22 March 2023
Hiring Playbook for (very) Early Stage Startups Australia New Zealand
This playbook was put together by Annie Liao & Archangel Ventures
Thank you to our core collaborators in the ecosystem for offering you time and knowledge on this subject:
Tim Atkins (My Startup Gig, CancerAid)
Dan Brockwell (
Earlywork),
Matt Bauerochse (Outhire AI),
Sabrina Zeng (Fishburners),
Yash S (Lyka),
Mohamed Ismail (Hatchery),
Nicholas Clancy (FitFocus),
Rena Zhou (Insidelane),
Michael Batko (Startmate),
Ethan Catzel (Canopy Study),
Jacky Wong (Relevance AI),
Daryl Lim (our SEA expert).
What's in this article
Why is it so hard to hire (very) early stage
Hiring is and continues to be one of the biggest challenges faced by (very) early stage startups.
Nick, the founder of FitFocus summarises this: “Hiring as an early stage startup is very, very hard as there is lots of inherent risk, no brand reputation and it is hard to find the right person that aligns with the vision and mission” (FitFocus, pre-raise). Tim, the COO of CancerAid and Founder of My Startup Gig, agrees - "The first 20 people are critical to a startup's success, which makes attracting the top talent an important problem to solve. The challenge for early startups is they can work exceptionally hard to create a great company and culture, but for potential new hires looking in, that counts for nothing. Pitching the startup's opportunity to new hires becomes a key role of management."
CBInsights survey shows that hiring is the third highest root cause for startup failure, intuitively, this has waterfall impacts on all other pillars too.
We forecast hiring at the early stage will remain in steady state in Australia in 2023, despite scary “tech layoffs”. Dan from Earlywork notes, “Even in a tough market, there are a bunch of strong startups raising fresh funding or growing quickly. Economic headwinds don’t affect all industry segments and roles equally…”.
Data from My Startup Gig supports this, showing movement is in line with startup with economic conditions. The State of the Australian Startup Funding Report findings supports this projection, with funding in early stage smaller deal sizes increasing from 380 to 428 (despite overall funding decreasing in 2022).
Overview of the mysterious hiring process
To put some structure to this, we came up with a hiring framework and tested this with many founders, VCers and existing literature.
The hiring process is split across four stages, and when executed well can be closed over a 1-6 month timeframe.
Yash, the People Associate at Lyka, highlights this is dependent on both the type of role hired for (seniority) and secondly, the primary hiring method used (in-bound, search or hybrid - most businesses do a combination of both). For Junior roles, this process tends to be much faster because it is slightly easier scoping out the role building the candidate pipeline over 1-2 weeks vs ~1 month for a more Senior role. Moving candidates through the interviewing process itself is the most lengthy of the stages.
Off the back of this, we asked founders what the most painful steps in this framework are and deep-dived into these (80/20 style). We go deep into the four blue starred (below) but let us know if any others are of value and we can explore further in another iteration 👇
Deep-dive into top four pain points for hiring
1. What role to hire for and how to sequence hires?
Scoping and understanding the role you are hiring for is intuitively one of the most critical steps in the hiring process.
Yash attests to the importance of ensuring you and your team (talent partner, hiring manager and/or the relevant team the role sits in) understands why the role is being hired, i.e. what is the genuine business this role will be solving for in the immediate to medium term (3 to 12 months). As you scope out the role, Yash suggests starting with your most ideal profile for the role and work your way down the list of requirements to understand what you’re willing to flex on based on your must haves vs nice to haves.
🔥
Yash’s hot tips for this: “
The earlier you are in your scale up journey the more likely you’re going to want to hire people with a strong action to bias. They generally tend to be comfortable iterating and failing fast which is a key learning mechanism for growth. More broadly, you want to look at hiring people that are generalists and able to work across multiple different functions and/or sub-functions. However, as you grow, you’re likely to need to start hiring more specialists / experts across the board. Don’t be afraid to hire high potential junior-mid-level doer’s. They can turn out to be your best hires as you scale because they’ll ideally have 1) deep understanding of how your business works, 2) they’ll continue to be in the detail as you scale, 3) they’ll have strong relationships with senior / cross-functional stakeholders that they can leverage as they potentially grow into managerial roles. Essentially, flexibility is key. Flexibility in role scoping process, hiring and interview process and evene when you’ve hired someone. Be open to questioning yourself at all times and ready to pivot if needed.”.
📖 More vetted resources on the topic, including some great resources from Think&Grow
here.2. How to make the company “attractive” with no prior brand goodwill
We address this conundrum by breaking it down into “pull” factors i.e., actually making the firm more attractive, and “push” which is how the startup is perceived publicly.
On the pull - how do you uplift internal firm culture and value proposition.
Yash gives us his recommendations based off his learnings at Lyka, where they use a mix of “soft” and “hard” rules as they scale and are seen as “best in class” by many:
Understand your companies WHY, not at a fluffy high level, but more about genuinely deep-diving 4-5 layers deep to flesh out your mission statement - make sure to engage your broader team in tightening this up as each of your early team members are, in an ideal world, going to be your biggest brand ambassadors - if you don’t have this / or are struggling to articulate your deeper WHY, you’re much more susceptible to poor employee engagement
Each individual you hire during the early growth phases needs to be a culture carrier, that is, you (the founder / senior leader) should not only be able to trust their way of thinking, decision making and cultural add to the business but are able to potentially connect with them outside the workplace. If they’re not, as you scale, you’re likely to slowly but surely water down the cultural impact of your early employees (let’s assume you don’t want to do this) which is going to result in your culture pivoting whether you like it or not. To flag, there is nothing inherently wrong with this. You just need to be aware of the type of culture you’re building and be able to be the driving force behind this with no qualms.
Tim adopts a similar approach at CancerAid: "
When the startup is small, you're reliant on your team to be brand ambassadors, who will only bring in people from their network if they're truly engaged, feel respected and love what they do. It sounds simple, but taking the extra time to develop an empathetic culture is worth its weight in gold - often in the form of exceptional network hires."📖 This is just the tip of the iceberg, Yash has linked us some useful things here along with some other research
here.On the push - how do you improve the presentation of the startup? Notably,
“Hiring the right people is a process that starts long before getting the job ad up. It's about consistently showcasing the story behind the brand, and bringing to life what a career in your company could look like…” (Rena, Insidelane)
🔥Some hot, tangible tips:
🔥 A key unlock for this is the job description itself. JDs for startups are very different to corporates, but follow a standardisable template. A recent point of contention has been the inclusion of salaries in JDs. Michael Batko, recently deep-dived into this (see below for results). The overall consensus is to include a salary range, with more interesting perspectives on the topic
here.
🛠️We have compiled a “
job description template in one minute” tailored to early stage startups which you can customize and paste into trusty ChatGPT. Link to the template and instructions
here.
3. 7 of the best hiring methods broken down and ranked
We’ve created a manual for all the different hiring methods and stack ranked them based on cost, efficiency and speed. Recommend going through this list top to bottom to build your candidate pipeline.
You need a targeted method to build you candidate pipeline in 1-2 weeks. Jacky Wong, who helped scale the team at Relevance AI remembers
“[they used] everything to hire…. Friends, previous woworkers, ex-project partners, external recruiters” (Relevance AI, Seed stage).
According to Mo, the founder of Hatchery
“[hiring is] a manual process… consists mainly of outbound; there is no inbound at this stage… [methods are mixed with] first hire was made via personal network and the second was via Earlywork. LinkedIn comprises, we found, mainly of low effort applications” (Hatchery, Pre-raise).
There are companies like
OutHire AI who are solving this manual problem. But in the meantime enjoy the below recommendations from our experts and resources!
🔥
Three hot tips from our experts here, before we go into our seven step framework:
“Diverse hiring is essential for startups. A diverse team brings varied perspectives and experiences, leading to products that appeal to a wider customer base. So, prioritize hiring candidates from diverse backgrounds from the beginning.” (Matt, Outhire AI, pre-raise)
"Make sure you have a strong balance between standardised documentation (job briefs, interview structure, job ads) and personalised assets (interview questions, job ads, social posts) for the role(s) you’re hiring for. At the risk of sounding slightly corny (see: Simon Sinek), tighten up your WHY the role is needed, WHY a prospective candidate should join you on your - don’t shy away from sharing the hard truths and the super fun facts about working at a fast growing and scrappy startup. It’s difficult but extremely rewards - there’s nothing more satisfying than seeing tangible growth day in and day out” (Yash, Lyka, Series B)
"I agree with Matt. On the flipside, a non-diverse team (and particularly management team) takes a long time to redress. So make sure you keep an eye on hiring biases and the make-up of the team from an early stage" (Tim, CancerAid, pre-Series A)
From our research, there are seven ways you can hire:
1. Personal, referral and extended network - the most effective way to hire across dimensions is from those first and second degree connections… And also leveraging those “value add” VCs ruthlessly 😉.
🛠️ We have created a customizable out reach template you can use for this in your network
here
Case study for personal network, for Hatchery's first hire, Mo leveraged Michael Seibel's (of YC fame) method of "write [sic] on a piece of paper 10 engineers ranked in descending preference, traversing personal, then professional spheres. Start with number one and offer a concrete and committal provisional offer to set the tone ...”.
Case study for extended network (referrals and references) - this is one of the best ways to hire and very scalable. According to Matt B, “ a lot of companies have internal referral programs… e.g., do you know anyone in your network that you could recommend and we will pay you $5K if you past probation” (Outhire AI, pre-raise). Jacky W, from Relevance AI backs this, recommending that “referrals help a lot, because it gives a layer of credibility and trust that isn’t otherwise there through an external recruiter” (Relevance AI, Seed).
Case study for VC network - Rayn mentions how Archangels have proactively put members of their Portco in touch with a sales expert who previously scaled a sales team. If you are VC backed, it’s definitely worth leveraging this lever.
2. Talent communities - there are many talent networks which vary by demographic. These networks can often be “hidden”, and high value as these are where the most engaged “subject matter experts” can often reside!
🔥 According to Matt, “Professional communities that use communication platforms such as Slack and Discord offer an outstanding chance to interact with and recruit talent. The members of these networks have a strong passion for their profession, and they belong to the category of passive candidates who usually do not proactively look for job opportunities on job boards” (Outhire AI, pre-raise).
We share some top resources to hire from talent communities below:
🛠️
Here is a customizable template you can use to post in these talent communities
🛠️ We’ve created a database of 15+ well known talent communities
here, including filters for the communities and talent pool sized and for specialist to post in e.g., Girls who code. If you have any additional communities to add, link
here to the form! Sneak peak below
3. Job boards - the most efficient way to reach a wide audience quickly is through job boards. The best way to do this is through My Startup Gig, which aggregates all startup job boards and automatically pulls jobs from your careers page. My Startup Gig has around 95% of active startup jobs on the one website. According to Tim, “For many of our users, it’s the only place they check each day for new startup jobs”
🛠️ You can access My Startup Gig
here
VC firms also have their own separate job boards, where especially if they have there own Talent Community like
Folklore, can be a great platform for advertisement!
4. Events and meetups - higher effort but great for sourcing for specialised roles and streamlining the interview process (allows you to vibe and culture check early)
For key events, you can find them through
here (thank you Startmate for putting this together!) or through
here. A great ecosystem connector in Sydney in particular, is
Fishburners who have regular events, for Melbourne, following
Dickie Currer always shares round ups of interesting events too!
5. Outbound passive - the sneaky “hidden talent pool” for hiring. According to Rena, “The best talent are the ones that aren't looking”. Usually use this where you want more senior hires that have some industry experience or degree of specialisation / are proven. You can do this through:
Go on LinkedIn and direct message connect the individual by filtering on key words. Some top companies founders enjoy poaching from are (these companies please don’t roast us!): Canva, Google, BCG, Atlasssian, Uber etc.
🛠️ We have created a cold out reach template
here you can tailor for your needs for this. Happy inmailing!
🔥 Hot tip from Ethan (Canopy, pre-seed), is to get your CTO to reach out to technical hires if you are hiring technical, this results in increased candidate conversion rates and provides a more friendly face. Also try get warm introductions greatly increases the success rates of this.
6. Social media
As Ben has mentioned, time this around a raise or company announcement. Next Chapter’s hiring for interns post
here is a great example of this done well!!
Hot tip is to post through your personal account (often has more (and different) reach than company pages). A great example by Jacky W from Relevance AI
here
🔥 Hot tip from Ethan (Canopy, pre-seed), is to get your CTO to reach out to technical hires if you are hiring technical, this results in increased candidate conversion rates and provides a more friendly face. Also try get warm introductions greatly increases the success rates of this.
7. External recruiters
The most pricey option but a great option iif you are low on resources and/or are head hunting more senior roles (e.g., head ofs, execs) or are time poor (you get what you pay for). Ethan has previously used
Onset or
SustainAbility Consulting, some other great companies Yash has come across are
Lab 17 and
Think and Grow
🔥 Note: Outsourcing has a misconception of being expensive, however is actually quite popular for early stage companies. Nick, has had great success with outsourcing: “We decided to engage with a third-party development house to enable us to supplement and accelerate our initial product development. We found them on UpWork as using a marketplace platform enabled us to post a job brief, get people to respond and enabled us to quickly triage which company would be the right fit. We were able to find the right partner all in under 72-hours. Whilst we’re still looking for someone internally, we haven’t regretted our decision and have been very happy with the company we engaged with” (Fitfocus, pre raise).
YouDo’s article here has a crisp summary of the pros and cons of insource, outsourcing and hybrid methods of hiring
here.
4. How to go about setting an attractive compensation package?
Generally, there are three things you can play around with when creating an incentivising salary package for employees. This is often pivotal to “closing the deal”:
Base salary and increases to this overtime - the most comprehensive guide for base salary, relevant to the Australian ecosystem is from Think and Grow
here. They just released their 2022-23 report! If you are after more granular data, the best way is to either I) ask Earlywork community / personal connections or II) if applicable, ask your VC firm - they should have internal data on this!
Equity - offering equity depends on the type of hire you are making. The overall recommendation is not to give equity to short term contract hires, and instead use equity as an incentive. For a rough guideline, YC’s founders just released an indepth article on this
here, Sifted article
here is a good resource. Being early stage, equity is seen as a great lever to attract the right candidates, and our founders agree:
- Mo states
“At our early stage, you have limited revenue and limited ability to compensate people. So, often equity is your biggest lever… it’s a balance - equity management is delicate, and it's easy to lock yourself into cap-table hell" (Hatchery, pre-raise). Offering equity and ownership opportunities is a great way to incentivize the best and brightest to join your team.
- Nick shares a similar testament,
“we want people that want equity, because it shows they are investing in the business” (Fitfocus, pre-raise)
Additional perks - Come in many shapes and sizes, this could include anything from offering flexible hours, car parking, telecommuting options, merch or compressed work weeks. A crowd favourite resource is in the Sifted article
here.
To close off this playbook, we share some wise words from Ben Armstrong and the Archangel team:
"The truth is that hiring mistakes happen. Having a well thought out recruitment process (and talking to lots of candidates over a sensible period of time) can help mitigate that risk. Usually rushing to hire someone fast and cutting corners because you have a hair on fire problem is the wrong instinct. “Act in haste, repent at leisure”. I’ve seen many founders hire too many people too fast, hire for the wrong role, or the wrong person for the role, and it makes both parties miserable as they then need to spend time and money unwinding the relationship and beginning the process again! Finding the right person, particularly when the team is small, can make a significant difference to culture, performance and everyone’s enjoyment of work. It’s a beautiful thing when you see an employee flourish and achieve what you always hoped they were capable of.
Thank you and goodluck in your job searching! Have any questions or want to add to this article? Feel free to reach out to Annie here. Note: the Startups mentioned in this article are all hiring soon or are already! Please get in touch with them for further information 🚀!
