Why we don’t interfere with our startups’ intra-portfolio hiring activities

Our 35 direct investments at Aslanoba Capital have over 700 employees. With such a large number of talented people, it’s inevitable that our startups which are looking to recruit the best talent eventually find themselves interested in a candidate from another portfolio company. This situation, which manifests itself in all tech startup ecosystems, is felt much more strongly in Turkey where there is a very large mismatch between the demand for and supply of talent. While the supply of talent is limited given the infancy of the country’s tech startup scene, the demand for talent is highly concentrated among startups like our portfolio companies who are among the rare ones with funding and can therefore afford to hire the best talent.

There have been many instances in the past where one of our portfolio companies has recruited an employee away from another portfolio company without any involvement on our part. However, we were recently faced with multiple occasions where different startups requested that we intervene to protect them from another portfolio company hiring away one of their best employees.

At first sight, this seems like a reasonable request. After all, our startups need to retain their talented employees in order to increase their chances of being successful. However, the beauty of an unrestricted free market is that it creates an optimal matching of supply and demand. If another one of our startups is willing and able to present a candidate with a more attractive overall offer, including both financial and non-financial tools, it’s better for them to be matched with the candidate in question than for the candidate to stay at their home base. In the long run, the more successful companies will be able to attract the most talented employees and this will allow them to build on their success.

Our companies need to operate according to free market principles in order to succeed outside of our portfolio, in the overall marketplace. In fact, it is these very same free market principles which landed them funding at the expense of hundreds of other startups. The same free market principles need to apply within our portfolio to ensure that the best companies are able to realize their full potential. Protecting a company from competition may make them feel safer in the short run but it comes at the expense of developing the competitive spirit and continuous development which are necessary for them to succeed in the long run. Because of these reasons, we have made it our principle at Aslanoba Capital to not interfere with our startups’ intra-portfolio hiring activities.