Coming from one of the largest venture capital conferences in the Southeast, you may be surprised to hear this from us…
Cash is not king.
At least when it comes to attracting and retaining talented employees, that is. Finding and retaining talent has never been more difficult than in the post-COVID labor market, where, for the most part, candidates are now in the driver’s seat. With more choices than ever before, employees can easily hop across different companies. This means that employers need to think outside of the box when hiring talent.
In the opening panel of Venture Atlanta 2022, panel host Gabby Sirner-Cohen of FullStory spoke with the following entrepreneurs and founders:
- Nicole North, Partner at Lightspeed Venture Partners
- Melissa Taunton, Partner at NEA
- Peter Clarke, Partner at Accel
Together, the panel discussed what we’ve deemed the “Talent Wars,” the latest era of hiring and retaining talent. As it turns out, the best employee retention strategies are less about dollar compensation and more about creating value and building a strong culture.
The Talent Wars Panel Discussion
Gabby Sirner-Cohen: Hello everyone and good morning. I'm Gabby and I lead all things people at FullStory, and I am delighted to be here today with three amazing talent partners, Pete, Melissa, and Nicole, who each represent the talent partners from their respective venture capital funds.
I can't help but be struck by the fact that when this group came together when this panel was conceived of in the spring, wow, what a different world we were in. Every candidate I was talking to had three, four offers that they were all juggling. And we as software companies, tech companies, we were all trying to hire and we had to navigate all of these competing interests. And fast forward six months; it's a different world. The economy, inflation, so many things have changed, and yet it's still challenging to find great people. And when we started, we had a prep call last week and we started talking about what, what does "talent wars" mean in this day and age? Pete, you had a spicy take on the name of this panel, Talent Wars. What do you have to say about that?
Peter Clarke: A little something, I guess, for those that have the misfortune of hearing me ramble on about this. But, never been a fan of the war analogy when it comes to people to begin with. So usually always push back on that. It's definitely challenging. It's hard, but always sort of thinking like, what's the war about? Who are you at battle with? Oftentimes it puts you in this mentality of, I'm fighting with another company for this person. And you tend to leave the person out of the decision.
So it turns out that, you know, recruiting people, hiring and building a great team is a bit of a two-sided marketplace. And lo and behold, the person on the other side of that conversation has the ability to make their own decisions, decide where they want to go, figure out what's the right fit. And so this idea that I'm just sort of battling against some other company or I'm fighting over someone, and then, you know, what do you do when you win? What are the spoils of war? Is that person, you know, suddenly the "land" that you took or whatever, the human resource that you collected, it's just for me, kind of a wrong mindset for how you think about building a great team, which is there's a relationship to be built. There's another person on the other side of that conversation. And to really look at it that way.
If you tend to focus on the external factors and the battle, you know, who am I fighting against rather than how am I positioning myself, my company, and you know, what it is this person can do there and how I can build a relationship with them versus just trying to win them at all costs, I guess. So again, not a fan of the war analogy. Never thought it was a good one, and I don't know if that's a spicy take or not, but I'd prefer to leave it off and not talk about it.
Gabby: Well, I think what struck me so much about your hot take—you spoke about the importance of candidates. Employees have free will, right? It's not just companies duking it out, employees have free will. And over the course of the past six months, a year, so much has changed on the micro-macro level. There's so many broader changes that are happening that are influencing how employees, how prospective employees are making decisions about where to work and where to stay working.
So, we thought that in today's session, we would spend some time talking about what some of those trends are that are playing a part in how your employees, prospective and current, are making decisions about where to work. So let's talk about one trend that certainly has been all over the news and the headlines in the past two years. COVID thrust us into a world where the office was not going to be the norm. But this question of where to work, are we gonna work a hundred percent remotely? Are we gonna be fully distributed? Are we gonna work fully in an office? Are we gonna have a hybrid approach? What are you seeing?
Melissa Taunton: So I think we're at a really important inflection point. Hopefully, we can say “post-pandemic,” but we're still kind of navigating our way out of it. And I think over the past two years, there's been an extraordinary challenge for CEOs and definitely people in leadership to help guide and navigate firstly the fully remote option that I think many companies managed quite well initially, and productivity spiked and people got used to having flexibility and being able to work from home. And then, you know, multiple returns that were either stored out because of new variants, or new developments in the pandemic, or because people just weren't coming back in the way that companies expected them to. And I think it's really important that every leader accept that things have changed and they've changed significantly and they've changed differently for different constituents in your company.
I think having an open mind, realizing that no one right now seems to have the silver bullet, the one answer to this conundrum. I think huge complexity has been introduced with hybrid [work] because when everyone was fully remote, it actually really benefited underrepresented minorities, women and people with disabilities, to be equally represented on a screen in a similar size square. And so there were a lot of gains made for those cohorts during a fully remote environment that I think they're fearful of losing now going back in person.
But I think even more damaging is what we're seeing is a lot of hybrid models. And so with hybrid models, I think it's gonna be really important to not create class structure within the hybrid model. A lot of people moved out of the areas where the companies now have HQs. So how are you gonna accommodate those employees? Are you gonna require them to move back or are you gonna have everyone on Zoom for core meetings and then be able to have in-office [work] utilized for things? We're seeing a big trend of in-office gatherings for social interaction, reconnecting with each other, feeling that personal connection, the conversations you'd have ad hoc. We're seeing it to be really vital for creation and creativity and engineering and product team meetings. We're not seeing as many people choosing to work in the office and actually get their work done. They're still vying to feel more productive at home. And so we're really in a state of flux, I would say.
I think we've got to keep our ears to the ground to see what's working, what's not working, and also respect that— definitely for women. There's a study published yesterday, Women in the Workplace by McKinsey and LeanIn. It was absolutely clear there that women want flexibility and women in the workplace are still doing 80% of the work of child caring and elderly parent care at home. And so that flexibility for them became mission critical. So, there are lots of things at play, but that's a long answer.
Gabby: So timely, that report just came out yesterday, and to see the number of women at the director level and above that are leaving in droves because they are looking for that flexibility, it's really interesting because also different populations have different preferences, and Nicole, you're seeing some interesting trends yourself on the executive level.
Nicole North: That's right. And this is an extension of what Melissa just said, not in opposition to it, but we are seeing a trend with senior executives where they're really prioritizing that in-person time. They want to be with their CEOs, they want to be with their leadership teams, they wanna be with their actual teams. So this, "Oh, remote is such a benefit," they're actually not seeing that as a benefit. And in fact, it's like, wow, okay, well I'm gonna be disconnected from those conversations in this hybrid environment. I have to travel more. I'm gonna be away from my family more. There's less organic collaboration. And we all know that leadership and development, employee development, mentoring, is hard enough as it is, and being able to do that in a hybrid environment is even more challenging.
Increasingly, we're hearing like, "Great, I live in San Francisco and oh, an incredible opportunity in New York, it's remote, wonderful!" And others are like, "Yeah, that's actually not great for me. I want to work in a company with a great culture and I want to be in the room with my peers." And there's also, I think for the senior executives that maybe have been through this rodeo before in different iterations, there is a real concern for perhaps not them being left behind, but certainly their teams being left behind in this hybrid environment. So if you're not there, you're not walking by your boss or your CEO and getting pulled like, "Hey, can I talk to you about this strategy? Can I talk to you about this?" And studies have certainly shown—and we're not talking about productivity and like monitoring keystrokes—but studies certainly have shown that when there are these hybrid environments, the people that aren't actually there are getting left behind. And so, that is definitely a shift and a little bit counter to what we had been seeing 6- 12 months ago, and that it was just this absolute benefit where it's quite the opposite in many cases now.
Gabby: It feels like we are certainly in the midst of murky waters, right? We are in the midst of a transition and we will look back on this time as a moment of inflection. I don't know that any of us feel like we're ready to call what direction we're headed in, but certainly in a moment.
Melissa: Yeah. And I think what's super challenging is one size does not fit all right? And that's something you just have to keep in mind. As you really put diversity as a priority, really thinking through how to support that with different initiatives. And I would say to build on what Nicole said, recent grads coming into the workforce for the first time have really struggled with remote. They learn so much from just carrying a bag, sitting in a meeting, hearing a negotiation, and you really can't underestimate the value of being able to see and hear and just be around leadership. So that's a really important aspect of this too.
Gabby: Absolutely. And it requires so much intention and design of leaders of an organization to craft an organization no matter what you decide, whether it's remote or it's hybrid or it's in office, right? It doesn't just happen, right? It needs to be intentionally crafted. I'd be remiss if we didn't talk about what's certainly in so many headlines right now when it comes to the economy and, you know, falling stock prices, inflation... one would think that it'd be super easy to grab some talent, but it doesn't seem
like it's all that easy these days. Pete, do you wanna kick us off?
Peter: Yeah, well I think having been at this a bit as Nicole and Melissa have too, just you see obviously a lot of ups and downs from a macroeconomic perspective. I think, generally speaking, venture-backed, privately held companies can kind of run at a little less of a wild swing of the pendulum. I think we tend to hear a lot of—depending on the macro conditions—like, oh, it must be like this now for you, or hey, because we're kind of in a bit of a downturn, recruiting must be really easy because all these great people are flooding the market. And, generally speaking, not the case, right? I think there are a lot of misconceptions around it being easier or harder.
Recruiting and building a great team is just really hard work. I think that's something we generally also say to a lot of our founders is, you know, you thought you started a company to build a product? You just became a recruiter. That's your job now. So, for all you founders out there, don't forget, it's probably a good 50% of your time at least. And that's just primarily because people joining a privately held startup are generally going to join not because of the great benefits or the amazing cash compensation. It's like, "Oh, you guys are doing something really interesting and I want to come work with you." And so the founder, you are the closer, right? You're the builder of the team.
But just back to "Is it easier to hire right now?" I think what we're seeing more generally and probably at the exec level is people that have kind of taken themselves off the market because it was actually too crazy. January/February timeframe, you were hearing from a lot of great execs, I'd get like, 50 emails a week on opportunities. There are 10 companies doing the same thing. They're all backed by reasonable investors. I don't even know what to look at. And so I'm just turning that off. I think we're seeing now people, interesting people, coming into the market, not because of the macro conditions or "Hey, I don't feel safe in my job," or anything other than, "I was already thinking about doing something else and now it feels like the opportunities that are available to me now are better."
I think, generally speaking, the market has sort of called the herd a bit on which companies are going to survive it, who are sort of operationally focused and are coming out the other side or have the chance to come out the other side. So I think they feel better about opportunities that are presented to them and they're engaging.
Also in this market, you see a lot of the, I guess we'd call them "startup tourists," who are big company folks who are like, "I'm gonna go do a startup now because look at the equity package I can get." I mean, we saw founders doing arguably not wise things relative to, you know, "Hey, let's try to put together this really big package for this exec from Amazon," and if they weren't necessarily the right person for that job, it just felt like in this market, we're going to scale and we're gonna be huge, so we should hire the person that's operated at massive scale. And it turns out they're just not able to come into something and build. They're operators, they're not builders. And you know, I think what we saw with this market is you lost some of those folks. They're gonna stay put at Google, Amazon, whatever. And then we're seeing a lot of really good folks who want to come and build something are now sort of engaging in those processes because it feels like it's a good time to get into the market. And, generally, venture firms talk about it too, "The great companies are built in the downturn," so find a good company and ride it to a big exit in the future when everything comes back.
Gabby: Nicole, you had some thoughts around risk aversion and financial security that candidates are maybe talking about—or maybe not talking about. But, the implications that founders and companies are trying to woo these candidates.
Nicole: Well, I think yes, there may be more people who are technically on the market, but they're more discerning than ever—and for those reasons. Risk aversion around career stability, financial stability, and then value creation. And we're in this challenging time right now. And by the way, we don't have the answers to this, but certainly a big incentive for executives to come in, like those senior executives at the larger companies to come in is because of course they're passionate and mission-aligned, but it is that value creation opportunity.
Now, we're seeing a lot of executives saying, "Huh, this isn't really penciling out so much, these valuations from six months ago..." So, you know, it's tough because we're not so far away that it's easy for founders or even the investors and us to do anything to really reconcile the valuations of six months ago. But certainly, these executives are looking at these numbers and they're like, "I don't see that path whereas I did before." So, that is tough. Then you think about, okay, well what are the strategies to try and get those folks? And so it's a little bit counterintuitive, but some people might think like, okay, our compensation, is that finally coming down? Are we finally able to temper these wild compensation and cash packages? Not really, no. See, great people always cost a lot, but if they're not seeing that the equity is penciling out in a way that it was before, then you actually are gonna have to pay them more because they do need to offset that. So, it's a little bit counterintuitive to what you might just initially think: "Oh, it's directly tied to what's going on in the economy. People just need jobs and want jobs." It's a little bit different, particularly at the most senior level.
Gabby: Cash just always seems to be king. It doesn't matter in a down market, or an up market... it often comes back. I'm curious, Melissa, have you seen anything similar with senior executives and how they're approaching these decisions around compensation and equity in their hiring process?
Melissa: Yeah, I mean, the last few years have just been kind of the wild west of compensation. We've spent an enormous amount of time trying to manage the craziness through COVID. I think great executives have sharpened their pencils. They're asking very insightful questions, maybe around 409A valuation or valuation at a prior round. And, you know, CEOs and leadership teams are having to think through that for themselves and their teams. So, you know, it's a time of reflection, more realism, I would say. You are seeing people who were going for the guaranteed RSU kind of fall away from some of those companies who had very generous RSU packages. And so I think just be really thoughtful, be really thoughtful about people's journeys, what they were aligned with from a compensation perspective prior.
You know, the great candidates are gonna push back, they're gonna ask hard questions, they're gonna be realistic about valuations. And so just think through all of those answers. Don't avoid it; address it, because everyone's thinking about it. So I'd say get ahead of it and really understand, have a good understanding of what your company looks like. I think just having that honest dialogue, I think great candidates will appreciate that because they're thinking about it, we're all thinking about it.
Gabby: Melissa, I heard you say that in this climate culture matters even more.
Melissa: Yep.
Gabby: And that candidates and employees are thinking about the team that they're working with right now. What are you seeing as it pertains to culture and team in this particular moment?
Melissa: Look, I think people have been through a lot and I think certainly a lot of people are traumatized by what COVID did to them, their lives, their families. And I think work is a huge part of our lives. There's no work-life balance. We all know that it's kind of an integration of one's self. And so I think creating a place where people can show up as themselves and feel a part of a team—belonging is a hugely important aspect that really struggled during remote work, I would say. And so, even if you are remote or you're hybrid, create opportunities to make people feel that they belong even if they're different. And so inclusivity, belonging, I think a founder's job, certainly on the recruiting side, but also driving the company, is to get the north star of the company clear and everyone to fall behind that north star and the mission, and to be reminded of it frequently.
What we did learn during COVID is that people really want to have some meaning in their work. It was a hard time and I think companies who are retaining people now are winning on culture, because we're all aware of the macroeconomic conditions and that things can go wrong. And when they do go wrong, you wanna be in a company and in the foxhole with people you trust and with a mission you're aligned behind and where you'll be respected and treated as an adult.
I think a lot of companies right now struggling with this return are not treating people like adults. I think if we learned anything during COVID with the increases in productivity is that people showed up and they behaved as, on the most part, they behaved as adults—apart from some of the people who were taking two or three jobs at various companies, which we know about. But people really showed up. And I think we shifted from, you know, the nine to five, five days a week in office, kind of post-industrial revolution style of working to realizing that people can do great work asynchronously. And so I think thinking through all those things, there's no one answer here, and there's no one direction. I think a leader has to feel what's right for their company and then try and create an inclusive environment to have that communicated through every rank and file in the company.
Gabby: Perfect. I think any one of us could talk about culture all day long. I'm just gonna suggest that we wrap up and Nicole, Pete, maybe you can offer to the founders in the room, what advice do you have for them as they are building the cultures of their organizations?
Nicole: Well, one thing that we're seeing more of is like, okay, well let's do more on-sites. Let's get everyone together. And that also means you're asking everyone to come to you. A lot of founders that we're now seeing that are doing a really great job of this, and we're hearing this from their employees, they're actually the ones doing the road show. They're the ones that are going to the different hubs where they know their employees are, their senior executives are, or their teams are. And that really means a lot. And being able to do those on-sites, but offsite and where they are, it's all about bringing people together and adapting your cadence of one-on-ones and not maybe through the lens of performance management, but really the career development and relationship building and the CEOs and founders really taking that onus on themselves to go to the people versus just asking everyone to come to them, I think is a really, really meaningful and impactful best practice.
Gabby: Really a powerful symbolism.
Nicole: It is. It is. Yeah.
Gabby: Pete, we'll let you close it on out.
Peter: All right. Yeah, I think obviously the founders in the room here were saying, "I don't really care about hiring a C-level exec or a senior exec. I just need to hire a couple engineers." Or, "I'm five people going to 10." I don't think the model's any different, right? I think we tend to, recruiting is hard, bottom line. It's not impossible, right? It's not an overly complicated problem to solve. I think we can overcomplicate it and make it harder on ourselves.
Generally speaking, culture is what wins. If we talk to the senior execs who are usually most vocal about, "Hey, my top priorities are team and mission." You know, what's the company doing? What's the impact? And not necessarily a mission like hey, I'm saving the world, but just... is this a product that impacts people's lives? Is it a B2B software that helps people do work better? And those types of things. Those folks are overtly communicating the fact that, you know, team and culture are most important. I don't think any of us sitting here in this room would say, oh, those aren't the important things, regardless of where we are in our career. So just keeping that in mind too, as you're thinking about how do I hire that next couple of engineers and oh, it's so hard and I've, you know, tried to hire this person and they turned me down and we lost on compensation. And you know, a lot of that is you'll never win on comp for whatever it's worth. You just won't, you know, someone will always probably pay more. And if ultimately you're losing someone to compensation, they probably weren't the right person to begin with, right?
So if you can be in market with where you are from a compensation perspective, the rest of it is about just you engaging with that person, selling them on what it is you're doing, the mission, the vision, the dream, and then really leveraging your own networks and the network of the people you're hiring. That's usually kind of the most effective way to really start to build out a team of folks who have good cultural alignment as well. But, you know, we tend to see a lot of, okay, I need to hire this, you know, front engineer, this full-stack engineer, and they must come from Stripe. Like, okay, but why? And it's mostly "I'm kind of attracted to the brand," or "I know they hired well," and I had to slip my TLC reference in here somewhere, like they say, don't go chasing waterfalls, right?
So, find the person that fits, you know, what you need today. And I mean, that may not be the person who graduated from XYZ University or, you know, I love the, "Hey, we're very diverse in our hiring. We hire from Stanford, MIT, and Harvard," right? It's like, well, that's not at all diverse.
Gabby: Georgia Tech…
Peter: Like, Georgia Tech. See, that's where you should be hiring from, right? Take advantage of where those people are going to be coming from locally, right? Don't go trying to find the person that's done the thing that you think you want to do, because they may not be the person who did that anyways. And, you know, ultimately whatever they did for another company may not be the thing that works best for you.
So just, again, general advice, and people have heard me say this too, so apologies for anybody I bored with this concept, but also, I mean, your company is your product too. So we tend to focus a lot on product development. And we're, you know, most founders who are product-oriented are amazing at that generally, then it tends to fall down when you get to recruiting. But if you start to say, "Hey, well let me think about my company as a product. Let me think about the roadmap of people and how we should probably build this organization based on where we want to go." And then, "Can I take user feedback?" if you will, or the unexpected use cases, adjust my roadmap and really just engage more on the building part of your company, just like you would the product itself. There tends to be a lot of like, "We're building this amazing product and we'll conquer the world." And then it's like, "Oh my God, I can't recruit anybody. It's the hardest thing in the world." It's hard. It's not the hardest thing in the world. It's not an unsolvable problem. And I think just engaging and then getting your investors involved, really making it a team effort, pulling in everybody to help you, and then really understanding where you can be the most effective.
Again, back to what I was saying earlier, you're the closer, right? You're the person setting the strategy, the mission, the vision. You're the person that'll get somebody over the line regardless of compensation, right? Because they want to come join you and work with you.
Gabby: Well, thank you so much. If we leave you today with any parting thoughts, first: don't go chasing waterfalls. Second, culture matters. And I will close with I spent eight years of my career at Google. And my boss at the time, a man named Laslow Bach, used to say people came for the mission. They want the meaning and the purpose. And they stayed for the voice and the feedback that they were given, the opportunity to share, to have their voice be heard, and that there would be this feedback loop with their executives, with their founders. And so we hope that over the course of the next two days, and as you all go back home to the various work that you are doing, you continue to think about that mission, that voice, that feedback, and the intention that you are putting behind building a world-class team and organization. And we wish you a great time over the next two days.
Thank you to our panelists. Really appreciate all the perspective you gave today. Thank you.
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