Arnaud Bertrand has a big problem — one to which most managers of flourishing start-ups across Europe can sadly relate.The founder and CEO of vacation housing service HouseTrip.com, and a scheduled speaker at the NOAH Conference, an annual event in London which this year is expected to attract around 2,000 people, Bertrand says he’d expand his staff of 200 — and double his current tech team of 30 people — if he could find enough qualified candidates to fill the jobs he needs to build his otherwise booming business.
That’s not his only headache. Even as HouseTrip executives dedicate countless hours searching for potential employees to supplement the hunting done by specialized recruitment partners, Bertrand knows his existing personnel are being courted by rival tech companies similarly desperate for new, competent blood.
“On average my developers get about 16 recruiting calls per week, which explains why we joke about there being more headhunters than there are good tech employees out there,” says Bertrand — who has had to rely so heavily on farther-afield markets in central Europe to find qualified candidates that the tech team of his London-based company has virtually no UK natives. “We just hired a CPO we spent more than a year, and over 70 interviews, to find, simply because the pool of talent is so limited, and competition for it is so huge,” says Bertrand. “It’s almost like a war.”
The battle for tech talent is creating a boom market for recruitment specialists such as Renovata Partners, Egon Zehnder, Aspen Worldwide, The Up Group, Skillcapital, and The Forsyth Group to help locate and lure that rarest of prize today: the ideal candidate for vital posts in surging start-ups. Headhunters are needed regardless of whether the search is for engineering and development staff to boost fledgling operations or for experienced top managers to assist founders whose technical and visionary gifts may not be sufficient to ensure business success after a certain stage.
“You have to be careful not to confuse the vision, passion, and dedication of a company’s founders with the entrepreneurial tools and skills required to make the business successful and profitable in the longer run,” notes angel investor Måns Hultman, who as CEO of business intelligence company QlikTech made several outside recruitment moves that helped drive growth in revenue rate to 650%. “Taking companies to higher levels is what entrepreneurs are all about, and that relies less on creativity and flair than on fixing objectives and a plan to obtain them — then sticking determinedly to it.”
Early-stage founders, having exhausted their own networks, can use executive search firms to find key talent to help them scale their businesses. According to Rosemary Forsyth, founder of London-based Executive Search firm Forsyth Group, the Dutch founders of an electronic trading platform realized from the outset that they did not have the talent in their own network and needed to build a team that could scale the business and eventually replace them. The company hired several executives from the electronic trading platform space through the Forsyth Group. The industry-recognized Non-Executive Director eventually became the CEO of the company and achieved a successful exit.
“The conversation needs to take place early on as part of the wider discussion between founders and investors about targets, financial and skill limitations, what the VC’s exit plans are,” says Forsyth. “That prepares the map showing where the boundaries are and where the bridges that must be crossed lie… In terms of recruitment, it’s obviously best if there’s as much alignment as possible between the board and founders on when help should be called in, and what kind of person and experience will be needed. It’s an important, often critical, step; it’s far better if everyone is pulling in the same direction.”
The scenario to avoid at all costs is one in which the founding leaders and CEO find themselves backed into a corner by financial backers, with no option left but to submit, surrender, or scram. More often then not, however, this type of dire drama is averted by continuing consultation and a degree of compromise. Sara Thomas, CEO of Aspen Worldwide, says she knows of one tech company whose iconic, charismatic founder initially rejected investor urgings to accept outside business assistance. Less than a year later, he found himself returning to the board on his own initiative to broach the idea after watching his business considerably under-achieve on its goals under his command.
“There can be a very strong aversion among some founders of tech companies to give away control but at some point there’s usually recognition and acceptance that it’s in the baby’s best interest that help be brought in,” comments Thomas. “The last thing you want is for bad feelings to arise at the top, because often that will seep down and adversely affect the entire organization.”
Hultman — who relied on Aspen Worldwide to recruit for QlikTech — says the process isn’t necessarily a zero-sum game of one person losing the CEO or other executive title to a newcomer. Often, he says, the best solution lies in recruiting proven business managers as advisers to the CEO or board, or in similar positions that don’t necessarily shuffle titular cards or undermine egos. “Even the most capable and brilliant founding CEO is going to be an eight out of 10 on the total skill table, and usually won’t have a problem getting guidance on those two weaker elements,” comments Hultman, who cites Spotify and Wonga as examples of companies where founders retained the top spot while accepting assistance that helped build the businesses into world beaters. “Whether you’re talking about one person or an entire company, recruitment is always about complementing weaknesses with proven strengths.”
That can be easier said than done. First, start-ups need to prepare themselves. The search is going to be long and difficult because of the relative dearth of qualified candidates generally and the challenges associated with finding someone with experience in specific technologies or sectors.
“It can take three to six months to find or replace someone,” Forsyth says, “and therefore the team should have an understanding of when the hire will be needed.” The conversation about any succession planning should take place early between the founders and investors and should result in alignment between the board and the founders on when to hire additional senior executive talent. Forsyth says, “effective C-level hiring is crucial to the success of a high-growth VC-backed company and a company can ensure its ability to adapt to new opportunities and market changes by taking the time to plan its leadership hiring needs.”
With this in mind, Forsyth suggests, “it is beneficial for early-stage companies to understand their cultural DNA, management style, and their vision for the company. Cultural DNA fit is vital, as is hiring people who share your vision. There is a lot of competition to hire people from specific technology sectors, for example in the big data space, and often the larger corporations can have the upper hand in hiring or retaining these candidates by offering salary packages which start-ups can’t compete with. However, exceptional candidates do choose to join a start-up instead because of the passion, energy and commitment they see from the founders and the team, and because they have the opportunity to participate in upside potential of the company via the employee stock option program.”
Second, keep all avenues of recruitment open. Though virtually all tech companies use headhunting specialists, most continue searching on their own. Nicolas Brusson, founder and COO of BlaBlaCar.com, a fast-growing pan-European ride-sharing service, says he and other company managers spend 25% of their work time looking for and interviewing potential employees in addition to using recruiters. And like most other tech outfits in the same workforce bind, BlaBlaCar has established an in-house incentive and reward scheme to encourage current employees to use their personal and professional networks to identify qualified people who might be interested in open positions.
“Like most companies, we use recruiting specialists — especially internationally — but I’d say around 80% of our hires have come from internal networking and direct talks,” says Brusson, who said he’d immediately add 20 to 25 more people to BlaBlaCar’s current staff of 100 if qualified candidates were available. “The other good thing about the incentive program is it allows people already working here to propose candidates they know would fit in well. That’s really important.”
Indeed, that approach is a hedge against one of the main risks in recruitment at any level: introducing someone new whose style, personality, and past experience clash with the unique internal culture of tech companies. “You can mess up the entire atmosphere — and even the entire company — if someone comes in and messes up the internal culture,” says Brusson, a scheduled speaker at NOAH Conference 2013, which is taking place on November 13th and 14th in London.
Mindful of that, when it came time for Bertrand to look for someone to take the chairmanship of HouseTrip, he not only began looking for entrepreneurs with proven records of business development; he sought someone who’d fit the particular culture of the company. He also churned through his own encounters and exchanges in the tech world over the years for someone who might be a good personal fit. In the end, Bertrand contacted and signed on someone he’d come across after HouseTrip’s 2009 launch in Lausanne, and had admired since: former Skype CEO Michael van Swaaij. “It was just a logical choice on the business and human level,” Bertrand says.
But he’s also the kind of recruit that, as Brusson notes, can be doubly beneficial. In addition to the business and management skills involved, van Swaaij corresponds to what Brusson calls a “showcase” hire, whose reputation and relatively high profile in the tech sector can act as a magnet for future transfers to the company. “A star or showcase person can make attracting new people a bit easier,” says Brusson. “And it decreases the risk of losing current employees to competitors as well.”
Despite the 16 weekly recruitment calls his developers receive, Bertrand says he’s only lost one of those techies to rivals in the past 13 months. Meaning he and HouseTrip must be doing something right in the war to attract and retain talent. As the battle for talent continues to rage, other European tech companies can only hope to be that lucky.