Life as a Startup Founder-Recruiter: Our First Key Hires

The following is a guest post from fnBlog Contributor Michael Overell, Founder and CEO of RecruitLoop. This post, originally posted on The RecruitLoop Blog.

Every startup founder complains about finding the right talent for their company. It’s such a common gripe it’s almost boring, particularly in the Bay Area, where every startup and its dog is looking for talent.

But there’s sweet irony in seeing founders of a recruitment startup face similar challenges.

I’ve been wrestling with this process myself, spending most of the past 2 months making our first key hires for RecruitLoop in San Francisco. It was as much a learning process as it was a company-building step.

Hang on.

Why not just use our own solution to get affordable help from an independent recruiter?

An obvious question, that I’ve been asked more than a few times. The short answer is, we kinda did. In this case, I played the ‘recruiter’. My cofounders were the ‘client’. We collaborated using our own tools and platform. We did this for two reasons.

First, I needed to experience the startup hiring process in this market first hand. I wouldn’t feel credible talking to clients unless I’d very recently felt their pain.

Second, and probably more important, our first hires felt SO critical. I thought I needed involvement at every step. In my mind, it was just as important understanding who wasn’t a fit, as it was selecting the best candidates. It’s formative for the culture we’re building as a company, and we needed to drive it ourselves.

In a team of 6 people, one new member is nearly 20% of the culture and performance. If we do our job right, possibly much more. On the flip-side, a misstep could have a far greater negative impact; possibly terminal. The stakes are high.

First, some background

After setting up logistically in San Francisco and raising seed funding, our focus quickly moved to building out the team. We had 2 key roles in mind: Head of Growth, and Sales/Operations.

We started the hiring process in mid-May. Two months and 215 applications later, we’d confirmed two phenomenal hires. We’ll introduce them in the coming weeks. For now, I’ll focus on the actual hiring process, and how we got there.

A few stats on our activity in this time:

• 215 applications
• 44 recorded video interviews
• 46 Skype calls (including repeats)
• 24 meetings/coffees
• 4 trial projects
• 6 references (provided)
• 2 back-channel references
• 1 day trip for an in-person meeting
• 1 dinner with partners
• MANY (15+) ‘closing’ discussions

In total, over 150 hours of input. Not including hours of indirect effort building our startup ‘brand’. Our conversion funnel of candidates through the process looked like this:

How we made our first hires

You improve what you measure. So, to truly understand the hiring process in an early stage startup, we mapped each step and major activity (diagram below). I’d argue this is an ‘archetype’ hiring workflow, with steps that can be applied to almost any role, not just at a startup.

Your mileage will vary. Variables include type of role, stage of business, and ‘luck’ (eg, if you already know the ‘perfect’ person).

In this post we’ll give you a look ‘inside the sausage factory’: How this early-stage recruitment startup made its first key hires.

 

Build Your Employer Brand

Early-stage startups don’t have a discernible ‘employer brand’. That’s a concept reserved for larger companies with HR teams who visit conferences and make powerpoints on the topic.

At a startup, you just have brand. And in a hiring sense, that equals potential plus public profile.

Potential = market size, product, problem, team. The exact same things you’d pitch to investors. Candidates are asking ‘is this a big problem I care about?’ and ‘can it be the next big thing?’.

If you’ve done your job, the trajectory in most of these areas is set before you even think about hiring.

Public Profile = online presence. It’s your blog, social media, press, website and design. Candidates are thinking ‘will I be stoked to tell my friends about this company?’.

Now, this is stuff you absolutely can impact, and will make the difference between winning and losing a top hire.

I was consistently impressed (and sometimes surprised) by the level of ‘stalking’ from every candidate we met. Our company blog. Twitter stream. Press stories. My personal blog. We’ve collectively invested hundreds of hours across these channels, telling our story. To a candidate, this is our voice, values and personality.

Never underestimate the impact of your ‘public profile’ in convincing candidates.

Time invested: +100s of hours over +12mth period

Write Job Description

Are job descriptions important in a startup? Some might disagree, but we think they are critical, despite all the moving parts. First, they set expectations with candidates, and help with self-selection upfront (ie, so you don’t have junior developers applying for your CTO role).

Second, and often forgotten, is the internal importance. A thoughtful JD will align your team on where new players will fit, and how current roles will change.

Time invested: ~3 hours, including internal discussion.

Ask for Referrals

We leveraged the network. Everyone knows someone, and is generally happy to make introductions. We turned to email, every social network, and networking events.

I see this as an ongoing part of the role for a startup CEO. Even when not officially ‘hiring’, I’m investing time in meeting and tracking potential candidates. Dozens of coffees over a 3-6 month period could be tagged as ‘recruiting’ in some way.

Time invested: ~30 hours over a 3-month period, including all the coffee meetings in advance of actively sourcing.

Post Job Ad

Yep, we posted job ads. But only on two networks: LinkedIn and AngelList. Guess what? Most of our candidates came directly from these channels. And both of our hires were sourced from a single ad on LinkedIn.

LinkedIn job ads:  $395 + $100 promoted credits.

Initially this felt like a huge expense. But we can directly trace our two key hires to a single LinkedIn job ad. In hindsight it was our best investment.

A few lessons:

• Invest in promoted credits. One of our hires wasn’t actively looking at the time she applied. But LinkedIn showed her ‘a job she might be interested in’. She applied. We connected. #win
• Complete your company profile. It’s the first click for any candidate who sees your ad. If your profile sucks, and they haven’t heard of you, it’s unlikely they’ll click through to your site.
• Expect a mix of crap and quality candidates. Including some who don’t remotely meet your requirements. Have a system of triage to quickly sort the crap and jump on the quality. More on this below.

Both of our key hires were sourced from a single ad on LinkedIn

AngelList Talent

This is a free service from AngelList. When we initially started sourcing, it was a phenomenal source of startup talent. An incredibly high quality:noise ratio.

Recently, the noise has increased as more general candidates seem to have discovered the channel. It’s too easy for candidates to express interest (effectively, apply) But I know for a fact there are very smart people working to solve/improve this, and make it an ongoing source of startup talent. AngelList should be part of the mix for any startup looking to hire.

Source Passive Candidates

We couldn’t just rely on candidates from job ads. I spent countless hours sourcing passive candidates, mostly on LinkedIn. Sourcing is one of the true skills / activities most people think of when it comes to external recruiters.

My approach was pretty simple:

1. Run a few searches: eg, keyword: ‘growth hacker’, location: ‘San Francisco’, prior company: <redacted>.
2. Explore the results, including the column of profiles for ‘other people also viewed’.
3. Save profiles (using tags, notes and reminders), and send InMails to anyone who looks interesting.
4. Track all messages in a CRM/spreadsheet, and follow up as required.

This is easily one of the most time-consuming parts of the ‘active’ hiring process. It’s also one that can be easily outsourced to someone who knows what they’re doing (preferably on an hourly rate).

Time invested: +40 hours

Initial Screening (recorded video interviews)

Screening applications is incredibly time consuming for any founder-recruiter. But it’s one area we absolutely ‘drank our own champagne’.

We applied a rough heuristic:

1. Any candidate who applied but was ‘meh’ on paper (in terms of either experience or cultural fit) = immediately send to a recorded video interview. All founders viewed the video, and added feedback as required. Very few candidates made it to the next step after starting here. This let us avoid (unnecessary) meetings with over 30 candidates, who were clearly not a fit after watching their videos. Massive time-saver.
2. Any candidate who was ‘rockstar’ on paper = take directly to a coffee / call / Skype meeting.

Whatever your approach, develop a system to quickly triage every applicant. Your mission is to focus on the gold nuggets of potential, and minimise any wasted time.

Time invested = 44 video interviews (5-10 minutes each)

First Interview

Rockstar candidates on paper, or applicants with a solid video interview, we’d take directly to a Skype call. A video chat is more insightful than a simple phone call. It’s also far more efficient than an upfront coffee.

Some common high-level questions:

• Why are you interested in the role?
• Tell me about a time you…
• What are you looking for in 3-5 years?

At this stage, we’re primarily screening for cultural fit (including shared priorities and values), while digging deeper into specific areas of experience.

With our founding team split across two countries, the next step for exciting candidates was a second Skype with another team member.

Time invested:  17 ‘first-round’ Skype interviews (20-60 minutes each).

In-person Interview

Several of our top candidates were ‘remote’, looking to move to the Bay Area. This made live interviews a challenge. But there were several local candidates we met in person at this stage.

The in-person interview let us dig deeper on specific questions from earlier screening interviews. It was also the first chance to apply the ‘airport test’, which is a critical rule for any hiring decision:

How would you feel stuck in an airport with this person, if your flight was delayed by 6 hours?

Time invested: 18 interviews (50-60 minutes each).

Verify Skills

The best way to understand suitability for a role is a live working project. A genuine try-before-you-buy trial (eg, of a week or month) isn’t possible for most candidates, who will be working in full-time roles elsewhere. But a short working trial is possible. And highly recommended.

We ran 2 trial projects with our top candidates:

1. Specific growth project.

We asked them to develop a list of potential projects that would best demonstrate their skill, given a budget of 3-5 hours. Having them develop the list is helpful in testing their understanding of the ‘problem’, and where they see themselves adding value.

The project we mutually selected from the list was a conversion optimisation review for our website. This required a combination of strategy and tactics, and gave excellent insight into their working style, technical understanding and creativity.

2. Develop sales strategy.

For our more sales-focused candidate, we asked a more general question: ‘How would you plan and execute your first 100 days in the role?’

Again, we were looking for a combination of strategic thinking, tactical execution, and hustle.

Time invested: 3-5 hours from each candidate. 2 hours of discussion once projects were completed.

Reference Checking

At this point we had narrowed the field to two options. We were serious in our interest, and ready to learn more from their prior work experiences.

References can take two forms:

1. Provided by the candidate. Obviously, no candidate will provide a referee with a negative opinion. But these references still offer critical insight. Verbal cues, pauses, and side-comments provide invaluable information. We recommend completing them for every genuine candidate.
2. Back-channel references. These are more sensitive, and also more valuable. We scoured LinkedIn to find mutual contacts with our candidates, removed by one degree. That is, a 1st degree contact who could introduce us to someone our candidates had worked with.

Most startup candidates will understand the need for back-channel references. But you need to be sensitive, and apply common-sense. Don’t contact someone at their current company. And assume your investigations will get back to them at some point.

One of our back-channel references was amazingly helpful and insightful. But he immediately contacted our candidate to tell them we called.

Time invested:  3 hours searching LinkedIn for mutual contacts + 2 hours of reference calls.

Final Interviews

It’s hard to draw the line where ‘final interviews’ began. At some point our calls and discussions moved from ‘probing’, to more of a discussion of mutual fit. Up until the time we made offers, we had a total of:

 Candidate 1:  6 calls and 2-hour breakfast

 Candidate 2:  6 calls, a 2-hour meeting and a dinner with partners (their’s and mine)

There’s no right number of calls or interviews. In our case, it was a balance between building enough insight and confidence into their ability and fit, without wearing them out. We faced an extra challenge that both candidates lived outside the Bay Area, and our other founders are on the other side of the world. In a perfect situation (local founders interviewing local candidates), these numbers may be much lower.

Negotiate Offer

OK. We did it! Found not one but two great candidates, and were ready to make offers. All done, right?

Nope.

Negotiating the offer for a startup role turned out to be almost as fraught and time-consuming as the selection process.

Really? Well, think about what you’re asking highly qualified people to do:

• Take a career risk on an unknown company
• Take a significant reduction in salary
• Place faith in a team they’ve met only a few times (and not all in person)
• (In our case) move across the country to do it.

Hopefully by now you’ve convinced them on the vision and potential. But eventually, raw numbers do come into play.

In our case, there was was no formula or rulebook. Our approach was highly personalised to each candidate, and based on a simple premise: We had identified genuinely awesome people, who fit our culture and could make a significant difference to our business.

In hindsight, we did a few things right:

• Being completely transparent about what was and wasn’t possible.
• Sharing external benchmarks for salary and equity. This added some objectivity to sensitive discussions. Another shout-out to AngelList, whose Salary Tool is incredibly helpful (once you remove a few crazy outliers from your comparison).
• Taking time to understand their priorities, constraints and personal circumstances.
• Always, negotiating in good faith. Your negotiating style gives candidates deep insight into your style as a founder (and vice versa). Ultimately, we wanted them on-board, with no bad blood or resentment about the outcome.

I believe this helped immensely in building a strong relationship well before the start date.

Time invested: +20 hours, covering discussions with candidates, internally and external advisers.

Hire

In my mind, the ‘hiring’ stage starts from the time candidates accept your offer. This is also a nontrivial commitment in time. If you haven’t already, involve a lawyer. You need:

• Offer letter
• Proprietary Invention Assignment Agreements (PIAA)
• Options plan setup
• Various HR compliance steps.

We also used Zenefits to manage this process, which takes 99% of the hassle out of all this compliance. Upload your offer letters and legal agreements. Zenefits looks after e-signatures, storage, and compliance documents ready for your new employees to hit payroll. #win

On-boarding

On-boarding new employees is the topic for another blog post altogether. And we’re only halfway through it. There’s the process of getting new employees up and running (tactical on-boarding). Then, the softer stuff of sharing team norms, and understanding their work and communication styles.

For what it’s worth, our tactical list includes steps like:

• Adding to GoogleApps: email, calendar, GoogleDocs
• Adding to shared Dropbox folders
• Adding to our Yammer account
• Creating logins for the necessary SaaS services (email marketing, CRM, Google Analytics, etc)
• Adding a desk in our coworking space
• Sharing our most critical ‘current’ documents on strategy, product roadmap, priorities etc.

Interestingly, all of these costs for us are completely variable (‘something-as-a-service’). I shudder to think what this list would look like if not building a startup completely on ‘cloud’ services.

Job done. Two awesome hires. What can we learn for next time?

 

3 Lessons as a Startup Founder-Recruiter

1. Hiring properly takes time

The hiring process is seriously time-consuming. I invested the majority of my time, effort and emotional capital to recruitment over a 2-month period.

But according to people smarter than me, building the team is 1/3 of the job for a startup CEO (the other two-thirds being driving the overall strategy and keeping enough money in the bank). Invest the time to do it properly.

2. ‘Recruitment’ is not a single, one-off activity

The hiring process involves a multitude of steps. Each requires different skills, focus, and time. Some parts of the hiring process are harder than others. And rarely will someone be outstanding at all of them.

If you believe these statements (as we do), then there’s huge opportunity to develop a more modular, skills-based approach to the ‘service’ of recruitment. One that allows companies to access the right support at any stage of the process. And be more selective about what steps they outsource vs insource.

3. Software helps, but recruitment requires real human effort

We’re fortunate in knowing a few things about recruitment. I know many founders are less so. We also used our own tools heavily (eg, video interviews) to be more productive, with better results.

Next time, I’ll look to ‘outsource’ steps that don’t require my 100% attention. For example, sourcing passive candidates. This is an incredibly time consuming activity that doesn’t require my personal involvement for a great result.

Luckily, I happen to know a few excellent recruiters who can help me in this way, charging only for the time they invest on the specific task.

Want to learn more about RecruitLoop?  Check out RecruitLoop’s Blog or connect with them on Twitter @RecruitLoop