The startup world is often fast-paced, chaotic, high-risk and frankly on the verge of insane. Yet, these characteristics are exactly what make it exciting. This is why people are willing to work 60-plus hour weeks with little or no pay. It is also why this often mysterious, somewhat dangerous and unpredictable atmosphere is able to deliver companies that grow at a remarkable pace, pushing creativity, innovation and disruption.
People Matters completed its fifth anniversary this year. As we celebrate this milestone, it also makes us curious to find out how other companies as old as us were faring. To find an insider perspective on the startup culture and challenges, we approached startups born of the tumult of recession and heard their stories. It is an eclectic list. We reached out to entrepreneurs like Zomato in E-commerce, SOIL and iProf in education, Mettl in human resources, Applied Mobile Labs in mobile advertising and Happy Hands Foundation in social services. We then worked on putting together some shared wisdom.
Starting out five years ago
It has been said that “when the US sneezes, the world catches a cold” and this stood true for India as well during the recession of 2008-09. Companies — among them lions of the financial world like Lehman Brothers, Bear Sterns, AIG and Merrill Lynch — faced massive losses or outright bankruptcy. Governments had to intervene to save businesses and banks.
The contagion spread across business sectors worldwide and recovery took its time. The Indian stock market crashed from a high of 20,000 to a low of around 8,000 points during this period. Corporate performance remained mostly subdued, while corporate profitability dipped. Recession also affected the investments made by Foreign Institutional Investors (FIIs) in the Indian stock market as they started disinvesting to meet their commitments abroad. GDP dropped and unemployment, always a significant problem in India, rose further.
However, in the midst of this gloom, bright and determined minds were at work on their dreams. Some had a personal goal to start a venture; others were addressing market or social needs. The recession proved to be a bane for established industry players, but it was to become a seeding ground for entrepreneurs. Over this period, India saw a generation of entrepreneurs venturing into new or established territories, taking risks in an uncertain economy and rapidly carving a name for themselves. These startups have proved that even a slow market and unfavorable conditions cannot stop a great idea supported by a strong business plan. As we probed into the culture of these remarkable organizations with our exhaustive conversations, and listened to the founders recount their experiences, some really interesting insights into the entrepreneurial mind emerged.
These anecdotes, touchstones and learnings, we believe, will be instructive for other startups who wanted to borrow a leaf from the books of these organizations. One can get primers to hiring the right people, maintaining a good team, making the right business choices and other decisions that can make or mar an organization’s growth. We found lessons for ourselves among them. We hope you, the reader, will as well. Read on.Some of the biggest businesses in the world today started off as entrepreneurial ventures. Companies like GE, P&G, IBM, Microsoft, Disney and various others started off during times of recession. Some dared to dream big, while others were happy just to make a difference in the society through their ventures.
But these companies proved that any business adversity is smaller than the will to make a difference. And it is this passion to make a difference that drives us here at People Matters. As we speak to other companies in their fifth year, we are optimistic that we all will go on to create wonders in our own might.
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The Hiring Challenge
With a new breed of leaders among the ranks of these entrepreneurs, the process of hiring has seen a change and the old methods have been discarded. Here are some new-age mantras that we discovered in our conversations.
- The skill vs will quadrant. While dealing with a candidate, if his skill and will are high you should go for it. If his will is high, but skill low, you might consider him. If his skill is high and his will is low, place him on hold. If both are low, reject him.
- Culture and value fit. Will you enjoy spending an 18-hour long flight with this person? If the answer to this is a ‘yes’ then the culture fit criterion is fulfilled. If your company works under a defined set of values, a longer exposure to the person’s career to judge his suitability is a good idea.
- Stop-gap or long-term potential? Does this person want the job as a stepping stone or is he genuinely interested in solving the same problem you are tackling?
- Is he ‘engaged’ or merely giving a ‘job interview’? People who generally are more inquisitive and think on their feet are better than those who just answer what you ask them.
- Genuine estrangement or a personality trait? It is never wise to hire somebody very unhappy with his last employer and willing to join another firm on the rebound. People who move on for better prospects and growth are preferable to those who are unhappy with their employer.
Talent decisions & dilemmas
There are equally complex challenges that emerge when you want to have a functional and responsive team. Talking to our chosen startups about their talent decisions and the dilemmas they faced, here are a few which stood out:
- Temporary workforce. Getting the right people together is crucial for any organization. A good hire at the right time can send the trajectory of your company upwards. Conversely, a bad hire can really set a startup back several paces. A number of companies have gone for a part-time or project-based workforce to work around this issue.
- Personal connect. Startups are small units with passions that run high as milestones are achieved. With such small teams, it is very easy to get attached to members. Even though a personal connect helps workflow, it might simultaneously hamper recruitment decisions. In the lifetime of every startup, there are occasions when it needs to upskill and hire specialists or let go of employees. Personal connects can affect such decisions.
- Not training enough. Your startup might be cash-strapped and it could be a challenge to hire the best people. This also restricts your budget for training the employees to align them with the company’s vision, which in turn can have a great impact down the line.
- Not firing quickly. This was a concern and a lesson that was shared by the companies. If someone is clearly not a fit after a certain time period, you need to let them go. For smaller companies, HR situations are make-or-break.
- Retaining talent. Once the employees with the will have also acquired the skill, how do you retain them? This cannot happen by money alone. Some successful startups have modified their offerings to include ESOPs for their employees, ensuring that there is a pot of gold at the end of the rainbow.
Business Challenges
There are equally complex challenges that emerge when you want to have a functional and responsive team. Talking to our chosen startups about their talent decisions and the dilemmas they faced, here are a few which stood out:
- Temporary workforce. Getting the right people together is crucial for any organization. A good hire at the right time can send the trajectory of your company upwards. Conversely, a bad hire can really set a startup back several paces. A number of companies have gone for a part-time or project-based workforce to work around this issue.
- Personal connect. Startups are small units with passions that run high as milestones are achieved. With such small teams, it is very easy to get attached to members. Even though a personal connect helps workflow, it might simultaneously hamper recruitment decisions. In the lifetime of every startup, there are occasions when it needs to upskill and hire specialists or let go of employees. Personal connects can affect such decisions.
- Not training enough. Your startup might be cash-strapped and it could be a challenge to hire the best people. This also restricts your budget for training the employees to align them with the company’s vision, which in turn can have a great impact down the line.
- Not firing quickly. This was a concern and a lesson that was shared by the companies. If someone is clearly not a fit after a certain time period, you need to let them go. For smaller companies, HR situations are make-or-break.
- Retaining talent. Once the employees with the will have also acquired the skill, how do you retain them? This cannot happen by money alone. Some successful startups have modified their offerings to include ESOPs for their employees, ensuring that there is a pot of gold at the end of the rainbow.