Swaroop C H

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The real reasons why Indian startups struggle to hire

22 Nov 2010

The last article on difficulty of hiring for startups in India generated a lot of discussion (also see the HackerStreet.India discussion about this article). I was surprised to see so much response within 24 hours. I guess it shows how much of a pain point it actually is:

Ramjee says: "Bang on, This problem is very severe."

Gowri says: "oh you could not have hit the nail on the head better!! We are a small, serious high technology company and find it really hard to get good people. First many don't want to talk to no-brand-name companies. Even when we get to make offers, we end up losing so many because TCS or Wipro or IBM or Accenture gave them 20k more for a maintenance project where they will end up modifying 50 lines of code every 3 months. I feel like crying for them!"

Abhaya says: "Next time we meet, remind me to buy you a drink. I sometimes wish all the people in Startup ecosystem will stop exhorting people to start their own companies and instead join one of the several hundred around as a first step!"

Abdul Qabiz says: "We have been working hard, for last two years, to build a small team, with not much success. Also, hiring is relatively harder for startups in third-tier cities because good ones move to metros."

These comments are actually the best part of writing a blog - getting to hear from other people knowledgeable on the subject and who are actually in the trenches. The various thoughts added by the community was so good that I thought it was best to summarize it in a new post for my own cognition:

Startups are not promising, yet

We all agree that hiring is an issue. But why is it so? I think the best articulation on the subject was by Manu J (summarized here, please read the original comment for his full thoughts):

  1. Stock options have made money for people in Silicon Valley startups. What about in India? "How many makemytrip employees made it big? How many rediff employees?"

  2. "Startups do nothing to differentiate themselves from the big corps. If you are offering just a market salary why would a good engineer work with you rather than a big corp which offers that and more?"

  3. "Uninspiring work. Not to knock on any startups but some time back facebook clones were all the rage. Now it is groupon clones."

  4. "Lack of technical leadership: Lot of US startups and techies actively participate in the tech community. They usually have a tech blog where they write about scaling challenges, best practices, new products tested out etc. I have learned a lot from these type of posts. I have never found an indian startup which has a good tech blog. (Couple of indian startups do have people in them who are well known and contributed back for ex: you ) but as a company I’ve never seen an indian startup which contributes back to the tech community"

Regarding Point No. 2, Syamant adds:

"Perhaps you should consider non traditional working models as well as talent from outside bangalore who could work remotely. Also consider people who are experienced and have opted to not work fixed hours."

And Anirudh adds:

"If someone’s good at what they do, they are most likely selling their skills to the highest bidder – namely google, microsoft, amazon, etc. The ones who are trying to work independently (like me) do it because of many reasons – one of them is that you get utmost power, control and authority. Working for a small startup offers neither."

Regarding Point No. 4, Harish Mallipeddi adds:

"Great technical work & leadership – do not build yet another PHP/MySQL site. Is at least one of the founders, technically well accomplished and smart? If you built Google News and you quit Google to work on your next big idea, then I’m sure that would instill a lot of confidence about you in the minds of potential hires. But if you are completely unaccomplished yourself, then it’s going to be a hard sell"

As far as I know, Manu hits the nail here on the real problems - startups need to do a way better job of making the job look attractive on the strengths of a startup (technical leadership, technical growth, long-term pay-offs, flexibility of timings) rather than trying to compete with big companies on the strengths of big companies (salary, facilities, etc.)

Even things like liberal work-from-home options or double the number of leaves of a regular job can make startups more attractive, like Harish Mallipeddi said:

"Different work space/work culture – you could try renting some cheap office space near a beach in Goa. I’ve worked for Yahoo and I’ve seen Google’s offices – they all have swanky office spaces with free cafeterias. You cannot compete with them by renting out a third-grade office space in crowded Bangalore. Try something different. If you look at all the Valley startups, they don’t just sell you a job – they sell you a work lifestyle – 'come work for us; this is the kind of work culture we have' is always their pitch."

Good Founders are rare, most are stingy

Pranay says:

I am an early career engineer, and I have seen many of my friends leave startup jobs to get into well-established company. Mostly because the startups seldom live up to the exciting work culture image they generally promise. Also, many of the founders are very stingy in terms of giving away equity. The general view is that, its not fun to be in a startup, unless you are the founders/co-founders.

Anirudh says:

"In India, developers are generally treated like crap. I’ve got tons of offers from 'business' guys who have a stupid idea and a little spare cash. They don’t understand technology – and more importantly – it’s limitations. Anyone with a little field experience will automatically be wary of such people."

Maybe the situation could be different if the founders mentor the employees, as Ayush Jain puts it:

"People who do join startups are mostly the ones who are interested in entrepreneurship or starting up themselves. These people do it for the ownership, respect and the appreciation of being entrepreneurs. The biggest mistake founders do is to treat them like employees. Consider talking to people you wish to hire about stock options as they join, or give them some reason to feel proud as an entrepreneur. This would also add to their ownership of the work they do and you would see a visible difference in their attitude towards work. But most entrepreneurs find it difficult to share the ownership of the company with them and thats why they find themselves struggling."

As "Have to be anonymous" says:

"The founders of the startups are in the attitude of “giving life and supporting a family” for a few people than “taking help from a techie” mindset. Even if they know an employee is not a beggar who has joined his company to help him succeed in a venture, the employer’s behavior seldom reflects they have acknowledged this fact. This could be seen right from giving appointment orders till making the employee cry for relieving letters. And it would be funny to note the same employer read about “brands”. Would they know customers are of two types, internal and external?

"Yes, I was working in startups, and have now finally decided settle down for the “big fish nets”. I am now one of the so called tier 1 company employees. Afterall, if the current project is over, the company would actively search in full swing to depute me on another project. I wont get a pink slip as fast as I would get in a “get-the-job-done-and-go-home” startups."

Good Startup Hires are Rare

As Rams says:

"There are not that many startup-type techies out there. That’s the simple truth. I am going through my 3rd startup and the reality couldn’t be starker. No, they are not hiding under a rock."

As Upasana says:

"I am going to have to disagree with several people – Ayush, Ashish (Pocha), etc. above stating founders are stingy. I know at least a dozen including myself willing to give away 10-20% equity + decent monthly cash for a solid hacker. From architects in Yahoo and Amazon, to 1-person IT consulting guys to 3-4 years experienced guys in IT Services company to guys working in a 6 year old American startup’s Indian devcenter – tried them all. You know what? They just cant take the risk! So I dont think badgering Founders for not being open to dole out equity is a good enough reason.

"We got some early employees using a fair equation where some wanted more monthly cash + low equity, others wanted low cash + high equity. The decision was left to them on which package they wanted. We found that one of the guys after working 2-3 months and finding out the real revenue/margin numbers himself wanted to reduce his salary for a higher equity.

"I think smart hackers should know their self worth and also the worth of what they are building. If what they are making is exciting and hard for them may be its worth a pay cut for 2 years with a possible equity upside potential? After all last few months are showing indications of a bright M&A future."

Ecosystem

Let's face it - our ecosystem and family mindsets are not ready yet, we know this one and I think these are the "growing pains" of any startup culture. As Gowri puts it:

"These people talk nicely about wanting challenging jobs and new technology and all that, but get lured by 'social status' of branded companies and few thousands more.

"I even had one guy who left our company because his future father-in-law did not like that he didn't work for one the 'large' companies!

"One guy resigned because he could not get a good bank loan since the banks were looking for branded or large company employees."

Geek Out

When I had mentioned that I wish there was a 'geeks grooming culture', then the irreverent Pramode C E pointed out that that was exactly his latest venture - and he seems to have had great results in just a month since he started:

I began my new venture of mentoring B.Tech completed students on August 25. The ideas was to take in motivated students, build up their FOSS skills by making them write code/solve problems full-time, and try to use whatever contacts I have with friends and former students in the FOSS community/industry to get them placed with companies who need capable programmers.

Learn more about this on the IC Software website.

The lack of skilled people is an open secret. As Rohit says:

"At a general level, what we see is a clear lack of skills fulfilling each role, be it engg, sales, marketing etc.

"For eg: when we look for an engg. to write features, we only seem to get folks who know to write code. Customer acquisition strategies which many speak about are mostly traditional and nothing innovative. Forget about finding folks who help us scale, there are probably handful of them in India who are already picked up Yahoos and the Googles or now Facebook."

Let's hope that Kiran Jonnalagadda and HasGeek can indeed bring these skilled people together and breed a culture of such skills.

Hiring Strategies

Regarding, good hiring strategies for startups, Sameer Guglani has written extensively on this subject on his blog - Hiring method that works, What to look for in startup interviews? and Early employees - Salary & Equity.

Bottom Line

Startups need to pitch why they are better than big companies, it is the same whether it is about the product or about hiring!

As Saurabh Narula puts it:

"As you point out in your statement, hiring for a startup is a lot different than hiring for big companies - attacking the different problem with same mindset often misleads people in the hiring process."

This has been an enlightening discussion for me, thanks to all of those whom I've quoted here (and many whom I've not quoted for reasons of length of this article) for their thoughts on this subject :-)


Update: More great insights by Manu J in the comments.

Update 2: See Ravi Mohan's take on the same.

Update 3: See Stalk Ninja, a unique initiative to whet good students and get them involved with startups.

Comments

anish says:

one more truth i would like to mention that
in start ups which is driven by mostly one or two geeks
if you are not one of them them in that case your life will be screwed
in general case i have seen people that they think they are specially different from rest of the word in this attitude why any good engg will work with you

Kiran Jonnalagadda says:

Thanks for the plug again, Swaroop. Now we have to work extra hard to make this happen. :-)

BTW, HasGeek is the same idea we discussed over a year ago when riding to Jayanagar from Gopal's place.

Manu says:

Lack of talent is true. I guess everyone clued in on the indian tech scene knows that. But Zoho managed to work around it. But Zoho was not paying well enough and Zimbra was able to hire away their best

Anyone who are into startups in India should read

http://indianstartupgyaan.wordpress.com/2009/06/24/building-a-kick-ass-team-part-i/

http://indianstartupgyaan.wordpress.com/2009/07/08/building-a-kick-ass-team-part-ii/

and

http://indianstartupgyaan.wordpress.com/2009/06/30/what-ails-the-startup-ecosystem-in-india

You can't argue with the results - paisa.com by abinash & team is a finely engineered product. If it fails it won't be due to technical incompetence.

The options for indian startups are


Grow the talent - Zoho way
Buy the talent - Zimbra way
Spot the talent -
Know the talent -


You do need a core team who are really good at what they do. This ideally should be founders but if you have the money you should be able to hire the best. Cleartrip was able to build a product using Common Lisp in India. Even in valley that would have been difficult. Some of the employees they hired had no previous knowledge of lisp. So its is certainly possible to hire and cultivate talent in India.

Equity is only one part of the issue. It is not enough to offer just equity. Without success tories the allure of equity is not very high. The early players do not have a good reputation on this (makemytrip, rediff) so the present startups will have to bear the cross. I would really like to hear about employees getting rich of equity. Infosys is the only company I know.

Bharath says:

I have been into recruitments (8 yrs now) and I have worked for a startup (1999 to 2002)

My experience and outlook on this issue is very different.

First and foremost I don't like the word startup. I prefer to call Tiny or small business. This is a better word for Indian scenario. As soon as you name your business as small business, your mind set clearly changes. You don't bother about getting a hotshot on board. You prefer to get somebody who knows how to make things and sell. This actually solves 50% of the problem. Secondly, you realize, business is evolutionary and so you simply start building it brick by brick. And you have all the time in the world to build it. That is all you want and that is all you do. And that is how a million companies are built in India. Believe me India has one of the best tiny / small business in the world. And most of them are very creative.

Coming to US, scenario is different. Need for venture capital makes high skilled founders to join hands. Most of the time, early team is highly capable team and they do everything on their own. And most of the startups are very focused on single product. Team joins hands even before a company is started. And initial team is enough to bring the product to market. And then comes Venture capitalists and rest follows. Every member of the initial team are capable of forming their own companies.... but they join hands only because of the unavoidable issues (Visa, Company registration.... etc).

What I mean is, a startup is a team of founders / partners. That is all. They must first start making money in the market by selling. Only then hiring must come. If you are not capable of yourself on your own to make and sell a product. Do not start a company.

Ajay says:

Excellent post! I agree with most of the opinions expressed/reviewed. I would like to add one more to the list,

I believe the 'startups in India' awareness is quite low or not up to the standards among the young graduates/students. Agreed that society plays a major role in pushing these young candidates to take up jobs in Infosys/Wipro/Cognizant/etc... , but little do they know how much their skills are wasted in these companies. I myself have gone through that phase and would characterize working for consulting companies as unproductive, waste of time and non challenging.

it doesn't matter which field of study you are from. Everyone goes through training courses and put into some god forsaken Struts1/legacy project(s) where, all you do is fix bugs, work with mundane systems and stay back to provide 'support to clients'. In my humble opinion, this destroys their creativity and by the end of the year, they are tuned 'not to think' and just 'follow orders' from higher ups(needless to say, you covered the 'management craze' in one of your previous blogs).

Sorry about my rant(couldn't resist), but the main point is, startups could attract more students/talents by


contrasting the work done in consulting companies to theirs(all the challenging work they could do!)
conducting info sessions in various colleges. Many of the students would be interested in attending such sessions[probably more if you offer free food - that always works! ;) ]
offer part-time internships(payed so much better), conduct programming contests and challenges - get them involved.
Use facebook/twitter/orkut, throw the message out. invite students to visit the startup's website.


I know most of the folks who shared their thoughts rant about students/young graduates demanding higher pay, but such class of people almost never are the ideal candidates for startups(IMHO).

I am very sure, there are a number of Indian students/graduates out there looking for a challenge, wanting to make a difference... It is upto the startups to nudge these folks in the right direction! Good luck :)

Swaroop says:

@Anish Yes, good point, Anirudh has mentioned that (quoted in the above article)

@Kiran All the best! OMG, that seems ages ago :)

@Manu Very very good points again. You should blog more often ;-)

Agreed about paisa.com, especially knowing bghose and the rest of the team's capabilities. I should definitely read Abinash's articles.

@Bharath Agreed, you're subscribing to the 37signals approach, but I would argue that it worked for them because they were doing services to earn money while building the products, it would not necessarily work for all kinds of startups, for example, many I know are building valuable IP (intellectual property) and that requires a certain amount of manpower, which may not be possible when there are only 2-3 founders.

@Ajay Yes, agreed, the startups have to pitch themselves well.

sashank says:

One of hiring mantra for start-up's i would say is , "Catch them Young"
go back to your college , best place to start with , get few smart kids on the block for an internship while in college , mentor them and inspire them on what entrepreneurship and geekdom is all about , give them a taste of what is it like working for solving something cool , i bet they would die to work for you , its from my personal experience , I mentored one student , who later joined some job , when i called him for a working for an idea in my start-up and that i cannot pay much , as i dont have funds , he said " for you i would work for free , if required " . so technical leadership is very much important when inspiring younger ones

Swaroop says:

@Sashank Excellent point, this is a great idea of "investing in the future" which is what startups are all about I guess :)

sashank says:

Most of the colleges , claim 100% placements and boast big company names , we are still first generation Indians to get fancy paychecks with big companies , we have been brought up from childhood with only emphasis on studying hard , getting good marks and landing up in a big company job to earn more, have a stable income and lead a peaceful retired job with enough savings , in this temperament , not even students who are brought up with sole reason to land up a good job would get adventurous to try hands on entrepreneurship , i still remember how much argument i had with my dad when i wanted to leave a well paid job for experimenting with my ideas , so it would take some more time for us to break this .

Kondalu says:

Swaroop - good to see some interesting discussion on these lines.

Here are some of my observations based on my experience with few startups in Bangalore (note: I moved from one of the big tech web product companies; now working with startups to find one with good culture):
1) Sometimes, it is important for the techie founders to accept that the employees they hire have better talent in certain areas of work. If the founders have their ego flashing on their faces then the talented employees find alternate ways. This also contributes to bad publicity.
2) Founders, especially with tech background, should (at least in the initial stages) work like everyone else, participate in fun activities within office. It makes a lot of difference when the founding member is moving with the rest of the crowd like one amongst them. The office atmosphere is a good selling point.
3) The information flow about happenings related to the company should reach every employee at a reasonable frequency. This adds to the point someone was making about the employee being a share holder in the startup. A significant disconnect in this aspect makes the gap between the employee and the management in a startup. Note: Don't sell the "you are also a share holder concept" if you cannot practice it after the employee joins.
4) Finally, the founders should not assume that the employees understand that there will be a work pressure thus, they should be squeezed all the time. It works well when the project scheduling is done with the right timelines and on exceptions there will be significant work loads.
5) Some startups tend to spend lots of money on parties when some good result is seen. It is a good thing. However, when the company sees good enough financial growth, try to show the employees some $$$ too. It helps because the employee gets to know that the increase in value is not just on paper but, it is real when the startup grows financially.

For employees - startup is not a place where you can relax like some of the big companies. Also, one might not get to work on the bleeding edge technologies always; there will be a significant period during which one has to handle the maintenance/operations part. One should understand that work in a startup is a mix of all flavors.

Sanjeev Kumar says:

I found the job posting by Pubmatic (www.pubmatic.com) to be pretty good and different. Hope others can also learn.

Their Careers page says-

We value innovation, creativity, customer service, and integrity. We focus on results and having fun. We also try to do things a little differently at work, so people can be successful in their professional and personal lives. For example, if you need to go running at 3pm, go run! If you need to start work at 10am because you’re not a morning person, start work at 10am. We offer unlimited vacation (you know when you’re ready for a break) and every employee in our company receives a full benefits package. We have snacks and drinks for everyone (we’ll get whatever you want, just let us know). We have a totally open door policy and encourage everyone to come up with and follow through on any “bright” ideas to push the company forward! We expect the best from our team so come to work charged and ready to dive in each day!

Swaroop says:

@Kondalu Agreed on all points. It is becoming more and more apparent to me that culture in any organization is top-down, rarely is it a grassroots thing.

Swaroop says:

@Sanjeev Nice! Now that is an appealing job description.

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