3 Keys to Building a Talent Edge

Navigating the Talent Business

We are all in the talent business.

For most tech startup founders, this is old news.

Yes, I know talent is super important. But I have customers to serve, a product to develop, backlogs in marketing & sales. There are only 24 hours in a day. What am I supposed to do?

Unfortunately, there’s nothing easy about being the talent business. But the first step to building an iconic tech startup is realizing it’s a talent business.

A good second step, I think, is to have a strategy for building a talent edge. I’ve been fortunate to invest in startups like Palantir and Canva that have built truly exceptional competitive advantages in recruiting top talent. I’ve also studied from afar plenty of others like Google and Stripe. What do they have in common? An edge.

There is a lot of nuance here so forgive me for oversimplifying - but here are three rules that can help kickstart building a talent edge:

1. Think about recruiting as a segmentation exercise, just like a startup should think about segmentation to find early customers.¹ Are you recruiting people who want to work in an office or remote? Do you want engineers who use PHP or hate it? Do they have demonstrated interest in your industry? The more dimensions you can target, the better. In the early days, you only need a few great new hires to get your talent gravity growing. There is riches in niches, as they say.

2. Find a honeypot. What compelling differentiator do you have to attract great candidates? In open source, startups have a natural honeypot once community starts to grow around their project. Increasingly, non-open-source software startups will have open source projects to have a honeypot that drives recruiting. A honeypot can also be as simple as bringing on single outstanding early hire with a strong network. Top candidates tend to attract other top-tier candidates.

3. Be very picky. This can be painful as it usually means key roles will go unfilled. For ex, from a recent profile on Stripe:

   On the flip side, the Collisons’ insistence on technically proficient managers meant that leadership roles remained vacant for months.

Frustratingly, there are no shortcuts here. It takes a lot time to build a talent edge. My anecdotal research suggests CEO’s who have a talent edge are spending at least 25% of their time on recruiting - and, sometimes, much more.

The good news in all of this is that when a startup CEO can attract amazing talent, it actually frees up a lot of the time they would otherwise be spending on individual contribution (IC) activities.

It turns out there is a somewhat counterintuitive rule:

The more time a startup CEO spends attracting great talent, the more time they have to spend attracting great talent.

1. This is another reason to listen to the recent First Round Capital interview with Sidharth Kakkar, CEO of Subscript, as he had great insights into this. (First Round Review Podcast)