Being able to recruit and retain talent is often the most pressing issue any tech CEO has to deal with. Dan Hynes, Atomico’s Talent Partner shares his thoughts on what entrepreneurs should be doing.
It is often, and very widely said, that tech companies in Europe are being hamstrung by an acute lack of available talent. Hynes sets the record straight on this myth, whilst offering some valuable advice from his considerable experience helping to build some of the world’s best known technology companies, including Skype, Google and Cisco.
There is a perception that there is a tech talent shortage in Europe, yet you came out recently in your blog to highlight the fact that this really isn’t the case. Why do you the think the perception is otherwise?
Probably because recruiting is just really hard and time intensive even more so in hyper growth mode. According to Stack Overflow there are roughly 1.6m developers in Europe vs 1.3m in the US, and if you look it city by city, there are 71,000 developers in London vs 83,000 in Silicon Valley, so they are pretty similar. What’s interesting though is when you compare these figures with the number of VC backed companies in each location the data shows that in Europe there are 1,700 developers per VC backed company vs 450 in the US. So in effect, European companies can recruit from a pool that is 4x the size of their US counterparts. And it’s a similar ratio for London vs Silicon Valley.
In addition European universities graduate twice as many STEM students as the US annually and have done for the last 10 years so the pool is readily available.
Lastly people talk about a lack of scale up experience which I just don’t see. We have years of experience scaling companies that now have multi-billion dollar revenues, and teams into the tens of thousands — and that’s just in London, never mind Berlin, Stockholm and other European tech hubs.
Of course Brexit may change things. We will be pushing for the UK Government to favour very strongly visas for highly skilled migrants and to make a clear commitment to the talented EU citizens already working here. Stability and security are important for employees and employers alike — especially those with family here. We need to make sure the UK is a magnet for talent wherever they may be based today.
So what is the biggest mistake you see companies making when it comes to hiring and retaining talent?
Generally people underestimate the amount of time they need to spend on it. Some people post a job on LinkedIn, sit back and then can’t understand why there aren’t dozens of relevant people applying. It’s really important to understand the journey, the experience and the outreach that’s required. It is a bit like creating a potential key account client list for a sales person. Write down who you want and go after them…woo them…spend time selling your vision to them.
Too often hiring is treated as fill one job, then move on to the next one, and repeat. I urge our portfolios to treat it (hiring) as an integrated channel. Think of it in the same way as bringing on board a new customer.
- Marketing — you need to build an employer brand through various mediums. Be where your target employees are and not where they used to be. Do you have analytics on your careers page and review it as you would a product installation? Visits, drop off rates etc.?
- Sales — you need an understanding of the funnel, to work out how many people you have to speak to, at what stage, and then look at the waterfall cadence after that.
- Product development — you need to try different things to figure out what works and what doesn’t, are you A/B testing?
- Operations — think of it in terms of your dashboard and the KPIs the team need to hit their weekly, monthly, quarterly hiring goals.
- Customer services — thinking about what the candidate and interviewer experience is like.
- Lastly Analytics — run the numbers and behaviours. Iterate constantly.
Recruiting is very time intensive. You can meet a lot of people that don’t meet the criteria that you are looking for but when you do or when you are working with a great recruiter who is introducing very talented, high calibre people that are aligned to your mission it’s a very different experience. If you’re meeting candidates that are potential peers or experts in their particular function it becomes an enjoyable hour spent and not a waste of your time. I think it’s about focus, and if you can get a great recruiter on the front end that’ll solve a lot of the problems. A key metric is to look at the ratio of candidates submitted to a hiring manager to offer accepted. Make sure you look at how many “candidates” you need to reach out to, speak with, qualify and so on before submitting. Don’t spam! Each outbound email needs to be customised and targeted otherwise it goes straight to spam…or shared on the web if really awful.
So there’s definitely enough talent in Europe?
Absolutely. You only have to look at all the fantastic companies out there that have built successful businesses. Skype is the obvious one for me where we were making over 50 hires a month once the company was spun out of eBay. Even at Google we were hiring hundreds of people every month without the need for relocation. It’s definitely doable. I know some people will say, ‘yes but that’s Google…’ But Google became an attractive place to work by design, not by accident. Larry, Sergey and Eric would meet every Sunday and talk about culture and hiring for hours and they built a very strong process around how to maintain ‘the bar’, which had its positives and negatives, but it allowed us to attract the best people because they knew they would be working with world class teams. It was hard to get in there but everyone wanted to work with some amazing people so it created this network effect. But that was no happy coincidence.
Of course successful hiring is not always about the numbers. Supercell has done a fantastic job hiring amazing talent into Helsinki — in part because they try to keep the company as small and nimble as possible. Go Euro’s bar is amazingly high.
What other advice would you give any CEO when it comes to talent?
Mission led companies are generally much easier to recruit for. If you can get people lined up behind your mission, you’ll find recruiting and retaining your talent much easier. For example, if your passion is music then Spotify and Soundcloud are obvious places for you, if it’s fashion then Farfetch, Lyst or Threads might be where you want to go. If you’re building a me-too business, I think it is a lot harder, both in terms of raising funds in this environment but also in attracting the level of talent you need. Then it’s understanding the amount of focus hiring well takes. I don’t want to keep banging the timing drum but most CEOs aren’t investing enough in hiring and they think a couple of hours a week is going to get them a team of 20 in a few months. They need to put in as much time into hiring as they do into the product. Also if you are hiring from outside, then bring in people that have been in this position before, and have scaled before. You want people who have been on the journey, but make sure you understand that journey. For example if someone was at Google in 2003 or 2004, then that’s a very different experience to someone that joined in 2012. We do a lot of this work with our portfolio, sharing our experience. We tell them if you hire well, that will solve 90% of your problems.
What lessons, if any, can Europe learn from the US when it comes to company culture?
It’s very interesting to see what is happening in the US. New roles are being created all the time to focus on the company culture and the employees. What Airbnb did is interesting, moving Mark Levy from Chief Human Resource Officer into a new role of Head of Employee Experience. We’re going to see a lot more of this. You need to understand what your culture should look like, what you want it to look like and how you can get it there. If a Founder is not consciously building his or her culture, they have no control over how it turns out. I do see a direct link between successful companies and great cultures regardless of where they are based.
As the early stage funding environment has changed this year in the US, what advice would you give CEOs on how to use equity incentives and vesting, to power low dilution company growth?
At Atomico we have always used data and facts to help inform decision making and we have put a lot of work into building tools that help our companies run salary models by company stage and location. One thing a CEO needs to do is be very clear about how many hires they will need to make and over what period of time. Build a calculator for your People road map. The last thing a CEO needs is to run out of stock. Do the model up front, look at who you need to bring in. And then work out what the market pays, and I mean really pays. Understand you are going to have to pay market rate for what you want. You get what you pay for. Companies are trying to recruit engineers out of Google on £40K or £50K, and they aren’t even offering stock. Why would they join? Other companies will be prepared to pay market rate. Everyone wants the top 1% but they are in a 50th percentile paying company. It’s important to be realistic and to be very clear about what your company needs. You have to share the upside.
How do you see the relationship between HR and Talent evolving?
I’ve seen a lot of companies elevate the talent function. Talent is coming out of HR and companies are bringing on specialists with experience of hiring engineering talent at scale, people like Steve Buckley at Potato, Brandon Cohen at Schibsted, Aaron Neale at Improbable and Melissa Trahan at Thread. Companies are then underpinning Talent with a strong HR function in their early days.
The industry clearly has a diversity issue, is this something you discuss regularly with your portfolio?
Diversity comes in many shapes. Gender, sexual orientation, religious, social background and so on. And there’s no doubt diversity delivers superior results. We have one portfolio in Germany, GoEuro, that has virtually a 50/50 split male to female, but they are the exception rather than the rule. We always advise CEOs to build inclusion and diversity into their DNA, so this goes back to them thinking about what culture they want to have, and how they want to be thought of. At Atomico we partner with The Boardlist which is a company established by Sukhinder Singh Cassidy and it’s about how you can get more women sitting on boards. There’s some amazing talent out there that really should be sitting on boards.