Index’s Director of Talent Dominic Jacquesson, talks hiring, culture and the impact of Brexit.
Are Universities the answer to Europe’s tech talent shortage? Dominic discusses why European entrepreneurs need to look to grassroot talent and why we should be looking at the diversity issue differently.
What are the key themes or consistent challenges your portfolio companies are facing when hiring talent in Europe?
One common challenge I see is where companies set out to look for certain experience but then put too many ‘must-have’ constraints around the hire. Your pool of potential candidates can splice down to pool of zero pretty quickly. In the startup world a company might need a CFO, but then they insist that they must have lead an IPO, and they must have SaaS experience. Suddenly you’re down to a pool of very, very small numbers. You might find somebody that ticks all the boxes but you just don’t get along with them, or the timing isn’t right, so you’ve got to be more open minded and strike the right balance between ‘nice to have’ and ‘must have’.
Obviously the talent pool is growing in Europe all the time which is fantastic, but for roles like an IPO-ready CFO or an experienced, at-scale, VP Product, there are particular pinch points where we have got to be willing to nurture our own talent or bring in people from slightly different backgrounds.
Is this a similar challenge faced by companies in the US?
It really depends on where in the US you are talking about. Trying to hire a very seasoned VP HR in New York is no easier than it is in London. Yet in the Bay Area you can find a decent pool of people who have been there, seen that, and who have taught the next generation of leaders as well. It’s a far bigger pool, that’s a key differentiator.
What is the most regular piece of advice you find yourself offering the CEOs in your portfolio?
It’s probably around building recruiting and people ops muscle into the team early as you scale. If you’ve taken Series A investment and your roadmap says you are going to go from 15–40 people in a year, or Series B and you’re going from 40 to a 100 in a year, well those are massive challenges and key milestones that you’ve got to hit to keep on track in order to raise your next round of funding. You can’t just rely on your hiring managers with a bit of support from the office administrator. You need to have a much more considered, machine-like approach to your recruiting. This goes beyond hiring an experienced recruiter. It’s also about building an employer brand, and making sure that as a CEO you are putting the adequate amount of time into recruiting. We normally say that as CEO you should be looking at up to 50% of your time being focused on people and people issues, which is massive. Often the reality is you have got to get on and hire a Head of Talent Acquisition to stay ahead of the curve. Don’t just get a junior person in. Invest in some real experience.
Not looking specifically at your portfolio but generally speaking, do you see CEOs underestimating how much of their time is going to be spent building their team?
Yes, but it’s linked to how fast you are growing. The challenges multiply if things are going well and you’re having to deal with growth challenges on multiple fronts. It’s a nice problem to have but on the hiring side it can be easy to cut corners, or fail to implement a rigorous recruiting process, or worse still, lower the quality bar. That is never the right thing to do, it will always impact you down the line.
In general what do you see as the biggest mistakes European companies make when it comes to hiring and retaining talent?
Very few European start-ups think about hiring raw talent straight from university. At Facebook, for example, it still remains a hugely important driver. After employee referrals, university recruiting is its biggest source of engineering hiring. Dropbox built itself largely on its links with MIT and established a very strong employer brand on the campus. There is some amazing talent coming straight out of university and that applies as much in Europe as it does in the US. But you don’t find start-ups on campus in Europe. They don’t have a campus presence, they’re not recruiting there. They are missing a trick. One of the initiatives that I’ve started at Index is working closely with a student-led group called ‘HackCampus’ who are connecting students who have a hacking mentality and an interest in the startup world. This Summer we had our second cohort of interns in a residential internship program, matching 8 exceptional student hackers with 7 of our London-based startups. Trying to run an internship program when you only have the capacity for one or two interns is tough. So we pool resources, we get them all to live together, they visit each others companies and they get a real insight whilst the participating companies get a far better return. It’s really a taster to give companies a sense of the quality and calibre of these graduates and to show how fast they can start to add value. The goal for the program is to build some success stories and case studies that show how European startups can ramp up their engineering teams by bypassing a major bottleneck around recruiting engineering talent.
We’ve recently witnessed some significant advances in the field of Artificial Intelligence which has resulted in a huge increase in demand for AI and Machine Learning experience across the board. Do you anticipate that more companies will go direct to Universities given the relative scarcity of these skills?
Yes if you are a true AI company, rather than it just being a re-badging exercise. You only have to look at Swiftkey, one of our portfolio companies which recently sold to Microsoft, they were very much ahead of this. They were Cambridge founders with strong links to the computing faculty at Cambridge which was fantastic. Their technology attracted a lot of inbound interest from students so they built much of their team that way. It was such a new emergent field, fresh graduates were as likely to know these leading edge technologies as people more experienced in traditional technologies. We need to change our cultural perspective around hiring less experienced people but people who are absolutely as capable and who have an amazing trajectory ahead of them.
How do you see the relationship between HR and Talent evolving?
I’ve a background in marketing and I see the correspondences between marketing and HR as very clear and evident. There is a close parallel between recruiting (talent acquisition) and HR (talent retention) with customer acquisition and customer retention. So in the same way that the very best marketers are able to take a holistic view (left brain and right brain), you see something similar between HR and recruiting. To most effectively harness your workforce you really have to look at the lifetime journey, and the lifetime value your employees and understand the linkages there. But at the same time they are very different skill sets and there are very few people who have a really rich and deep appreciation of both HR and recruiting. There are not many HR leaders who are excellent recruiters. You just have to have enough of an appreciation at a senior level to get both of those pieces right and to hire excellent specialists in those areas who can collaborate and are aligned in achieving your over-arching goals.
Airbnb hired Mark Levy to Head Workforce experience. In your opinion what lessons can Europe learn from the US when it comes to company culture?
This is related to my point earlier around building up people ops muscle. If you’re on a persistent journey of hyper-growth like Airbnb has had, or in our own portfolio we’ve seen it at King and Just Eat, as well as more recently FarFetch and Funding Circle, the cultural challenges are huge and it’s about keeping ahead of those. It is about the time and attention at the top, from the CEO and senior executive team to make sure that you are giving due time and attention to keep that internal alignment and focus on mission and values etc. At the same time it needs a lot of organisation. It requires a thoughtful, carefully considered and well executed plan to let those things happen. Just running a meaningful all hands meeting every week is tough. A lot of effort goes into them, let alone if you are running a global offsite twice a year like King does, bringing their entire workforce together and making it a really feel good and productive event. It’s a massive exercise and there are plenty of ways it can go wrong if it not well managed. So put the time and attention into people analytics. It’s not just doing the measurement, it’s about being thoughtful in the interpretation of the information that comes back to you, quantitative or qualitative, and understanding what the implications are. AirBnB in fact works with CultureAmp (plug for another Index company here!) on people analytics, and I think it is a good move by Airbnb to leverage these learnings by hiring someone into this role. I have seen other progressive companies at an earlier stage bring in experienced people to focus on holistic aspects of HR, for example Funding Circle have recently hired a Global Culture Manager.
The tech industry has a diversity problem. Is this an issue you regularly discuss with your portfolio?
The first thing I’d say is I think there is as much diversity opportunity as much as there is the diversity problem. I think the whole diversity topic can be looked at negatively around unconscious bias etc. Or you can actually say, guys you are nuts, whilst you are talking about how difficult it is to hire talent you’re missing these massive talent pools that are available. So it’s as much of an opportunity. The most common issue that comes up is the women in tech one and quite rightly. It’s a tough one because it comes all the way through the university system. We see it in the work we do with ‘Hack Campus’. The majority of grads coming through with a computer science background are male. So it is difficult for start-ups alone to fix that, as they hire from the pool of available talent now. That’s part of it but diversity goes well beyond that. This is something I feel personally very strongly about. My wife started a not-for-profit which is actually working with disabled students and graduates and helping them to get tech jobs. Diversity is much broader than the gender issue, it’s ethnicity, sexual orientation, disability etc. Those are hidden talent pools that you can positively tap into.
What’s the name of the company?
It’s called EmployAbility, they work with Google, Goldman Sachs Technology Division, and many other leading tech recruiters. She has now started to talk to start-ups as well.
What’s the official line from Index as to what occurred over the summer (Brexit)? I am sure there are certain quarters within the portfolio who are looking for some kind of advice or guidance.
We were initially a bit shocked and disappointed because like the vast majority of the startup ecosystem we were pro-remain, and being a very transatlantic firm, we’re broad based and that reflects the culture internally as well. We did an excellent blog post about Brexit that got lot of attention and quite rightly so. People loved that the headline which was devised by a certain partner, ‘Never mind the bollocks, we are still bullish on Europe’. I thought it was great and absolutely goes to the heart of how we feel.
We are still very bullish about the European ecosystem generally, as we have always been. It’s the core of Index’s roots. Innovation can happen anywhere and we are going to be there, Europe is our home base. It doesn’t change that, but there are some real things that whilst we are in a period of uncertainty gives pause for thought. For example, from research that I have done on my portfolio, 19 out of 24 of US companies that have come to Europe have chosen London as the EMEA HQ. At this point in time, if you are a US company expanding into Europe would you choose London as your EMEA HQ? Maybe. But you would think about it. Rather than a certainty we would advise them to be more thoughtful about Amsterdam, Dublin, Berlin as alternatives. We will see where we end up at the end of the uncertainty but we may see companies spread a bit more rather than being completely focused with London, or the UK as the regional HQ. There are some real points there which I hope the UK Government is aware of and what the implications are if the uncertainty isn’t lifted in a positive way. Over time it will challenge the preeminence that London has had in the European startup scene. Innovation in Europe will continue and London will continue to be an extremely important centre.
Are you looking for other offices as a result of Brexit?
It’s way too early to say that. Index VC is such a close personal firm- we have fewer than 60 people in total and we are already distributed between San Francisco, London and Geneva. It’s a very significant thing in such a small team and where it is so people centric we have no immediate plans of any form of opening new offices but the team here (London) reflects a pan-European background and we’re on the ground on pretty much a daily basis across Europe and we obviously have portfolio companies all across Europe as well.