In this blog, I take you through six more of my Peter's Laws, and how they've guided me in my career, and how they might give you a new perspective.Read More »
Solving Your #1 Business Problem: Finding Top Talent
In my last blog I spoke about how the online site 99designs uses contests to connect businesses and designers on projects that are 10 times less expensive than "traditional" graphic-design projects, with turnaround 10 times faster. Here I'm going to look at what the founders of 99designs are doing to increase the efficiency of employment recruiting among startups.
Just as 99designs created a revolutionary new way of bringing designers together with clients, its founders have tackled a nagging employment problem among Internet startups: finding and adequately compensating talent.
Did you know that most developers at top Internet companies such as Google, Facebook or Twitter receive a pitch from a recruiter every two days? And that recruiters only spend 6 seconds looking at a typical resume? It's an inefficient way of doing business. Most developers ignore these pitches and delete them from their inboxes, for the simple reasons that:
1. They're overwhelmed with the mountains of requests that have no value, and it's too time-consuming to sort through the volume of opportunities.
2. They can't be sure that even if they decide to move to a startup that their work will be valued enough.
"The No. 1 problem for startups is finding talented engineers," said Matt Mickiewicz, a cofounder of 99designs. "The big companies have a lot of talent sitting there and it's really hard to get it to move to smaller companies where engineers can really add a lot of value." Recruiters don't always have the goods -- they're a link to the job, but not the job itself. And developers aren't often paid as well as they should be considering their contributions.
So Mickiewicz and his partners decided to create a site, Developer Auction, that reverses the recruiter-recruited model. Here it's the companies that offer actual jobs to candidates, rather than working with recruiters to lure candidates to potential jobs.
Developers are undervalued, Mickiewicz told me. "Look at the prices of these 'acqua-hires,'" he said. "Teams are being bought out for $1 million to $3 million per individual, and the salaries these developers are making in a full-time jobs doesn't really reflect that. Those great developers are only earning 15 percent more even though they're 10 times more effective than other people. The prices that developers are getting on the open market don't reflect the value they provide."
Developer Auction runs 14-day auctions during which engineers who've registered with the site weigh real job offers that include salaries and benefits. The offers can be substantial. Typically, Mickiewicz said, "companies will say something like, 'I'll pay you $125,000 a year with a $10,000 signing bonus and half a percent equity and four weeks' paid vacation and a $5,000-a-year gadget allowance.'"
Following the auction, every developer generally receives five to seven job opportunities "with numbers attached to them," Mickiewicz said. "Then developers can choose which companies they want to pursue in-person interviews with." At the end of the auction, developers are free to accept an offer, or not. Registering for the auction isn't binding on taking a job.
But developers who do accept a job get 20 percent cash back on Developer Auction's recruitment fee. This cash back can range from $3,000 to well over $6,000.
Developers won't be wasting their time interviewing with companies "that would require them to sell their house and live in a studio apartment," Mickiewicz said. "They're only pursuing jobs that are in a similar price range to what they're currently earning."
Developer Auction ensures quality by doing these four things:
- It is private. It prescreens potential employers so that an employer never sees its own employees. The site requires a login through AngelList (a platform for startups) to verify identity.
- Every developer who joins the site for an auction is verified -- so that they're serious about looking for offers. "We don't want people signing up just for the hell of it to see who's on the market," Mickiewicz said.
- It classifies developers by educational background and employment history. "If you were good enough to get hired at Google in 2006 and were promoted three times, then you're a probably a pretty safe bet. You've passed some pretty rigorous hiring exams," Mickiewicz said. The site also demands that developers provide links to some of their work and allow them to answer technical questions so potential employers can see what they've done.
- It is transparent regarding salary and benefits. The prescreened employers can see what offers are being made in the marketplace. This encourages competitive bidding on developers.
In the company's first auction, which ended August 31, some 142 startups bid on the services of 88 engineers. The startups submitted over $30 million in job offers.
Just as 99designs provides efficient use of designers' time and a far less expensive work process for companies looking to hire them, Mickiewicz believes that Developer Auction should work for any profession where "demand far outstrips supply."
In my next blog I'm going to write about Indiegogo and how it has built a community for crowd-funding innovative ideas and solutions.
NOTE: Over the next year, I'm embarking on a BOLD mission -- to speak to top CEOs and entrepreneurs to find out their secrets to success. My last book Abundance, which hit No. 1 on Amazon, No. 2 on the New York Times and was at the top of Bill Gates' personal reading list, shows us the technologies that empower us to create a world of Abundance over the next 20 to 30 years. BOLD, my next book, will provide you with tools you can use to make your dreams come true and help you solve the world's grand challenges to create a world of Abundance. I'm going to write this book and share it with you every week through a series of blog posts. Each step of the way, I'll ask for your input and feedback. Top contributors will be credited within the book as a special "thank you," and all contributors will be recognized on the forthcoming BOLD book website. To ensure you never miss a message, sign up for my newsletter here.