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Hiring Startup Founders: Risks And Returns

Hiring Startup Founders: Risks And Returns

Entrepreneurs bring a special value, but must be placed in roles where this value can be best put to use. A routine supervisory role may not make for the best fit.

 

The select few who had quit their jobs in large companies Tin the recent past, either to start their own company, or to work for startups, are now looking for opportunities to return. This in itself is hardly newsworthy. People change jobs for a variety of reasons, and movements into and out of a sector or class of company are common. In 2016, Naukri created exentrepreneurs as a separate category of job seekers. However, since this featured as a news item in the business press last month, it appears that the numbers involved are larger than usual. Startups have been getting enormous attention from the government, the investor community, and the media. Therefore, it is natural for such a development to provoke discussion all around.

 

The business environment has been challenged to a certain extent over the last year. This could be the reason behind some startups being unable to grow as planned, in turn leading to disillusioned staff, and even failed founders. This is something of a complex puzzle. The more immediate issue is the response of hiring managers in big companies to such job applicants. What should a hiring manager do with applicants who have been entrepreneurs?

 

The first reaction is to turn them down because of the fear that they are looking for jobs as a stop gap arrangement, before they ride out on their next business idea. There is also the concern that someone who has been her own boss will not be comfortable working under others. Finally, there is a sense of insecurity in managing someone who probably has managed bigger teams, including people like the hiring manager herself What if the applicant has not been a founder herself, but had simply quit a big company to work for a startup, and now wants to move back? In such cases, the first reaction is usually not negative, especially if there has been a general lay-off in the startup, but there is a concern that the person may be easily lured out again by the prospect of making a lot of money in a short duration. There is also the worry that people used to the greater flexibility in a startup work environment will struggle to adapt to a more rulebound and less collegial culture.

 

Both set of concerns can be addressed. The case of startup employees is simpler. Working in a small company gives all-round exposure to business, and helps a person relate her work to the larger goals of the company. It also helps her appreciate the concerns and constraints of coworkers in other functions, and makes her more open to collaboration. The frugality of most startups, where present compensation and conveniences are curtailed with the promise of disproportionately large future rewards, helps the employee make do with less, and, therefore, more appreciative of the perquisites and conveniences of a larger company.

 

Returning to a more hierarchical and rule-bound environment may actually be a relief for those employees who are put off by whimsical and inconsistent decision making of the founders, who cannot be questioned in a startup.

 

Also, the flip side of a flexible work environment is the expectation that one will be available for work at all times, and a collegial work-culture makes it harder to draw personal boundaries and refuse work. All this makes the applicant a willing worker and a good hire.

 

In any case, not everyone leaves a big company for a startup merely to make big money. Some are driven to follow a charismatic supervisor or friend. Others are escaping a malevolent boss. Many others are grappling with personal issues, and mistakenly believe that a startup’s flexible work environment will help them to better blend work and personal time. A careful interview will usually uncover the real reasons, and help the hiring manager make an informed choice.

 

The second case, hiring someone who has been an entrepreneur herself, makes for a harder decision. The concerns mentioned earlier are very true. However, one must recognise the value such individuals bring to a bigger company. They are good at selling the company’s goals and vision to others in their team, and are also good at influencing team members without using compensation as the sole lever. Having worked with people at all levels while raising funds and selling their products, they often become great communicators. They are comfortable speaking up for their teams and getting work done across departmental boundaries. They also have a good feel for cost control and can be tapped for suggestions on improving work processes and improving efficiency.

 

People who have been entrepreneurs themselves bring a special value, but must be placed in roles where this can be put to use. A routine supervisory role may not make for the best fit. They would make a better contribution in a new business, a new project, a new geographical location, or even a new initiative within a traditional function. They may well leave to pursue a new business idea, but it is not as if everyone else stays on forever. It is up to the hiring organisation to make the most efficient use of such people while they are around. One must remember that some of them may have taken the entrepreneurial failure to heart, and may therefore be further motivated to prove themselves.

 

It must also be noted that not all entrepreneurs truly have the entrepreneurial mindset. There is such a big buzz around the startup ecosystem, and the supposed ease of raising money that many people are driven to emulate peers and win bragging rights. They are ‘spreadsheet warriors’ who cannot pivot out of their chosen business model if required, and underestimate the effort involved in setting up a business, building teams, and getting customers. Once-bitten twice-shy, this subset of former founders is likely to make for especially stable employees. A study in 2014 found that 75% of failed founders went back to corporate jobs.

 

There are three other reasons why hiring managers should look forward to hiring people associated with startups, irrespective of whether they have been founders or mere employees.

 

◆ They are likely to have acquired good collaborative business and technical skills in a short time at no cost to the hiring company.

 

◆ They are usually multiskilled since employees in a startup often pitch in for each other as required.

 

◆ Their entry discourages at least some existing employees who may have been planning to leave to join startups as they get a sobering message about the risks involved. Recruiters should take heart from the fact that their dilemma is not unique. With the long tradition of entrepreneurship, and the acceptance of accompanying failure, there is still reservation among recruiters in the US towards hiring ex-entrepreneurs. The hesitation is valid, but the benefits of hiring are equally valid and should prevail.

 

References

1. “Most Start-Ups Fail; Will You Hire An Ex-Entrepreneur?”; Lilia Stoyanov; Entrepreneur: Aug 2019

2. “Job Portals Look To Help Out Founders Of Failed Start-Ups”; Arushi Chopra & Priyanka Sahay; Mint; 3 Aug 2016

3. “A Tale Of Two Start-Up Ecosystems”; Athira Nair; YourStory; July 2019 4. “Techies Return Home As Start-Up Dreams Turn Sour”; Ayan Pramanik; Economic Times; Jan 30 2020

 

Gautam Brahma is a management consultant who advises start-ups and SMEs on strategy & operations including sales, HR and IT. He carries an experience of over four decades in the public, private and non-profit sectors in telecommunications and IT industries. He has been an invited speaker on multiple industry forums and a monthly columnist on HR issues for nearly two decades. Gautam is based out of Gurgaon and can be reached at [email protected]

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