Looking at the current state of hiring in the tech market and don't know what the heck to do in your own startup? Well, you're not alone in the uncertainty.
Last year, 160,000 workers lost their jobs. 2023 started with more layoffs: 120,000 were fired from giants such as Google, Microsoft, and Zoom, according to Layoffs.fyi.
Whew, that's just the big techs in the US. I'm cool.
No no no. Startups also had a rough time here, and here in yours truly Latin America.
Let's be real here: this is the most challenging time for the tech market since 2008. The bull run of the past decade is over. Global venture funding had a 35% decline in 2022, while Latin American funding had an even steeper fall, at 79%.
And of course, less money impacts hiring. But you've been scrappy from the start, early-stage startup founder. And that means this moment can actually play out in your favor.
That's one of the topics our CEO Brian Requarth and our CTO Yuri Danilchenko talked about during an episode of the Latitud Podcast. Learn how the ups and downs of the tech market impacted tech hiring; what's the hiring silver lining for early-stage startups; how to attract tech talent; and when and how to expand your tech hiring.
If you've been following startup news in the past decade, you probably already know that we had a huge leap in venture capital investments, and just how much more liquid the tech market became with that. The pandemic just accelerated the trend of big and bold rounds, with its peak in 2021.
With more money in their pockets, big techs and mature startups became even more competitive. They started hiring remote workers worldwide and offered aggressive salaries as the cherry on top. Liquidity also made the job market more fluid, and some companies took that opportunity to balloon their employee count.
In that landscape, local companies had the hard task of being David and competing with Goliath. Our Latin American currencies just couldn't compete with the American dollar. It's offer equity or die.
Well, things have shifted in the last two years. Rising interest rates changed the market's optimism about tech, and layoffs became common news, especially in the ballooned companies. Even experienced and competent engineers didn't escape the waves of firings.
What your early-stage startup can do about hiring?
But even the worst story has a silver lining.
And in this case, it's for the Davids out there.
Now's the best time for your local and early-stage startup to conquer good employees. These talents are excited to start working again – now taking more responsibilities, being able to see more of the impact of their work, and taking equity as a substitute for aggressive salaries.
Still, don't be enticed by good deals: hire only the talents you'll need to reach your next milestone. The past decade had an abundance of investment in venture capital and many founders hired and inflated their staff, only to adjust to reality when the crisis knocked on their door.
Don't make the same mistake. Focus on which hires will drive your metrics and revenue up, so your startup can be more productive, thrive, and even conquer investors in this difficult – now more demanding than ever when deciding which player they'll bet on.
In engineering, choosing wisely is even more important, and not just because of expenses. "Research shows that the top engineers are 150 to 200 times more productive than the average engineers. The math doesn't work out like in other roles inside a startup'’, Yuri says.
Startups attract the best employees by showing a clear vision of their mission and what problem their solution will solve, right?
You are correct once again. 10 points to Gryffindor.
But let's talk real talk. In the very early days, you are that vision.
"People join your startup because of you, not because of your deck and projections. As the founder, the problems you are solving are very attached to you. Your network of people you know well are the best candidates to join your company", Yuri says.
With time, your startup will need its own employer branding. And how do you build your startup's brand as an employer?
At Latitud, we've found that building in public is a huge value proposition.
Use digital platforms as an engine to create your tech brand, from social media to company blogs. Put the spotlight on your solution, since you'll attract candidates who are passionate about your mission and values. But also highlight the team behind it. The opportunity to learn and shine is the best asset your startup can offer employees. Yuri says it best: gente boa atrai gente boa.
If you're attracting tech talent, you might expand on that and build your tech employer branding. Talk in more detail about the technology you're developing and who are the engineers behind it. Talking just like tech talents, you might just make them interested in joining that awesome team to build that awesome solution for that impactful problem.
When building a team, recruiting tech talent is the CTO’s mission. That is the most common scenario in early-stage startups. After the CTO and the first hirings create the initial product and the company grows, the CTO will move on to a more strategic role. This means that they will need someone to support them. And that's the VP of Engineering.
Hiring this person at an early stage can be the wrong move because it creates dangerous layers of abstraction. You need to be close to your product teams and, of course, your first customers.
When product and engineering are handled by the same person, it will offer speed because decisions will be made faster. Having intermediaries can make you lose sight of what is going on.
In the early days of every startup, any quick distraction can be a recipe for failure. Let's repeat this mantra together: our objective is to get to product-market fit as early as possible.
As the project scales, it will be harder to use the CTO-manages-all approach. They will need to think not only about various roadmaps but also about the market and the competitors. This is when having both a VP of Engineering (interfacing with the technical team) and a VP of Product (interfacing with sales and marketing teams) reporting to the CTO will create a much-needed work-life balance.
Diversity should be a constant concern, from the first hires to the VPs. Products are created for a diverse world, which means their development also needs a wide range of perspectives.
You probably know already just how diversity is monumental, but let's refresh the stats: according to McKinsey, companies with diverse teams have 35% financial gains. Also, a study by Harvard Business Review pointed out that having people from different backgrounds drives innovation and increases the chance of capturing more markets by 70%.
So how do you begin? Tech recruiters shouldn’t rest on their laurels and be satisfied with their current diversity rates or their current candidates and referrals deal flow. For fostering diversity, you need a proactive approach.
Be a talent hunter and prospect for diverse candidates, while also being clear that diversity is a value in every communication your startup does, and what's more, a priority in every step it takes. Go beyond words and lead by example, showcasing your diversity numbers and your team's MVPs.
Yeah, artificial intelligence is now the talk of the town, and that includes using it to help engineers. Well, guess what? We've been looking at it before it was cool.
Most specifically, our CTO has. In 2012, Yuri Danilchenko and his colleague Richard Fox’s research Automated Code Generation Using Case-Based Reasoning, Routine Design, and Template-Based Programming tapped into how AI can be used to help engineers. They noticed patterns while observing a team that did repetitive tasks, such as data extraction and data preparation for research, and saw opportunities to use artificial intelligence to help create programs.
Currently, there are AI assistants that help engineers write the code so that the human only needs to go to the stack overflow and see the snippet.
This means that the future of software engineers will be about how to direct AI to create shortcuts for producing and scaling performance. Tech won’t replace all engineers just yet: the creative part of the work still can't be automatized.