. No one else will.

Use talent-as-a-service providers

It takes around seventy hours to make one successful hire. This is two weeks of a month. While none of the above strategies are complicated, you have a small team that has to focus on the core business.

Berg Search, for example, provides a subscription service that's built specifically to find employees who want to work in early-stage companies (£1,000 per month and a success fee per hire). We outlined our extensive process here.

Using external hiring services is a great and flexible way to make hires without losing that early-stage momentum, although they are more expensive than hiring your own internal talent team.

Recruiting for startups is a totally different beast from any other type of recruitment so make sure that any provider you do use fully understands the difference between hiring for big companies and hiring for high-growth startups.

Employee reviews

Potential hires will take advantage of websites like Glassdoor to get the inside scoop on the company. While it's true that Glassdoor over-indexes negativity, the effect isn't as strong as you may think. Work closely with your employees and be proactive when asking for reviews. Never ask for positive reviews as this will backfire!

Making the most of your advantages

You are mission-driven

The mission-driven nature of startups can be intoxicating for the best talent. Candidates want companies where they can be part of a mission and not just an annual budget-setting cycle.

Of course, every company will have a mission but for many larger companies, that mission is repeated only in investor updates. The day-to-day work of the normal employees has little to do with the vision.

Employees who say their company’s mission, vision and values align with their own are far more likely to recommend their employer as a great place to work (70% vs. 25%) and to say their work gives them a feeling of personal accomplishment (72% vs. 29%), according to new research from Qualtrics. They’re also less likely to say they are thinking about leaving their current employer (33% vs. 44).

On the other hand, nearly half (46%) of employees in the United States and United Kingdom say they are considering leaving their company because it does not adequately exemplify the values they personally hold. And over half (56%) would not even consider a job at a company if they did not agree with its values.

Glassdoor’s Mission & Culture Survey 2019 found that over 77% of adults across four countries (the United States, UK, France, Germany) would consider a company’s culture before applying for a job there, and 79% would consider a company’s mission and purpose before applying. Furthermore, over half of the 5000 respondents said that company culture is more important than salary when it comes to job satisfaction.

Communicating your vision and values

If you aren't sick of repeating yourself, you aren't communicating enough. Your mission and values should be repeated at regular employees' all-hands and referenced when planning annual or quarterly strategies.

But communication doesn't happen inside your company. The best candidates want to know as much as possible about your company before they pledge their allegiance. Make sure your company culture is available for candidates and new hires to read before they start.

You could share your values on a Notion page like Berg Search or through branded content.

Rapid promotion

People get promoted at startups at a much faster rate than employees at scale-ups. This is because business growth is significantly higher at early-stage companies. Top candidates for startups are hungry and most startups give those employees the freedom to sate that hunger through hard work and forward momentum.

As companies get bigger, promotion slows down (less growth and more attrition) and becomes a larger process which requires a wider opinion base to make those promotion decisions.

Equity-based incentives

What better way to be part of a company than by owning some of that company? Early-stage employees have a unique opportunity to own a reasonable stake in the companies they work for. An options pool is typically between $5m and $15m which means that a startup which sells for $100m would give $15m to its team.

Options are poorly understood if your employees haven't worked in finance so make sure you provide clear documentation with some examples of how much their stake is worth. EG if we sell for X, you'll get Y.

It may still be hard to compete against tech titans such as Google who give lucrative equity incentives in addition to lucrative salary but these behaviour is limited to large tech companies.

Using the founders

There's nothing better than a founder getting personally involved in an important hiring decision for their business or at least part of the onboarding process. At proSapient, I made sure that I met all the new joiners on their first day and then again at the end of their first week. That personal touch was my way of showing these new joiners that we could be their dream job.

Be creative with job descriptions

Job descriptions or job adverts are there to be played around with. Different descriptions appeal to different people and a good recruitment process involves playing around with the job description, the job title and anything that could help your message appeal to a different set of people.

Too many job descriptions suck the soul out of the business they're trying to recruit for. It's easier than ever to stand out and make that great hire.

Creating an effective hiring process

An effective recruitment process will take at least seventy hours per hire. You can take some shortcuts but do you really want to gamble your start-up this early?

Start with the mission

Your company follows a few strategic goals in order to achieve its vision. In the same way, a new role should have a mission which is an executive summary of this person's core purpose. It should capture why the role exists using clear, quantifiable language.

What outcomes do you expect?

Imagine you're sitting with a colleague a year after you've made the hire. You turn to this colleague and say "You know what Joe, Daniella was the perfect hire because....."

How would you finish that sentence?

You should be hiring the person who's most likely to make that sentence come true.

Job descriptions focus on the inputs to the role and the values, experience required to make that role successful but 'a go-getter attitude' doesn't directly lead to success. It's the outcome that you expect the 'go-getter' to achieve.

Each role should have between three and six core outcomes before they can be considered fully thought out.

This will be easier for some roles than it will be for others. For example, the outcome of a successful salesperson is explicit. If they beat their quota, they can be considered successful.

However a lot of roles are not as easily quantifiable (eg compliance associate).

We'll borrow from The OKR model and give you two ways to think about outcomes

Input-based outcomes: A metric that you can directly influence (eg. hire over 30 people)

Output-based outcomes: A metric which is indirectly related to your inputs (eg obtain a 4* performance review after 6 months)

Screening out all but the highest potential

You should be extremely picky about your early hires. They are going to create the culture of your organization. You've got too many other things to do and the reality is that you probably don't have the time to gamble on resumes that look weaker than others. In general, the best candidates have the following

• Long stints at companies

• Promotions through companies

• Give outcome-focused resumes

There will be a lot of exceptions. But if you had a pile of resumes that met the above bullet points and a pile of resumes that didn't, I bet you'd find more of the best candidates in the first pile.

The start-up interview process

We've written a huge amount about the interview process which you can find here

• How to conduct a great screening interview

• How to interview and find A-players for startups

• Why internal locus of control is the most important values for startup hires

Reference calls

References are almost as important as the interview itself. 

Yet almost everyone does it wrong, if at all! They hold off conducting references until the end of a process, using them to confirm that the person worked where they said they worked for the amount of time they said they did. If a bad reference springs up after you’ve made the offer, powerful psychological bias will try and normalise bad references or mark them as a ‘one off’.

Our reference call strategy can be found here but here is a short list

• Make sure you reference a line manager or direct report

• Take note of how easy it is to schedule (managers of A-players will always feel obliged to do them a favour)

• Pay close attention to the tone of the reference. If the praise is just "fair," consider it a red flag. Genuine appreciation is evident in the referee's enthusiasm and specificity.

• Ask the following questions:

  • In what context did you work with the candidate

  • What would you rate their performance on a scale of 1-10 and why

  • Where do they exceed/lag behind their peers

  • Why haven't they considered hiring the candidate again

  • What's the candidate's ideal work environment

Leveraging technology to hire in your startup

Technology can make the recruitment process run much more smoothly. For internal talent teams, we'd recommend Ashby as an awesome applicant-tracking system for a high-growth company.

We'd also recommend tools like Rippling to make the onboarding process for a new employee as seamless as possible.

Internal talent teams vs talent services.

The recruitment process for any new start-up is founder-driven. This is partly because there isn't anyone else at the company and partly because newly minted entrepreneurs like to get stuck in to all aspects of the company. However, there comes a point (usually 10-15 employees) where you exhaust your network and have little time for anything that isn't directly growing the top line.

Internal recruitment teams are the most cost-efficient hiring approach but may only become the best approach once you reach a certain scale.

In recent years, new recruitment services have sprung up to help startups hire.

Embedded recruitment is the concept of hiring a team of recruiters who can start recruiting from day one. They join your team and are almost immediately ready to get stuck in. The business model differs from contingent recruitment in that you temporarily hire those recruiting consultants (they'll take your @company.com email address) which is great for employee branding.

This model is great but carries a high fixed cost c£10k per person per month and a minimum commitment. This means paying if you're hiring or not.

The alternative way to hire is using a talent-as-a-service company like Berg Search who charges an extremely low fixed fee (usually £1k per month) and carry all the benefits of embedded search, charging a success fee for every hire made.