The P for People and 3 Deadly Mistakes Startups Make

If you have studied Management or Economic you have already heard about the 4 P’s of a business: Product, Price, People and Profits. In startup’s world where the founders are techies the product is where all the energy goes into. Price and Profits are not much in the picture, especially in the initial stages of the company. Many startups don’t even know their business model and how they will make money, let alone having an idea about the right price for their product. No judgement in that. In the early stages we all know the company is driven by the passion to create, revolutionize or build something that adds value to other. Hence getting the product right, getting traction or users to use it, take their feedback takes all the energy that we have in the 16 hours workday.

We mentioned 3 P’s. What about the People in the 4th P.

What strikes me the most is that a large number of the startups, especially in India, regardless of their funding stage, regard this People piece ( the forth P for People) as the least important. Hence, they either try to ignore it or hire a Recruiter to take care of that. Though it might seem necessary to hire a Recruiter, the founders should really make it their business to make this person as knowledgeable about their business as they are. How can you leave your “baby” in the hands of total strangers and expect them to bring it up per your values? That never works.

We as a marketplace for tech hiring interact in India with 150+ startups on daily basis, supporting them in receiving the CVs of candidates sold on the idea to work for their company.

What we see often regarding the P for people is 3 major mistakes that most of the startups make. We believe that if a startup improves any of these 3 mistakes, it will not only experience an extremely easy hiring but will also be able to build a great brand in its early stages.

Pitfall 1: Leave it up to the Recruiter with the “ostrich strategy”

In this case the company hires a Recruiter who has poor understanding of the business, product and the purpose of existence of the company. Hence the Recruiter is unable to evaluate the quality of the hires, selling the company to interested candidates and worst of all leading salary negotiations when making an offer to a candidate. To make matters worse, this same Recruiter will also switch off his phone or become very sick and leave all of his duties, hot candidates pipeline to just lay dormant. We call this the “ostrich strategy”, just put your head in the sand and pray the mess goes away. After a few days of disappearing, phone is switched on again and the Recruiter behaves like its business as usual. Only difference is, all those interested in your company candidates lost interest and accepted another offer, your partners supporting you in the recruitment decided to stop supporting you and left you to collect the pieces yourself.

On our marketplace, we see a ratio of 1:5 (good recruiter vs recruiter mudding the waters). Hiring agencies, marketplaces and other recruiting partners very quickly leave such startups to deal with their own mess on their own. Hence hiring talent for such startups, becomes difficult, painful, expensive and worst of all kills your brand before it even got any traction.

Pitfall 2: Excruciatingly long and messy hiring process – “the procrastination game”

In this case the startup keeps interviewing people, not taking any decisions even though the Hiring Manager or co-founders might have already settled on the right candidate. This lingering on, not being sure what to do puts off interested candidates, especially the ones holding multiple offers. Selling your startup to them becomes pointless. You ruin your brand. The average hiring cycle from receiving the CV to making an offer has decreased from 30 to 15 days. We believe that in the coming years it will decrease even further, as the Global demand for techies will keep increasing in a hockey stick line to the year 2040.

On the IT World Web.com marketplace we see that 1:2 startups are very good at playing the procrastination game, keep lingering on, not taking decisions and at the end not hiring anyone for months in a row.

Mistake 3: Attitude and Ego. “I pay you shut up and deliver strategy”

As a startup founder, you very often might not realize that you need “friends in all places” who will help your company get sold to your future employees even when there is no brand equity to speak of. Like I heard once, your success is not about who you are, but about who you know. With this I mean your relationship with recruitment agencies or marketplaces like IT World Web.com where they have a large network of candidates and do the heavy lifting to find candidates and convince them to go further in your recruitment process. What we often experience is a massive amount of arrogance and too much of attitude from co-founders when they communicate with anyone from the recruitment industry. I also believe that many of them are not even aware of how hard it can be at times to find candidates, let alone convince them to work for their startup that has no impressive track record, no impressive product and no brand. The way you behave as a co-founder towards your business partners sets the tone and behavior conduct within your company. Tomorrow, the people who could help you ramp up your company’s hiring and sell the job opportunities to talented candidates might not be there to back you up.

On the marketplace, we see 1:10 startup founder or their HR / Recruiters or Hiring Managers being disrespectful to recruitment agencies, until the moment they start looking for a job for themselves. They you see a different personality all together.

The P for People in a startup is the lubricant needed to make the engine of the company run. If there are no talented people in that company, there might not be any funding, breakthrough products or even a business to speak of. I read somewhere that in Silicon Valley, hiring a techie with good pedigree can add up to a million dollars in valuation. Hence the desire of Silicon Valley entrepreneurs to hire the best in class.

As an entrepreneur in the recruitment space, supporting hundreds of companies in India and Europe in their hiring, I advise you to really make some massive changes if you recognize you are falling short in any of the 3 areas. By making small adjustments in these areas, I promise you, you will see your business turn around and flourish, without costing you even a rupee.