03 Feb 2023
Big Tech Down, Scale Up
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The opportunity for earlier stage tech firms and how to maximise it.
Headline news about big tech’s decline is more a result of market cooling and a post-pandemic correction than the Four Horsemen of the apocalypse. That’s not to diminish the incredibly tough time that over 200,000 plus employees from the likes of Salesforce, Microsoft and Meta among others, are going through right now, and sadly it looks likely more will suffer the same in the near term.
However, as an eternal optimist, I want to encourage those unquestionably talented people existing in these larger firms to take the opportunity to think of an alternative career path. Go early stage!
There are some tremendously exciting early-stage businesses with big ambitions that need you right now. These firms are in areas of technology that will have a dramatic human impact in the years to come.
Agritech, Healthtech, Biotech and climate/ESG related innovators are just some of the areas in technology that are genuinely changing the world for the better.
It’s also a good time for these early-stage businesses to capture this talent. Digital adoption during the pandemic fuelled significant wage inflation, which is now being offset by large-scale workforce reductions. Previously, many start-ups and scale ups were blown out of the water by massive total reward packages that big tech could offer, which included sign-on bonuses and RSU/stock allocations, usually bloating annual compensation to a level earlier stage businesses couldn’t compete with. But for now, the playing field has become more even with depressed stock value and less inclination to go over the top to secure talent.
If you are an early-stage business, it has to happen now. I call out to founders, VCs and PEs, that if your house is in order, you can win a crucial battle in the ongoing war for talent. But think about three things first:
1. 'Define or Refine' your mission
Who doesn’t want to be part of a mission? Most employees in tech don’t just turn up for a pay cheque, people are inherently driven by purpose. So, if you have a mission, don’t keep it to yourself like a recipe for a secret sauce. Broadcast it loudly, so the most talented can hear it. A word of caution however, if you are turning up the volume on your company’s purpose and culture, it needs to have substance and longevity, or else people will see through it and unsteadying attrition will be the net result. Those companies who write their values on their walls but then don’t weave them into their core DNA, get found out quickly. Alongside this, your product or solution vision must also stack up.
Too many scale ups with a clear mission fall down when their product or technology is not sufficiently evolved to deliver. One can’t exist without the other, not long-term at least.
Whatever your mission or purpose for being is, refine it quickly so everyone can get on board with it, and then use it to help define your products, strategy and culture. What could be more important?
2. Ownership for All
If you have a mission, and everyone in the firm is playing their role in achieving it, then why should only a small few benefit? While the counterargument is that those who founded or invested should benefit the most, those same stakeholders should also realise that employees who have skin in the game, even a tiny percentage, will be vastly more committed if they can benefit from an eventual exit. Carving out employee equity, so that everyone can benefit means you will be able to attract, and crucially retain, the very best people because they feel, and actually have, a form of ownership and personal accountability.
3. Invest in people, culture and say yes to the workplace
When investment in early-stage businesses is often so hard-fought, it should rightly be allocated to the evolution of your products and go-to-market functions. But don’t forget that your biggest asset is your people. Hiring and keeping the right people is critical to long-term success, yet so many organisations pay lip service to these elements and hope a positive culture and workplace environment occurs organically. If you invest in your people, they invest right back.
Start by listening to what they have to say and ask them what’s important to them.
Far too many companies think free snacks or drinks on Friday is enough to demonstrate they care about their people, but it’s a token and not much more. Is it what employees really want? Do you actually know what matters to them? Not only are you likely to get the answer if you ask, but in doing so it gives your employees a sense of empowerment and a voice in how the company evolves, and that is just as important.
The Scale Up Collective supports the talent agenda through board builds and leadership hiring for early stage businesses, whether at seed round or later stage funding.
To discuss your own leadership needs in the light of digital transformation, please do get in touch with us here or your local Odgers Berndtson contact.
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