How to hire a tech team

One of the biggest challenges for most entrepreneurs is recruiting top-notch talent: The combination of mindset, skills and focus needed to work at the pace maintained by innovative companies is rare.
Crain’s asked Michael Kirven, CEO of Mondo, for his advice. The Manhattan-based IT staffing company, one of Crain’s New York’s 50 fastest-growing companies last year, has more than 300 employees around the U.S. It provides both full-time and contract tech workers.

What do you say to an entrepreneur who is beginning to move into full-fledged hiring mode? He or she has gained some traction and now needs to hire two, five or 10 people pretty fast.

I say, “Yes, you may have a cool idea. You’re not going to get a discount [on anyone’s salary].” New York City is super-hot for IT talent, and the talent is not negotiating.
I also say, however long you think it’s going to take, double that expectation. Everybody has multiple offers. Everybody has multiple opportunities.

You’ve got to differentiate yourself, so how do you do that?

If you’re VC-backed, that helps. People want to know that these smaller companies are going to make payroll. If you’ve got a Kleiner Perkins or a Silicon Valley Bank, versus “my father gave $300,000 to seed this thing,” that helps. Tell the candidates about the level of sophistication you have in your banking.
You also want to sell the technology candidates on the fact that they’re going to get involved in tons of different technologies. Tell them: “We want your input, we want your guidance, we want your ideas. We want you helping us make business decisions.” Technologists love that. They know they can get their hands on all this new technology. The more they know, the more marketable they are.

How to scale your company and keep its culture

You’ve got to sell the culture to them. They don’t care about ping-pong tables, sofas, lounges and free coffee. They want to know the company has a vision. They want to share in the upside of that. Build a realistic equity and profit-sharing plan. Consider WhatsApp. In order for WhatsApp to have gotten talented developers, they had to build an equity plan to answer the question: What’s my potential upside?

What does a good equity plan look like?

It takes a percentage of the company, maybe 10%, and it builds a stock plan to distribute that share. Those shares get distributed based on performance and time.

The important thing is the share of the company?

Yes, the bigger the share, the more it shows management’s attitude and the fact that they’ve put the time and money into building something. It shows they want to attract the best talent.

Where do startup entrepreneurs lose people?

Lowballing is the quickest way to turn off a candidate, because they realize they’re dealing with amateurs.
The other mistake that they make: They don’t plan far enough ahead. They think they can place a Facebook ad and the people will start rolling in … but you’ve got to hire a full-time talent-acquisition person when you are at 25 or 30 employees. Think of it this way: If you’re going to hire 100 people, you’re going to interview 1,000.
[Startup entrepreneurs] have to get over the idea that contractors are a bad word. So much of the labor force is moving toward contracting. There are people that won’t work for me for $400,000 a year. They’ll take a six-month, one-year or a two-year contract. Over the long term, and factoring in benefits, using contractors probably costs about the same.

Any other advice?

They should sponsor H-1B visas for people they like. Entrepreneurs are scared off by that. The reality is that with the right immigration attorney, it costs about $5,000, and it takes about two days, and then you have this great employee who is just thrilled to work for you. You can spend another $7,000 or $8,000 and sponsor their green card.

A version of this article appears in the March 10, 2014 print issue of Crain’s New York Business as “Understand what attracts a WhatsApp-type team”.

Related Topics: Practice Management