Where Einstein Meets Edison

How Do Startups Hire?

How Do Startups Hire?

Mar 12, 2013

Once a startup begins formally hiring employees, it’s a reflection of success on many levels.  Full time employees are expensive, so a startup can only make such hires if they are profitable, if they have secured backers with deep pockets, or if they are plain crazy.

For the early startup making their first hires, the process feels less like a badge of honor and more like a throbbing headache.  Hiring is a difficult process and many startups are forced to learn the ropes by trial and error.  Unfortunately, mistakes can be discouraging, expensive, and potentially fatal to the company.

We wanted to learn more about how startups navigate the thorny hiring process.  To do so, we got on the phone with startups who had posted job listings on http://startlabs.org/ and asked them a series of questions about their hiring habits.  We profile here three startups in very different stages of their growth:

  • Small: An early stage mobile app, with fewer than 5 full time employees.
  • Medium: A financial data company with about 15 employees.
  • Large: A big data analytics company with about 30 employees.

Who are they hiring?

Technology talent is foremost in demand among all companies.  Over half of all open roles at all three companies were for technology positions, and such hires took a disproportionate amount of the hirer’s focus.  Small startups were looking to fill five positions: three strictly technology, one designer, and a single non-technical hire.  As the startups got larger, the need to bring in technology talent remained, but they were more diversified towards hiring marketing, ops, or other business roles.

Who is doing the hiring?

We found that the smaller the startup, the more senior the person who was handling the hiring.  At the small startup, the responsibility fell in the lap of the CEO/co-founder.  At the medium startup, hiring was still the responsibility of one of the company’s co-founders, although the CEO did not directly do it.  At the large startup, the responsibility fell to a senior VP.

Where do they look?

Contrary to crazy claims bandied about by some digital hipsterati, startups traffic in resumes just like large companies.  The resume serves as the starting point in the funnel.  About 20-25% of resumes merit an initial interview, and maybe a quarter to a third of people will move on to an in-person interview.  The funnel varies widely depending on the position, of course.  A typical technical position would receive about 50 resumes, while a business position may see up to 150 resumes.

The positions almost always end up posted to job boards around the internet, especially the free ones.  Startup sites like Startuply or technology focused sites like Stack Overflow received high reviews.  Most also looked to post at university career boards.  Craigslist in particular was singled out for its low quality resumes.  Despite all the time spent on job boards, respondents felt the best hires would come from personal networks or career fairs not job boards. These startups seldom used recruiters and often had bad experiences in their contacts with recruiters.

How do they evaluate hires?

The first screen for technology resumes is to see if they think the potential employee possesses the technically ability to do the job.  This doesn’t always require a direct match of technical skills to job requirements – a potential hire can get a pass if they demonstrate a proficiency in the most current technologies (more details on what these are in a future article).

Beyond this, additional factors come into play.  Through the resume and subsequent interviews, the hirers would look for other positive factors, including a good education, communication skills, and a fit with the company’s culture.

Conclusion

Although most of the people interviewed did not have a background in hiring, they all displayed a high level of sophistication in their hiring techniques.  Most of the knowledge was picked up over the course of several hires, and especially from the pain of making bad hires.  Some took an impressive analytical approach, and others were quite resourceful at sourcing talent.  While startup companies often lacked the resources or manpower of larger companies, they compensated with greater ingenuity.

About

Gerrit Hall is an MIT Sloan MBA student graduating in the class of 2014 and CEO / Co-Founder of RezScore and Barnacle

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