These are heady days in the Silicon Valley. The number of unicorns (start-ups valued at more than $1 billion) is growing rapidly. According to CB Insights, a venture capital and angel investment database, from seven in 2012 and eight in 2013, the number of unicorns grew dramatically to 47 in 2014. In the first five months in 2015, 32 companies joined the club.
These breakout start-ups have a humongous appetite for one thing: talent. They offer everything and the kitchen sink to lure the best and retain them.
But the bright young folks have another option: start their own company. These unicorns have created many, many millionaires who have become angel investors. It is easy for someone with an idea, to raise some seed investment and start a company.
So, given these two options—start a new company or join one of the unicorns—why would someone want to join your company?
Given the two options—start a new company or join one of the unicorns—why would someone want to join your company?
In our conversations with many entrepreneurs and investors, this is a challenge that everyone is grappling with.
Our own LinkedIn ad for a software engineer during our early days got just a couple of resumes; none met the bar. Good quality software engineers do not go looking for job openings; they are chased by recruiters and the people they know in various companies. Of course, there were many recruiters who saw our ad and inundated us with emails and calls. We realized that, in this market, we had no choice but to use the services of recruiters even though it cost us about $30,000 for every hire.
We also brainstormed on how do we make our company attractive to candidates, especially the right kind of candidates. We drew from our own experiences, conversations with a multitude of entrepreneurs and advice from our advisors and investors. We took an experimental approach: we would try something, discuss the results with the team and then tweak our approach. Here is what we learnt:
1. A compelling vision is your biggest draw
Everyone wants to be a part of something big. They want to be a part of the team that builds the next Google, Facebook or Twitter. But, how do you develop a powerful vision when there are so many ambiguities? The product vision, technology trends, how the market will evolve and what customers will want, is all unclear.
Everyone wants to be a part of the team that builds the next Google, Facebook or Twitter.
Powerful one-line vision statements like "To organize the world’s information and make it universally accessible and useful" for Google and "To give people the power to share and make the world more open and connected" for Facebook are much easier to appreciate when part of the vision is already realized - when there are real products serving real customers.
I used to say that our vision is to "unlock data collaboration by making it easy, fun and effective". People would have a whole bunch of questions about what we mean by data collaboration, how we think people would want to collaborate, what will happen to big data, and so on. Of course, we had answers to all these questions but it would take us half an hour just to give the candidates a vague sense of our vision.
We came up with the idea of a future imaginary article that might appear in the business press when our company goes public. You can see the article here. We would share a printout during the meeting or email it right after our first conversation. We found it to be a persuasive way to describe what the product might evolve to, how the technology trends may develop, what needs it might fulfill for our customers and how our product might fit in the market. Candidates resonated with our vision. They’d tell their recruiters that they would love to work for our company and that in turn prompted recruiters to share more high-quality resumes with us.
2. Lead the conversation with the "why" - the purpose that inspires you
Simon Sinek in this TED video explains how great leaders inspire action by leading with the "why". According to Simon, people generally start with the "what", sometimes talk about the "how" and seldom talk about the "why". He talks about how most computer companies market themselves by first saying "we make computers" (the what), "we design our computer really well" (the why) and stop there. Apple instead says that "we think differently and always challenge the status quo" (the why), "we do it by designing our products really well" (the how) and finally says that "we make computers" (the what). Consumers resonate a lot more with the way Apple speaks to them.
Great leaders inspire action by leading with the "why".
We were introduced to this framework by a consultant who was helping us with our messaging for consumers. We thought this could also be effective in other communications. We started leading with the "why" when talking to candidates. "We believe in creating business apps that are as easy, fun and effective as personal apps" (the why). "We do it by reimagining and rethinking business workflows for the new context and coming up with far superior ways to create, share and interact" (the how). "Our app allows users to collaborate with data anywhere, anytime" (the what). You can see the entire document here. We found that starting with the "why" not only resonated with candidates but continued to motivate them once they joined.
Starting with the "why" not only resonated with candidates but continued to motivate them once they joined.
3. Make your culture stand out
The values and culture in start-ups is a top draw for high-quality individuals. In most cases, the values and culture evolve once the critical mass of people have come together in a start-up. It is critical that the initial people have a common thought process so that the values and culture that "happens" is delightful, productive and motivating.
The values and culture in start-ups is a top draw for high-quality individuals.
We had a few thoughts about values and culture and it would come up in conversations with potential candidates. We often got the "nothing new" look from candidates. All start-ups in the bay area are building something cool, have a nice office and have goodies like pool tables and gourmet snacks. How do you stand out?
We decided that "The Chartcube Way" must articulate how our company is different from other companies. We wanted Chartcube to be a lot more appealing to the right subset of people rather than being somewhat appealing to everyone. For instance, Chartcube is all about using design thinking and creating experiences that customers love. While this drives away software engineers who care about solving big hairy technical problems, those who appreciate design and delightful user experiences are attracted to our company. We had a "The Chartcube Way" document even before we hired our first employee. You can find the current version here. We found that each candidate and the company learnt a lot about each other while discussing this document. The document has evolved based on these conversations, especially early on. These conversations have also become a glue for the team. The team can now engage in fierce debates without taking anything personally, knowing that they share a common set of values and beliefs.
4. Define your core values and stand by them
One of the early pieces of advice we got from other entrepreneurs is to "be real". "Pick something that is important to you and something you can and will stand by," someone suggested.
Pick something that is important to you and something you can and will stand by.
One of our core values is fairness. We decided to offer all our employees exactly the same terms and had a standard contract. One of the clauses in our agreement is called a "double trigger acceleration". If the company is acquired and an employee is fired, he is entitled to all his stocks including the options that are "unvested". This clause protects employees from being fired by the acquiring company to save on all the unvested options.
Smart candidates typically know about this clause and negotiate with their employers. But, many don't and hence are not offered this benefit.
Companies do not offer this benefit to everyone because a potential acquirer may not like it. Investors do not like this clause as their financial outcome is dependent of an acquisition most of the times.
We had a little bit of pushback from some of our investors. But, we decided to push through and made it a standard term we offered to every employee. All employees have exactly the same terms when they join. We see that this immediately put candidates at ease when negotiating.
5. Constantly check and correct your course
Today, high-quality talent deserves and demands that the company is managed well. They need to know that their contribution is being leveraged optimally to further the company’s objectives. The company must provide competent leadership and management so that they are engaged. Start-ups must also create a work environment that is conducive to creativity and productivity.
High-quality talent deserves and demands that the company is managed well.
At Chartcube, we constantly think about these elements. We do a bi-annual survey to ensure our feet are on the ground. We ask if people agree or disagree with the following six statements:
1) We have a clear and inspiring vision.
2) We iterate on our plan to achieve our vision quickly and effectively.
3) I have confidence in the leadership.
4) I have the freedom to work effectively.
5) I have the chance to be really good at my work.
6) My work has positive impact.
The first three statements relate to how the company is being led and managed. The survey results allow us to identify issues, talk about them and address them proactively. The next three statements relate to conditions for productivity and creativity. Traditional incentives based on achievements against the targets that have been set do not motivate in an environment where there is ambiguity, uncertainly and hyper-growth. Daniel Pink in his TED video makes the case that there are three elements required to motivate people in situations requiring creativity: autonomy, mastery and purpose. These three statements help us ensure we do not lose focus on these elements.
Recruiting and retaining talent is critical to the success of a start-up and is increasingly difficult. The exact answer to how a company does it will be different for every company depending on the context. But it is imperative for entrepreneurs and intrapreneurs to try to find the answer with a sense of urgency.