1. !
R E L A T I O N S H I P - B A S E D R E C R U I T I N G
BUILT to
WIN!!
Fadi Bishara - techVenture, Inc.
Creating a successful high
tech company, in today's
competitive marketplace, can
happen in a fraction of the time that
it took just a few years ago. The catalyst
has been the exponential growth of the Internet, the resulting
transformation of personal communications and industrial
commerce. In fact, the demand for Internet savvy
professionals has doubled in the past three years and is
expected to double again by the year 2002.
2. This boom has given birth to an increasingly competitive hiring environment for high-
tech firms. Moreover, it has given employees more choices as to where, when and how
they apply their talents for the creation of technological success and monetary wealth.
A visible indicator of the difficulty in attracting talent is the use of stock options by
every company, not just startups and pre-public companies.
Another factor, beyond basic supply and demand, is the overwhelming cost of hiring
software and Internet savvy talent. The cost factor has escalated the stakes when
hiring key employees for early stage companies.
!
"Finding the right people is everything. Intellectual Capital
has surpassed financial capital as the only sustainable
competitive advantage for a technology startup."
Ann Winblad (Hummer Winblad Venture Partners)
"In the world today there's plenty of technology, plenty of
entrepreneurs, plenty of money, plenty of venture capital.
What is in short supply are great teams."
John Doerr (Kleiner Perkins Caulfield and Byers)
!
For established companies, a hiring decision (whether ultimately good or bad) is rarely
devastating. However, for a small, high-tech company where growth and survival
depend on flexibility coupled with speedy execution, key people - as noted by leading
venture capitalists - are the most important ingredient for success.
The cost of a team that is not functioning at peak levels is immediately obvious in a
startup environment. Execution mistakes result in much higher costs with virtually no
recovery time. A startup that discovers a flaw in product design or in resource
allocation after securing a commitment from a large customer is in deep trouble. The
architecture of the product and the quality of implementation needs to be on target
from the white board forward.
In not, the company may miss a vital (and perhaps the only) opportunity to grow to
the next level or even remain in business.
Clearly any company should be prepared to invest in its people, this especially true for
high-tech companies that are in the process of developing products and providing
services. Unfortunately, for the startup that investment comes at the cost of managers
juggling developing product with the search process. An enormous amount of
engineering time spent on assessing the critical criteria for each prospective candidate
rather then towards to company’s efforts to develop products. So, beyond offering
stock options and sufficient benefits, how can a young company, with limited personnel
resources, increase its chance of attracting talent and making the right hiring choices?
To optimize the process, techVenture has developed the following techniques to help
young companies be more effective in their search for talent.
▪ U T I L I Z I N G P E R S O N A L R E F E R A L S
▪ E V A L U A T I O N C R I T E R I A A N D T E C H N I Q U E S
▪ R E L A T I O N S H I P - B A S E D R E C R U I T I N G
!
U T I L I Z I N G P E R S O N A L R E F E R A L S
3. Gathering all of the personal referrals available is an invaluable hiring tool. Referrals
provide inside information about performance from people who have been able to
observe the candidates over a long period of time. Your employees and your board of
directors should be encouraged to scour their past for promising candidates, even if
they are currently employed. No interview, no matter how thorough, can replace direct
personal experience with someone.
The downside of this approach, as anyone in Silicon Valley can tell you, is that there
simply are not enough personal referrals to fill key technical positions such as software
designers and architects.
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E V A L U A T I O N C R I T E R I A A N D T E C H N I Q U E S
The use of the following evaluation metrics can provide surprisingly honest answers,
and when measured against corporate goals and company vision can help you winnow
a good fit from the bad fit. Insure that the potential candidate has:
• Demonstrated success and extensive design and development expertise in a field
that is similar to your companies.
• Maturity, competence and emotional intellect to fit the company's culture.
• Dedicated work ethics, discipline and integrity, which qualify them to "own" a
portion of your company and deliver quality results on schedule.
• Commitment to long-term goals and alignment with your vision.
• Loyalty and protection of your company intellectual property.
• The ability to hang in there when the going gets tough.
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R E L A T I O N S H I P - B A S E D R E C R U I T I N G
Traditionally, there are three ways to locate key employees. You can depend on your
own in-house employee referrals, work with an outside employment firm (resume
recruiters) that handles a high volume of resumes garnered from a wide variety of
sources, or pay a premiums up front as required by retainer-based recruiters.
Relationship-Based Recruiting is a relatively new concept. It is perhaps the best
approach for startups who may not yet have a large enough in-house staff to garnish
referrals form, the time to spend wading thru hundreds of generic resumes, or the
money to commit up front required by retainer based firms. Relationship-based
recruiting is designed to merge the advantages of in-house efforts with the expanded
resources of a professional recruiter who will spend more effort in qualifying a
candidate that a high volume recruiter and will be more practical than the retainer
based firms.
The concept, as developed by techVenture, depends on a three-way relationship
between employer, potential employees and the recruiter. This method is articulated
best by the old adage “know your people." Thus, the search for the right person no
longer depends of culling through hundreds of anonymous resumes, or committing up
front to a firm that has more time than your business does. Rather, the search is
narrowed to a pool of specifically targeted individuals, men and women from both the
employer and the candidate sides who are well known to the essential middleman, the
professional recruiter. It is the middleman who creates the match.
!
4. The essence of our success is in creating a pool of employers and
employees who are at the top of their fields and in knowing them well
enough to make a fit from personal knowledge. This demands
selectivity, forcing the recruiter to turn away both companies and
candidates as business philosophies and technical factors conflict. Only
the companies with the newest, most innovative technology and the
kind of candidates who would thrive in that arena are chosen as
clients. Other recruiters choose a more mass-market approach and
often flood companies with resumes. It is important for the corporate
client to work with a recruiter whose pool of potential key people or
'high stakes hires' closely matches his or her corporate environment.
!
As the importance of filling a key functional role with the right talent goes up on the
organization's priority list, so does the importance of really knowing both the company
and the candidate. A single 'high stakes hire' may be vital to that one big opportunity
to hit it big in the fast-moving high tech market. A hiring mistake at a critical juncture
could deep-six a project or entire company.
Unfortunately, the kind of venture most in need of the "perfect" team is also, by its
nature the least able to spend the countless hours that search, interview, and the
evaluation processes demand.
techVenture's answer is to first create a search process that is systematically
organized to fit the needs of a specific functional area, thus maintaining a controlled
burn instead of a burnout of the present team members.
The following table gives a breakdown of suggested BEST hiring methods for different
employee functions, as divided by criticality. The tables not only compare employee
values, but they illustrate the amount of time and effort an ambitious new company
must put into hiring key members of their design and engineering team.
!
A closer look at the table shows that few young company’s can begin to meet the
financial advantage provided by a professional relationship-based recruiter. Time saved
by accessing a targeted data base of potential 'high stakes hires' more than makes up
