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Startup Challenges: Recruitment

May 7, 2007 | In: Uncategorized

One of the key questions an entrepreneur faces is about recruiting the team with right talent and focus, as nothing can be more detrimental to the success of a startup than lack of right team with right passion and focus, and unlike a giant corporation, you as an entrepreneur can’t afford to loose any guy in your long walk to success.

However, for a person who is planning to embark a career with start-ups, there are always temptations to work with those big companies and have a sense of stability and perceived peer respect or to be part of a dream, which might not be a 9 to 5 job but may bring great challenges and excitements, which one might not get while selling sugared water or being a super support staff to some global backoffice.

Amar Goel, Entrepreneur and founder of Komli – a technology and media company in advertising space - discusses challenges of working with startups. Read on the following interesting article by Amar Goel: -

Read on following interesting article by Amar Goel

“Are you marrying me or the company?” One of the engineers on our team at Komli told me that the other day. This is probably one of the best lines I have heard in a while. He was talking to one of his friends about joining a startup and his friend was concerned that if he joined that startup his parents and his fiancé’s parents would be very concerned about the stability of his job; they might even break off the engagement. The engineer on our team didn’t understand why everyone was so focused on his friend’s job.

When I got engaged I was actually unemployed. I had just left the startup I had previously founded when I graduated from college (Chipshot.com, an online e-commerce company focused on golf), and was figuring out what to do next. Nobody called off the engagement or threatened or even hinted at it.

This stark contrast helped me realize a huge disconnect in India’s ability to really innovate and build companies like Google, Yahoo!, Microsoft, and Oracle (interestingly enough, all four of those companies – four of the best technology companies ever started – were all started by people who dropped out of school and NEVER had a full-time job before they started their companies). Generally speaking, youngsters in India are still too concerned about the stability of their jobs and getting married.

There are both logical and emotional arguments to why this might be the case. I am going to present some thoughts on why this concern with job stability just doesn’t make sense if you are really good at what you do and are confident in that.

Reason #1: The spoils go to those that take risks — the ones who work at startups, very early on.
Microsoft is the most successful technology company of all time (though Google is hot on its heels). The first guy at Microsoft made about $50 billion (Bill Gates). The second guy (Paul Allen) made about $25 billion. Steve Ballmer who was one of the early few and joined in a leadership role made about $15 billion. If you were in the first 50 people and got 1/10th of 1% (common for a startup today) you made about $200M. So the first guy made $50B, the 50th guy made $200M. Guess how much the 1,000th employee made, probably about $20M. And the 10,000th employee maybe made $2M. This is in the most successful technology company of all time.

If you want to make some serious money and you join a really good company (where the numbers will be 1% of Microsoft’s) as the 10,000th employee or even the 1,000th employee you are not making the right decision – the math just doesn’t work in your favor. If you want to make some serious money you have to take some risk and join something early, at least among the first 50 employees. I’m not saying that every job you take should be at a startup, but if you never do it, it’s going to be hard to make serious money in the tech industry, unless you work for 20 years and climb to the top of a big company.

Reason #2: The right startups are not that risky.
What is the worst case in any startup if you are not the founder? The startup goes out of business. Your downside is that you have to find a new job. Going back to my original caveat, if you are good at what you do and confident about your ability, then in India it will be relatively easy to find a job. India’s overall economy is growing so fast (2nd fastest growing economy in the world in 2006), and the hi-tech industry is growing even faster, that most people seem to get a 25% pay increase when they jump from job to job anyways. If you add in to that a startup that has a good working environment, good management, good investors, good customers, and you feel that the products are useful then the risk is dramatically reduced. You’ve gone from a 5% chance that something good happens to a 35% chance that something good happens (I made those numbers up, but you get the point).

I know a number of people in Silicon Valley who have made a career of working at startups, and are fully aware that some will be winners, and most won’t. They figure if they work at 5 startups over 10 years maybe one or two will be successful and that’s more financially rewarding than working at an already successful company as the 2000th employee. Crucially, for all 10 years they were excited about the work they were doing. Here is what Paul Graham, a well known entrepreneur and writer, has to say about this: “Economically, you can think of a startup as a way to compress your whole working life into a few years. Instead of working at a low intensity for forty years, you work as hard as you possibly can for four. This pays especially well in technology, where you earn a premium for working fast.”

Reason #3: Often that stable job isn’t so stable.
I have seen a lot of people go to the stable company and then leave after 1 or 2 years because they just don’t like the work or the company. What is the difference between joining a startup that you like and the worst case happens in 2 years versus you join a “stable” company and in 2 years you leave because you don’t like the work?

Reason #4: Do you want to make your parents happy by a) always working at a stable job or b) potentially being Narayana Murthy (who took a lot of risk to start Infosys and almost went out of business early on)?
I’m serious. Wayne Greztky, probably the greatest ice hockey player ever, once said “You miss 100% of the shots you never take.” I’m lucky to have a wife who tells me “The only thing worse than failing is not even trying.” I’m sure you are saying “Amar, you don’t understand, you don’t know my parents or my in-laws, or it just seems too risky to work at one of these little startups.” You are right, I don’t understand. You get more ownership of the work you get to do, you can make the same salary as a big company, you get a meaningful percentage of equity – what’s not to like?

Reason #5: It is probably the best time in the last 25 years, if not ever, in India to start a company.
If you are smart, have a good idea, and can assemble a good team, then statistically, you have a lesser chance of failing today and in the next 10 years than at any time in India’s past.
India has entered a period of fast and sustained economic growth, as long as the government keeps on its current path of increased economic liberalization. With a demographic bulge in the 10-25 year age bracket, the country is virtually guaranteed a consumption boom for the next couple of decades. There are so many industries in India that are already growing at 20-30% per year. More opportunities will also open up as the government makes hitherto closed sectors open to private sector participation and competition. With a fast growing economy, solid worldwide economic growth, and a large talent pool at your disposal, it has never been a better time in India to start or join a startup as an early-stage employee.

What does this all mean for India?
In the US there are tens of thousands of people employed at startups, working hard to innovate and build products and services. The US has tens of thousands of hi-tech startup companies. India has a few thousand. It’s unlikely that India’s thousands of tech startups are going to create more winners than the US’ tens of thousands of hi-tech companies, the US just has too many more chances at success since it has so many more startups. If you think the US example is too far-fetched in that the US already has it good with great infrastructure and a society that is historically not as risk-averse then just look across the border to China. China’s economic growth and pace of innovation over the last two decades has been stunning; in large part this is due to the entrepreneurial culture that has taken hold among the young. What is really interesting about this is that China was traditionally as hierarchical and custom-bound a society as India.

Until India’s culture begins to shift to embracing risk takers rather than eschewing them it will be difficult for India to become the global technology leader. Surely society plays an important role here, but the easiest way to begin the transformation is for each individual to look within and really understand and push her own risk appetite.

About the writer
Amar Goel is the CEO and Founder of Komli, a startup in the media and technology space trying to simplify online advertising. It has offices in Bombay, Pune, and New York. It is currently hiring India’s best and brightest.

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2 Responses to Startup Challenges: Recruitment

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Young Indians are Risk-Averse « ???? — The ChinaBhai

May 31st, 2007 at 12:35 pm

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Anurag Sharma

July 24th, 2007 at 2:14 pm

It was nice reading your views! GIven me some courage to work on new projects! The website I have mentioned is under construction! I am Month time you will be able to veiw the website!

I am student in Chinese language school!

Regards
Anurag Sharma

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