2013-09-26

Co.Labs

Why Your Startup Can’t Find Developers

Matt Mickiewicz runs a developer recruitment site called Hired. He sees startups making these same mistakes over and over.



In its first year of business, Hired organized thousands of developer interviews for companies trying to fill spots. It quickly became clear why some companies couldn’t hire. "Ninety percent of companies are bad at hiring, but it's particularly bad among seed stage companies and first time founders," says founder Matt Mickiewicz. Here are the most common hiring mistakes made by employers on Hired:

Hiring In Your Own Image

Too many twentysomething founders look for employees just like themselves. "So you discriminate against anyone who is in their 30s or 40s or has a family," says Mickiewicz. "But the most talented and experienced people will be in their 30s and 40s. I know one well-known startup who has been trying to fill a role for over four months, and has gone through two dozen candidates, simply because the founder mandates 80-hour workweeks."

Founders typically look for candidates who have a similar educational background to themselves and live within 25 miles of their office. A CEO with a Stanford CS degree will often look down on anybody who doesn't, but this seriously limits the talent pool available to his startup. "We look a lot outside Silicon Valley," says Mickiewicz on recruiting for Hired itself. "There are really talented people who don't live on the coast and there's a lot less competition for that talent."

Another typical form of hiring self-sabotage is to concentrate on candidates from well-known companies like Google, Facebook, or Apple. "Don't just cherry-pick the Google engineers and the Stanford grads to work at your 'Uber for Laundry,'" says Mickiewicz. "Hiring Google engineers is generally a really bad idea. If you work at Google you have access to an entire set of tools and technologies that you won't have in a smaller startup environment." Hired has also found that Google engineers are three times more likely than average to reject interview requests, simply because few companies are willing to match a Googler’s existing salary.

On the other hand, startup CEOs tends to be prejudiced against developers who work for less cutting-edge large companies, like Dell, Accenture, or Salesforce. Mickiewicz points out that Uber’s CTO was hired from VMware.

Programming Trivia Questions

Too many interviewers still rely on puzzles and programming trivia questions. Google stopped asking puzzle questions in interviews when it found that the fact that a candidate could calculate how many golf balls fit into a plane had no bearing on whether they could actually do the job.

Viewing the interview as a combat sport is another common pitfall. "Asking an engineer to architect Google Maps on the whiteboard when they work for a car-sharing startup," Mickiewicz says, "just because the CTO worked on Google Maps. It becomes like a battle of wits. The CTO versus the applicants: Who's smarter?"

Mickiewicz suggests that Stripe’s interview process, which is based on setting more realistic programming tasks, is a better model to follow. Hired interviews its own engineers in a similar way. "Pair programming is something that we do ourselves. The engineer we are interviewing will work alongside one of our engineers for 2-4 hours to solve an issue that we are currently tackling." Mobile consulting firm Mutual Mobile gives candidates broken code to fix.

The Need For Speed

The biggest variable between hiring companies, and the best way to compete with employers like Google, Facebook, and Apple, is simply speed. "You should be able to present a final paper offer within 5-10 days of first meeting someone," says Mickiewicz. "Move the process as fast as the candidate allows versus as fast as is convenient for you. We have seen hundreds of cases where companies just forget to follow up with candidates or to reject a candidate. They'll reschedule interviews three times because of other priorities." Series B companies are Hired’s best customers and they tend to have much more organized hiring processes, giving them another advantage over seed stage companies in the battle for talent.

Startups underestimate how much time they should spend on recruitment. "20-25% of your time should be spent interviewing," says Mickiewicz. "It's a really good metric as to whether you have a hiring culture. If you view hiring as a core competency you need to develope in the business, then you'll do whatever it takes."

You’ve Got To Pay If You Want To Play

You must pay market-rate salaries. "Don't ask people to take a pay cut when they live in San Francisco and have car payments or house payments," says Mickiewicz. New graduates can command $100,000 a year in Silicon Valley. Hired has found that bumping the offer up to $120,000 gives you access to 30% more candidates. "There are definitely people who are 2 -3 times more productive than others and if you believe that, then paying them 20% more is a bargain."

Most founders vastly overestimate the value of their equity. Don’t expect employees to take stock options or even equity to compensate for a lower salary. If you can’t match a Google paycheck, then offer flexibility instead. Many developers want to work from home or to work part-time.

Hiring bottlenecks can seriously stall a startup’s progress and even threaten its entire existence. "Even though we have only been around for a bit over a year, many of the companies who were really bad at hiring have already gone out of business or been acqui-hired," says Mickiewicz. "Based on behaviors I see, I can predict who the next three or four companies to go under will be."

[Image: Flickr user Michael Duxbury]


Article Tags: hiringinterviewing





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27 Comments

  • Vitaliy Koval

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  • Viktor Bogdanov

    Today's IT resources market is tough and startups are challenged to find those ready to work in uncertain and unstable conditions. It's probably one more reason why they fail to find and recruit senior guys - they're just good with their well-established employers. Extra dollars don't really always make a major hook for these guys. As such, startups should consider looking far beyond Silicon Valley or even national borders. Most of the European digital startups don't develop their solutions in-house, but transfer them to lower-cost locations nearshore. And it has nothing to do with outsourcing feared so much by many Western companies. It has to do with smart way of finding developers that are so hard or too expensive to find within own country. For instance, running an 8-person digital team (for a game dev startup in particular) costs on average $618,000/year in the United States, in Eastern Europe it would cost slightly more than $300,000. Plus, in the developing countries the salary does matter a lot and any senior software engineer would rather choose to join a startup offering a higher salary versus Google or Microsoft. To cut it short, modern startups need to learn how to work in a global cross-border environment if they really want to grow and win a relative market niche.

  • wagush

    As a 58 year old CEO of a new mobile app company I'm confident I'll find whoever I need because 1) I'm not hung up on age - real experience and personality counts whether you're 20 or 60 2) I'm the one with most of the stock, so no one has to work 80 hours except me. 3) It's not their job to convince me to hire them, it's my job to convince them to work for me. There are 3621787361872 start-ups. I have to show why they should put their faith in me and 4) I will never ask anyone to prove they are "good" enough by giving them some arrogant "solve this business case" test. I've been handed them and I walk away.

  • Ann Eliese Grey

    Fantastic article. I however disagree with the "code for this job" suggestion. Most professional developers I know think being asked to write code (work for free) during the interview process is tacky and often times ends up being a scam. This process may be norm in California but not elsewhere. My first experience in being asked to do this was a PSD to Code, I didn't get the job but I later saw the code being used on the web.

    I recently turned down an interview with Toptal because they ask developers to write code as the first step. As a highly sought after professional, my time is very valuable and I'm not going to do any work without getting paid.

    My take on this - pay the person for the time they spend on your code. It's a small chuck out of the companies pocket to find out if the developer has the skills before you submit an offer and could save you thousands after by finding the right talent versus someone who is so eager for a job they are willing to be put through the ringer.

  • Mike Dee

    An entertaining post, but I don't think it hits the target.

    First off, the economy downturn in recent years barely affected technology.  Software engineers and web developers have been in short supply.  Look at some of the bigger companies, like Microsoft.  They have thousands of open jobs.

    Second is cost.  American developers are expensive.  Startups can't afford that type of expense...at least not for the long haul.

    There is a trade off in terms of salary and benefits to working at a startup.  Pay isn't as high and benefits aren't as good.  But, one is compensated with options.  In general, employees receiving options take salaries at roughly 70% of market rates.

    I like to refer to a Silicon Valley veteran to address what is wrong with Silicon Valley (and much of the U.S.) I think it relates to this topic.

    http://www.webguild.org/201102...

  • Terry A Davis

    Once it becomes know God talks... TempleOS will be like the Sistene chapel.  Who doesn't want to be included in the new Bible?

  • dbg

    Silicon Valley pay rates are really abnormal, even by the standards of other expensive cities like New York or Washington, D.C.

    New grads DO NOT FUCKING GET PAID $120,000. That's the salary of an engineer with 5 years of experience. 

  • Kurtis Rainbolt-Greene

    I've never graduated from anything, only been developing for 3 years, and I've gotten paid around that amount outside of Silicon Valley. I suspect if I went in I'd get paid $150-$180. I really can't say I'm *that good*, so what's with the difference'e you're expecting?

  • Jessica Darko

    Look at the top image- that's why a lot of top talent won't go work for your company.  If you have an office like that, anyone worth a damn is going to give you a pass.  Nobody wants to use junky PC machines, and if you've got everyone in a boiler room, you're showing you don't want good people anyway, because you're showing you don't respect your employees. 

    More than one engineer to an office is acceptable, only if the company is working on finding new offices.  And never more than 2 to an office.  Also, if you double up, you must have a liberal WFH policy.

    It's hilarious how many companies claim to want the "Best engineers" but have no interest in letting those engineers be their best at work.

  • Victoria Mudraya

    I fully agree that for many start-ups finding the developer is a real challenge, especially when the company is still small and not well known yet. And high salary is not the only way out, since for many start-ups it is just to high. Those who can not pay 120K can get a great developer too - they can just use offshore it staffing solution, that would give them the same quality for much lower price

  • Ann Eliese Grey

    Same quality? You've obviously never worked with offshore development teams. My experience in companies hiring offshore developers ends in them having to hire U.S. developers who they originally passed on to fix or completely rewrite the code that the offshore developers created. I have not only fixed that code, but I've managed offshore teams from various parts of the world and there is a lacking in code quality that is worse then the lacking in the english language.

  • Viktor Bogdanov

    Ann, if we look at the EU, according to research company Empirica, it'll have up to 900,000 open IT vacancies and only 100,000 ICT graduates by 2015. The supply has become a bottleneck for growth in the tech sector, creating a leaky pipeline that threatens to hamper European innovation and global competitiveness. As the competition becomes tougher and tougher, digital startups just won't be able to gain a competitive advantage if they're unable to afford to hire highly-qualified senior resources / tech leads / PMs for their projects. While offshore outsourcing has proven to result in many failed endeavors, there're other models that allow the leverage of external IT talent pools without losing quality and control. I can tell you the story of Bipper, a personal safety app maker that originated in Norway, but has then expanded its presence to US just because many US investors found their app disruptive and truly innovative. So, Bipper started off by setting up their own app development team in Eastern Europe which allowed their founders to fully focus on biz dev while running and managing own team of developers nearshore. They treated their remote team just like their in-house one - interviewed and selected candidates, put a Norwegian PM to oversee the processes, set up Scrum / Agile, put in place a reward/incentive program and, as a result, launched their app within just few months to the mass market. Would they have been able to reduce their TTM in such a way, had they chosen to develop within Norway? I doubt it! They'd have had to spend the same time they spent on developing their beta app nearshore for screening the local market for required resources. That's the difference. But I totally agree with you that outsourcing in its traditional sense is not viable at all!

  • Jessica Darko

    You cannot get  the same quality offshore.  You can get a lower price, but at the end of the day it ends up being more expensive.  i speak with experience working with people in a variety of countries. 

    I think the biggest issue is cultural. When an american is told to implement X, they think of the ramifications of X and deliver a complete solution.

    when a team of engineers in india (just for example) are told to implement the same thing, they give the minimum functionality that qualifies as X without really solving the problem that needs to be solved. 

    Not only have you had to hire a team rather than one engineer to do the same thing ,but you're not getting the full solution.

    In the end, it ends up costing more to outsource-- for non-rote/assembly line work. 

  • Vladyslav Solodovnyk

    Quite a few startups thinking global first in terms of market also source talent wherever it is available in the world.  For simple programming, Southeast Asia is a place to look; for mid-complexity, Eastern Europe is great choice; critical code will probably still need to be developed by the core team.  I've seen many startups starting and scaling with developers in Ukraine working with the core team in the US and Europe - and once companies grow, they get really creative with many development centers all over the world.

  • wildpeaks

    120K for a single developer ? You may want to look outside the Silicon Valley indeed, you get 3 or 4 great ones for that price in the real world.

  • Erin Corson

    In Washington DC it isn't abnormal for a completely inadequate dev to make 120k...easy

  • David Gillooly

    Fortunately engineers are finally realizing working 80 hours a week and taking a pay cut to increase the CEO's huge stock package is ludicrous.

     

  • KVFinn

    "I know one well-known startup who has been trying to fill a role for over four months, and has gone through two dozen candidates, simply because the founder mandates 80-hour workweeks.”

    This should be the headline.  DON"T DO THIS.  You are essentially offering half of your 'actual' salary if you ask people to do this.