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September 12, 2022
Olivier Roth

Recruiting Advantages that Early-Stage Startups Have Over Larger Companies

The war for talent has never felt fiercer. If you’re a startup in the tech space, that battle can feel especially rough — after all, you’re facing up against titans like Google, Meta, and Apple when it comes to attracting potential employees. If you’re using traditional hiring methods, it can feel like your cold emails are going unread and your job postings unnoticed.

However, while larger companies definitely have certain hiring advantages, so do startups. Lean into those strengths, and you’ll find that recruiting feels like less of an uphill battle.

Below, three founders weigh in on the startup advantages that have given them a leg up in recruiting.

Startups are favored in today’s market

For a long time, we’ve seen tech companies enjoy high valuations and massive rounds — but in 2022, those dynamics are shifting.

“For the first time in history, it is less risky to join an early-stage startup than it is to join a late-stage private or recently public tech company,” says Nolan Church, co-founder and CEO of Continuum and former Head of Talent at DoorDash. “If you look at the stock market at all, it’s just been a bloodbath.”

In the past, joining a late-stage startup meant pretty much guaranteed equity, but with tech stocks plummeting, that benefit has largely evaporated for many employees.

“If you started at one of these companies in the last year and your equity is down 90 percent from the time that it was initially granted to you, all of a sudden it’s no longer the safe bet we thought it was,” says Church. He continues:

“If you’re not in the same ballpark [as later-stage companies] for cash, I think you’re going to have a really hard time hiring, period. But if you look at the equity for a Series A company versus a late-stage private company that’s raised a very large valuation… all of a sudden, it’s like, ‘Well, I can actually see the upside in the pre-seed/Series A company.”

In other words: if you can match the salary offered by the larger players, the playing field has never been more even between early-stage and late-stage startups.

Startups can leverage “founder magic”

At the pre-seed or Series A stage, many founders are still actively involved in the hiring process. In fact, if you’re a founder yourself, hiring is probably taking up a larger portion of your time than you’d probably like.

However, now is the time to lean into your heavy involvement in hiring and leverage what Church calls “founder magic” — i.e., the passion for your company that only a founder can truly exude.

At Continuum, Church insists that either he or his co-founder take all initial calls with candidates. Ninety percent of that first call, he says, is spent selling the company’s mission, team, and the role itself. That excitement tends to be contagious, and it gets a candidate to come back for another call.

“The second call is like, ‘Okay, what questions do you have from our last conversation?’ Then I’ll jump in and start asking the candidate questions,” Church says. “And I think when you have the founder magic, you have to lean into that — because that is a superpower that early-stage companies have that frankly late-stage companies cannot scale.”

Startups can be really transparent with candidates

When prospective employees go through the hiring process with your company, they’re getting a sense of what it would be like to work there. Use this to your advantage, and embrace transparency throughout the entire process — since this is something larger companies generally can’t do.

Jaclyn Chen, co-founder of Benepass, uses this transparency to explain equity and compensation to candidates.

“We’re fairly transparent around equity, in terms of what percentage of the company this represents, where we got the data from in terms of Option Impact and anchoring to that,” says Chen. “We also share what the valuation at our latest round was, and so they know what the strike price would be. I think candidates really appreciate that level of transparency [that] they might not be able to get at other companies.”

Chen also recommends being open about exactly what the interview and hiring process entails — another detail that’s generally less clear when candidates apply at larger companies. She says her team lets candidates know exactly how many steps are involved in the process, and they explain why each step exists.

“I think people really appreciate that,” Chen says. “And that’ll give them a much better idea of what it would be like, frankly, to work with you on a more long-term basis.”

Startups have the ability to move quickly

The average hiring time is… well, slow. Depending on what job function people apply for, they can usually expect to wait, on average, between 33 and 49 days between applying for a role and starting at the company.

Early-stage startups, however, can use their size to move far faster.

“It’s another advantage of early-stage,” says Chen. “A lot of big companies — outside of hiring freezes — can take a while, a full month or six weeks, to get through a process. And it feels like you’re talking to a lot of people and don’t really know how you’re doing. As an early-stage company, you can sync up internally and provide that feedback really quick.”

Candidates appreciate a fast process, and moving at speed can help you bring on stong employees that don’t want to wait eight weeks to hear back from an enterprise-level company.

Learn to land great candidates as an early-stage startup

Once you learn to lean on your strengths as an early-stage startup, you’ll find that the recruiting and hiring process becomes a lot smoother. Next: learn how to use storytelling in your recruiting process in order to better sell candidates on your company, mission, and team.

Harness the power of networks to make your recruiting more efficient. Start free at theswarm.com