National Post (National Edition)
FP ENTREPRENEUR
Hiring practices go a long way to help start-ups make friends with their neighbours.
In San Francisco, next door to Silicon Valley, tensions are rising. An influx of well paid tech workers has put a squeeze on housing. Locals are being displaced. And highly visible symbols, such as the Google bus that had a brick thrown through a window, are being targeted.
In Vancouver, about 1,500 kilometres north, housing is in short supply, too. In the Downtown Eastside, where I started my company, the encroachment of condo buildings and trendy new restaurants has angered some low-income residents. Vancouver’s emerging tech scene hasn’t yet been implicated, and it hopefully won’t be anytime soon.
On one level, the issue comes down to hiring practices. Startups that reach a certain size and level of success inevitably face a dilemma. Where do you find new talent to keep growing and succeeding?
One approach is the hired gun. Companies, usually larger, more established players, pay a premium to bring in proven, outside talent — professionals who get the job done for a price and then, often, move on. The alternative, really the only option for many startups, is to nurture homegrown prospects.
As chief executive of a late-stage startup straddling the line between these worlds, I’ve learned that both approaches make sense in different contexts. And both come with caveats.
The hired gun In the Bay Area, the focus at many large, post-IPO companies is on recruiting and retaining top employees. This often comes at a cost, such as the $3-million salary Google reportedly pays to keep one elite programmer. The incredible demand for engineers in the region means even fresh startups find themselves in bidding wars for key employees. The result is an incredible concentration of tech all-stars — the best and the brightest, lured by chances to work in the Valley’s blue chips and be compensated accordingly.
For companies fortunate enough to land these prospects, the rewards are multiple. These hires act as mentors to younger employees, diffusing expertise throughout the company. There’s the enormous efficiency gain of bringing on high performers who know exactly what to do and how. Plus, top talent can also help attract other prospects, powering a kind of virtuous recruitment cycle. But this approach can also create complications. Hired guns motivated partly by a big paycheque and shortterm payoff may have little reason to be invested in a company’s long-term vision. A mercenary focus on bottom lines and bonuses — at the expense of vision and value alignment — is hardly the recipe for a healthy company culture or a business built to last.
Then there’s the bigger picture: Tech firms don’t exist in a bubble; they draw from and feed into a larger community. Ideally, the relationship is symbiotic. The challenge in San Francisco — at least to some — is it doesn’t always seem that way. (The reality is much more complex: For each new tech job in the Bay Area, for instance, 4.3 other jobs are created, like cooks, dentists and teachers.) But, for better or worse, protesters have fixated on the meme of high-paid outsiders who seem to feed off the vibrancy of communities while giving little in return. The homegrown prospect Of course, tech is increasingly decentralized. Newer tech centres, such as Vancouver, with younger companies are able to embrace a different approach to talent: recruit locally, identify homegrown prospects and bring them along for the ride.
On one level, this is pragmatic: New startups generally can’t pay top dollar. Instead, they sell junior prospects on youth, energy, generous options packages and the possibility of a payoff down the road. And they tend to attract workers whose spirit of hustle and entrepreneurialism matches their own.
This was certainly the case with my company. During our first years, we found recruits in Vancouver, who made up for what they may have lacked in experience with eagerness to learn and willingness to take a gamble on a company with a lot of potential. Finding a balance Eventually, a successful startup has enough resources to get industry-leading expertise. So how do you bring in hired guns without upsetting homegrown chemistry? How do you preserve company culture and a spirit of entrepreneurialism while offering incentive to top recruits from outside to join your ranks?
Companies born out of a strong culture find ways to preserve it, though this certainly doesn’t happen by accident. (At some stage, putting in writing a company manifesto — a succinct statement of beliefs — seems critical, a step I’ve recently taken.) Continuing to draw on local talent and finding ways to engage with the broader community are absolutely essential.
Understanding and respecting your roots is critical not only to winning the tech talent wars but leaving a legacy that transcends bottom lines. Tech companies have a finite lifespan: For the successful ones, an IPO or exit is rarely more than a few years off. But by recruiting locally and developing homegrown talent, companies can build something that endures.