Startups’ war for great talent

I’ve spent the last week focused almost exclusively on recruiting for our West coast portfolio startups. On any given day I’ve met between 3 and 5 candidates interested in joining a tech startup. Given the needs of our startups, the focus has been on engineers and business development professionals. Among the over 20 candidates that I’ve met so far, I’ve been very impressed with 6 and referred them to our entrepreneurs. Let’s see if they feel the same way. Although a candidate may be very talented and motivated, it’s also important that there be a personal fit with the existing team. It’s up to our entrepreneurs to decide if this is the case.

Taking a step back from the meetings, I have two key takeaways. The first is that there are a lot of people working in large companies, especially in fields like technology and consulting, who want to join a startup. They want the greater responsibility that comes from being part of a smaller team, and the greater personal satisfaction that comes from seeing a clear link between your efforts and the performance of the organization. They’re also willing to take a step down from their former compensation to accommodate the tighter budgets that startups have to work with. Although there is the additional upside of a small equity allocation, this shows an intrinsic motivation that prioritizes the startup experience over the financial outcomes that it may produce.

The second takeaway is more important. Although the first takeaway may suggest that it’s a great time to be a startup because you have a large pool of candidates to choose from, this isn’t the case. While there are a lot of people who want to join a startup, there are large differences in the level of their skills. The excess of candidates among which startups can pick their employees comes hand in hand with a shortage of the great candidates that are necessary for a startup to succeed.

Especially at the early stages of the company, the first few hires outside the founding team can have a big impact on the outcome of the startup. This includes not only the specific engineering, business development, or other skills that they bring to the table, but also their influence on the company’s culture. This is why┬áI only refer candidates who I trust because I have worked together with them in the past, I can see myself working together with them in the future, or who come strongly recommended by people I trust. While startups’ war for great talent may be fierce, the costs of lowering your standards simply for the sake of filling in a role are too great.