Startup hiring is hard
I often get asked, was starting Yonder as hard as you expected? The answer is yes, but not in the ways I expected. Fundraising is hard, building a product is hard, but the hardest? Hiring.
Building an early stage team is almost impossible. You need to find the most talented people, who are willing to work twice as hard for about half as much compensation, for a company that is statistically likely to fail. But it’s these first few hires that will determine the success or failure of your start-up.
We’re super proud of the team at Yonder and I wanted to share some practical learnings on what we’ve done (and learnt). I don’t have empirical data to know whether our approach was right or wrong but hopefully it’s useful for other people building early stage startup teams!
Fill your talent gaps
So we had a general principle at Yonder that we only wanted one person per area of expertise needed to build Yonder. That means we explicitly have no redundancy if someone is sick or away - it’s operationally tough but it means we can build the smallest team possible (I’m a big proponent of small teams).
It sounds obvious, but we specifically looked at hiring people to fill talent gaps that we as three co-founders had. My background was in consulting and product, our CTO was in tech (but mainly backend), and our Chief Risk Officer was in data, risk, regulatory and financial services.
That means we were seriously lacking on the creative side and so the first couple roles we hired was a marketer and product designer. We later added a mobile engineer and backend engineer, breaking our first principle with the additional backend engineer. Building a credit card is incredibly backend intensive, so two backend engineers significantly improved our build time.
The next four roles were customer support, finance, partnerships and another mobile engineer. Every startup will be different, but we found these roles helped us to have good coverage across all areas of our business. We only hired these roles when we were much closer to launch and the workload was beginning to break us (literally). All in all, we launched Yonder, a fully fledged regulated credit card in less than 12 months with 11 people.
Know the level of experience you need
There’s always a tricky debate on what level of seniority do you want to hire for. Some founders typically index on a less experienced team that have hustle - and it’s worked for companies like Uber in the early days with their ‘market launchers’. In general I was looking for a level of experience that could lead their function independently but still loved getting their hands dirty. That means no C-level executive experience, but also not completely inexperienced team members - most of our early team had at least 6-7 years relevant experience (but everyone happily got their hands dirty writing FAQs, taking out the office rubbish, manually testing the App etc.). This has definitely helped us as we think about how we scale the team, we’ve now got great functional leaders across the team.
Look for generalists
For example, Rachel who leads our member support team isn’t a chargeback specialist, but she’s got great experience in team leading, fraud, customer service, and crisis management. That means we sacrificed deep specialisation for people who could do everything. We did this because we weren’t entirely sure what types of expertise we needed until we actually launched the product. Generalists build startups.
Where to find your unicorn talent
One of the challenges you’ll face early on is having very little credibility, presence or track record to bring in the type of team member you really need. So you need to hustle and overcome these headwinds by using your effort, persuasiveness and network to good use. You really can’t outsource recruiting in the early days.
Your early team represents a massive part of your culture, more than your founders! I still meet great people 6-12 months before we’re hiring for a role, most exceptional people aren’t looking at the exact same time you have a role available so I find it helpful building these relationships over time.
We found all of our early hires through referrals
So here’s how we built our early team. You might notice a trend…
- Design Lead – Personal Referral (former colleague)
- Head of Marketing – Personal Referral (advisor)
- Frontend Engineer – Personal Referral (advisor)
- Backend Engineer – Angel List
- Partnerships – Personal Referral (investor)
- Finance Manager – Personal Referral (friend)
- Customer Support Lead – Personal Referral (former colleague)
Job boards aren’t effective
Tools like Otta, Cord, LinkedIn, WorkInStartups can be useful, but they didn’t work for us early on. Partly because candidates are comparing roles primarily based on compensation, something we just couldn’t compete with as an early stage start-up.
Recruiters aren’t effective
We tried outbound recruiting, but we didn’t successfully recruit anyone through this approach either. They’ll charge 15-25% commissions and we just didn’t get any great talent through them.
How to convince them to join
If you have a brand name like Google, Facebook or Amazon, getting applicants isn’t the hard part - it’s finding the best people through the applicants. If you’re a pre-product start-up, getting people to apply in the first place is the hard part. We were fortunate enough to have tier 1 seed investors, but even then, no one knew who we were (and our website was terrible).
Don’t forget, they’re interviewing you too
In the early days, you’re selling yourself (not the company…because well let’s be honest the company barely exists). I treated all our initial hiring chats with people as an opportunity for them to learn about Yonder (as much as it was an opportunity for me to learn about them). We typically would spend between 30-45 mins and split the time 50/50 across them asking questions to us, and us asking questions. At this point, you’re doing a lot of pitching.
Be upfront about your expectations
I think at this point it’s also worth being upfront with the expectations - I tried to be clear to everyone that the job isn’t going to be 9-5, it’ll most certainly be one of the toughest jobs they’ll have in their career, but definitely the most rewarding. Building a start-up is unbelievably hard and we’d rather people opt-out of the process early on, then having them opt-out 6 months after they’ve joined.
How to run your recruiting process
Our recruiting process was adapted from places like Google and ClearScore, it’s fairly well trodden process and so we didn’t try to reinvent the wheel.
- Job Description: Hiring manager wrote a very detailed job description with as much information about what was actually involved in the role, what good looked like, and salary bands. We created a Notion page with information about our company and the jobs we had listed.
- CV/LinkedIn Screen: Hiring manager was responsible for reviewing the CVs or LinkedIn of people that applied (or we spoke to). We wanted to do things like anonymising the names of people to eliminate bias but with 3 people (and no Applicant Tracking Software), it was practically impossible to do it.
- Four stages: We did the hiring manager chat first, and then aimed to do the next three rounds as close together as possible (often in just one day). The hiring manager was responsible for scheduling the interviews and also transparently explaining the process to whoever we were interviewing:
- Hiring Manager chat: This was typically 30-45 mins and could often be an informal coffee chat, walk, drink at a pub, or a call
- Job fit interview: We had two people do a job fit interview which focused more on the technical aspects of the role, drilling down on the candidate’s experience and seeing whether they could do what was required of them.
- Values fit interview: We had another two people do this (which in a small team…could be the same people as the job fit interview), and this was focused entirely on values fit inline with our principles. We emphasised this wasn’t about the technical skillset, but more about the alignment with our principles.
- Case interview: The last was a hypothetical case study that people could either do as a take-home, or a live case with preparation time ahead of time.
- Consensus: We then asked all the interviewers to give a ‘thumbs-up’ or ‘thumbs-down’ on whether we should give this person an offer. Neutral wasn’t allowed, and we asked everyone to close their eyes to avoid biasing another person (think about when you’ve played scissors-paper-rock). Everyone would share their feedback and the hiring manager would make the ultimate call, they didn’t need unanimous thumbs-up to hire someone.
- Offer: We aim to make the offer within 24 hours of making a decision
How to think about compensation
Compensation is a bit of a touchy subject but our personal experiences of pay discrimination and painful salary negotiations meant we wanted to take a slightly different approach. From day #1 we implemented transparent pay bandings with publicised salaries and stock options.
We knew we couldn’t afford to pay as well as other companies, we’ve taken a capital conservative approach from day #1 and we figured that given pay benchmarking data was widely available, we’d be honest with people upfront that we underpaid relative to market rates. We also shared how we’d adjust our pay bands as we raised more capital, e.g. Seed raise and Series A raise.
If we paid market rates, our cash burn would’ve easily been 50% higher - which would ultimately jeopardise the success of the company; and we weren’t willing to compromise on the level of talent we wanted.
Give them ownership
With stock options, we offered everyone a stock option (in terms of a £ amount) multiple of between 0.6 - 1.0x their salary depending on seniority with a standard 4 year vest. We explained the stock option grant through different exit scenarios so people could understand what this actually meant in terms of financial outcomes. We encouraged people to do their own research in terms of probability of different exit scenarios so they could make an informed choice.
Hiring takes a long time, but it’s worth the effort
We didn’t actually ship much in our first couple of months of Yonder, we spent about 70% of our time on hiring in the first couple of months. We screened over 1,000 CVs and interviewed about 200 people for our first 4 hires. It was incredibly time consuming and we probably weren’t as efficient as we could’ve been, but it was worth the effort.
If you think about it, your first few hires, hire your next 10 hires, who then hire your next 30 hires, who then hire your next 60 hires, who then hire your next 120 hires. Getting it right increases your chance of being successful exponentially.