There was an article in ERE Media that spoke about why 90% of early-stage startups die. Everyone seems to touch on the big three reasons of poor product, bad marketing performance and weak leadership, but they often neglect speaking on how important the talent is – which stems from a crippling inability to hire high-quality candidates.
When we’re out speaking to technology companies, one of the key challenges they are facing, which is validated across the board is finding top talent. They can’t get the right talent on board to execute and get what they need done. They have their seed of VC money, plans are in place to expand and now it’s a race to bring on board the best players. And today, with the competitive landscape for candidates, it means that the best, most desirable candidates are receiving multiple offers.
Now it starts to open the floodgates of questions when thinking of the leading challenges facing early-stage tech companies. Are they too concerned about price? There’s only so much money for talent acquisition, so what’s their burn rate look like? Are they already draining too much of their financial resources? Was it a lack of talent or just a bad decision?
As we speak to some companies and we’ll look at whom they hired and question if that was the person we would personally present. And it gets us thinking on what happened here? Why did it not work? Did they settle for a candidate? Did the board force an employee on them? Did they choose one of their friends instead of someone more qualified?
So now there’s a litany of reasons why someone didn’t work out, but regardless of the introspective questions being asked – a bad hire could set a company back a year. And now what shape does it leave them in? Are they still viable?
And it also means going back and unpacking every single situation and asking, “what happened here – why did that not work? And what does it mean by “not working?” Are they bringing on a candidate that’s not a right fit for what stage they’re at? Are they too focused on brand recognition instead of hiring someone that was successful in a company at a similar stage?
In many cases we see companies dead set on thinking they’ve hired a rockstar, and after paying out a lot of money, it ends in disaster. So when you take into account all of these reasons swirling a candidate’s downfall and couple it with the statistic that snowballed this train of thought, it magnifies how crucial the hiring process is for these early-stage startups that are pitted against much bigger businesses in the chase for the best talent.