Eric Ries has a good post on MBAs and startups. My favorite paragraph is:
General management is supposed to be orderly, “strategic” and mostly calm. I have seen founders replaced because their style seemed too chaotic, even though what’s really happening is that they are operating at startup speed. Pivots are disorienting, but necessary. Except when a startup is busy “pivoting” all the time, running around in circles. That’s a waste of time. How do you tell the difference? General management doesn’t have a good answer. As a result, founders get removed prematurely or even entirely exiled.
Eric goes on to explain that he sees a disconnect between the entrepreneurship courses at most business schools and the actual, current best practice at startups. I think he is correct – but isn’t there is also a lag between most academic courses? Anyways, the real point here is that Eric is not just complaining, but is also trying to be part of the solution. He will be an EIR at HBS this year, and he goes on to talk about how he hopes to bring the idea of the lean startup to entrepreneurship teaching. Pretty cool.
Hiring talent is one of the most challenging things facing a startup. Hiring the best programming and technical talent is even harder. Taking data from The Entrepreneurs Census, which I wrote about yesterday, we can get a glimpse into how hard it is to hire programmers in Boston, Palo Alto and New York.
It may be easier for startups in Boston to hire programmers than startups in Palo Alto
Startups in Boston may have a better time hiring programmers, as measured by how long it takes to fill an open position and by the percent of startups that have open positions.
The two thirds of startups in Boston were able to fill open positions in under three months – verses about half in Palo Alto and 63% in New York City. (OK, the difference between New York and Boston is probably statistically insignificant.) Three months is a lifetime for many software and web startups; being unable to add a critical developer in that period of time could derail product launches and critical feature updates. Heck, a lot of startups are out of business in 6 months to a year, so if you can’t fill your positions by then who knows if it’s even worth still looking…
The data collected by the study would fit with anecdotal evidence that I have heard from friends starting companies in Palo Alto. Many people have told me that it’s impossible to find talent in the SF Bay area… especially at a reasonable price. I know it is hard to find good people in Boston as well, but this study would suggest it is a bit easier here than in Palo Alto.
Compensation of programmers in Palo Alto is higher than Boston and New York
And of course the other important part of the equation is how much it costs to hire talent. From the study:
Doing some really crude math, it looks like programming talent in Palo Alto is 13% more expensive than Boston and 36% more expensive than New York. (I very roughly calculated that the average comp in Boston was $66.85k, Palo Alto 75.65k and New York $55.75k; I assumed the comp for each salary range was in the middle of each range for my calculation. Again, the numbers are small so the difference may not be statistically significant.)
The other data point in the above compensation chart that I’m trying to get my head around is low end and high end. The high end is easy enough to understand; you have to really pay up to get good talent in some cases in Palo Alto (and NYC). This doesn’t surprise me too much, but it is interesting that the high end is zero for Boston. Maybe due to a small sample set? I just don’t know enough.
The low end is also pretty intriguing. I’d bet that most of the sub $50k programmers are working for equity. It looks like regions OTHER than Boston have more programmers working for a pittance, trying to get equity. Does this mean that Boston has less of a founders culture???
Pretty ironic and not really very important, but Gmail decided to add in this little advertisement to the top of an email conversation that I’m having with someone about this post… it looks like Google is hiring developers in Boston!
Pretend you are on the board of a startup. Unfortunately, this startup is not living up to its potential, and is failing to get sales traction as you and the team hoped. Why are sales not materializing? I had a brief, but insightful, conversation with one of my partners today. This partner (like most venture capitalists) is on several startup boards. Most of these startups are growing quite well; however, one of them is not.
The question is why? From a board level, it is quite difficult for a venture capitalist to determine the cause of the startup’s sales slippage. Is it the sales team? Or is it a market/product issue?
Knowing how to build your technical team when you’re founding a startup up but don’t have a technical background is challenging. I was reminded of this while I was having a few beers with Ariel Diaz, founder of YouCastr, a local startup focused on online sports broadcasting, and Todd Galloway, co-founder of Fafarazzi. Ariel is not a programmer or techie, but has managed to put together a solid technical team; Todd is technically solid and has also successfully hired several programmers. We were talking with another young CEO starting a business who had deep domain expertise and contacts, but who needed a technical person on his team.
When you are a non-techie starting a technology business, you’ve got two basic problems when you try to make your first technical addition to the team: 1) you haven’t got the network to easily find the right people; 2) you don’t know enough to evaluate the people you do find. (A third question is employee vs. co-founder, which I take a stab at below.)
Ariel’s basic advice was to acknowledge that you don’t know what you are doing, so you need to find the people who can help you. He aggressively networked with friends who were starting companies and he recommended using connections with schools you’ve attended (assuming they have a computer science department or an equivalent department focused on the technology you need.) If you’re luckly/good you can get them to help with both issues.