gm and Happy New Year all!
Kind of a no-brainer, but at the start of the year, I like to check in with all our portfolio companies to assist with headcount planning and hiring roadmaps (even if we had these discussions towards the end of the year; things change quickly!).
The most common thing I’m hearing? Hiring in 2022 was rough. And many hiring managers are siloed w/r/t knowing how difficult hiring is across the industry in general. While I don’t have precise data for web3-specific recruiting, I wanted to make a quick post to share data from across the broader tech industry to show everyone that you’re not alone in thinking that hiring is getting more difficult every year. And, anecdotally, I’d say the numbers presented here are probably higher than what I’d expect from early-stage web3 companies in terms of response rate and hiring success.
tl;dr - adjust your outreach accordingly, because it’s going to take a lot of work to get those hires in 2023
Credit: All data I’m referencing is from Gem’s Recruiting Benchmark webinar that was hosted last summer (data from 09-2021 through 03-2022). They drew data from 12M candidates and 2.2M outreach sequences. So, yes, the data is a bit old, but it’s the most updated I can find. Even with the layoffs and more candidates on the market in the second half of 2022, I don’t expect the data to have drastically changed for the subset we’re targeting, which is technical talent in the early-stage company.
BIG SPOILER: Want to hire better? Focus on passive outreach
Gem’s data showed that passive candidates were 4x more likely to be hired, which, to me, is an insanely staggering statistic. This is why you employ in-house recruiters, recruiting agencies, and leverage your investor’s Talent Partners - to go after the folks not already in your network (note that Gem considered referrals as “active” candidates).
Huge con, of course, being that passive sourcing takes considerable effort and time versus simply posting a job and crossing your fingers people apply.
Why does it take so much effort and time? Because no one’s getting back to you.
Engineers open emails at the lowest rate (77%) and, if you’re a small company - defined by Gem as less than 249 employees - they’re only responding 11% of the time. I’d love to see data for an even smaller subset (say sub-20 employees, as most of the Chapter One companies fall in this range) but, unfortunately, I don’t have that as of right now. If anyone does - please add! Again, anecdotally, I have to imagine the response rate is even lower than that 11% figure.
The overall reply rate for these 2.2M outreaches was 22% - down from 28% in 2021 - and the logical conclusion is because candidates are receiving more messages than ever. Especially as layoff lists become more ubiquitous and recruiters can more easily find email/Twitter/Telegram handles, it’s crucial to make your messages stand out and be more personalized. Again, this personalization takes time and effort that must be factored into headcount planning and forecasting.
Wait! Someone responded! Now what?!
It’s not all sunshine and rainbows yet, let’s make sure your process runs smoothly - not only is it taking a median of 39 days to hire engineering talent, but offers were accepted at a lower rate (81% v. 85%) than the year prior. What can you do to improve this?
On the time-to-hire side, the reason why I like these beginning-of-the-year check-in calls is to really hammer home the importance of building a tight recruiting process. I continually highlight Daylight (https://careers.daylight.xyz/) as they put on their careers page exactly what the process will consist of and set expectations up front. The 39-day time-to-hire factors in that most companies are doing take-home assignments and other technical assessments that slow down the process (and give candidates more opportunity to opt out of your process). Be reasonable with expectations and communicate early and often to your candidates with how long to expect each round will take.
On the offer acceptance side, you should know every step of the way where your candidate’s head is at with your company (Always Be Closing, right?) and, if an offer isn’t accepted, understand what went awry so you can improve on it next time. If you need a final push at the end, I cannot stress the importance of leveraging your investors. All of us at Chapter One, for example, are more than happy to jump on calls with your candidates and evangelize for why we invested and believe in your company.
Oh, and you want to improve your DEI stats? You’re not alone!
Gem found that women reply far less in every role they looked at (sales, marketing, design, recruiting, data, product, engineering) by as much as 10%. Women in engineering respond at only a 16% rate (men are 24%) despite both men and women opening emails at the same rate (80%).
I had a great discussion a few years ago around the trade-off between hiring quickly v. building a diverse pipeline with the Head of Talent at a portfolio company when I was at a16z. That Head of Talent did a phenomenal job of relaying back to his CEO that “yes, we want to build a diverse pipeline, but to do so we need to slow down and prioritize it”. Today, I’d argue they’re one of the most well-represented projects in web3 because of their intentionality around reshaping their recruiting process.
tl;dr:
Focus on passive outreach - hire an internal recruiter, utilize your investors for introductions, get yourself a tool like Gem that can automate email sequences, and/or leverage an agency that focuses on precisely what you’re looking for (your industry, the specific roles you have open, etc.)
Personalize those DMs, InMails, and emails. Take a few minutes and look through people’s blogs, speaking engagements they’ve done, etc. Find something to address to make your message stand out
Create a clear recruiting process and communicate expectations at each stage with the candidate
Don’t overcomplicate things
As you complete your headcount planning and hiring roadmaps, keep in mind that hiring is only getting more difficult and, given the market, empathy and flexibility with your candidates will be key. Likewise, give your recruiters and hiring managers some leeway to innovate: try new methods of outreach, let them be transparent about your process, dedicate resources and time to DEI-focused initiatives, try to cut out redundant interviews, etc. WAGMI w/r/t hiring, but we need to build the recruiting infrastructure first.