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The Myth of the Talent Shortage

I recently read a post by Dan Hynes last week in which he described that there was no tech talent shortage in Europe, but rather, there was a smart hiring shortage. In essence detailing the problems with the hiring structure of HR and other such talent recruitment agencies that use the outdated format of the résumé or the CV to look for the same limited number candidates on linkedin and other job finding sites, like Monster, then subsquently use a computerised task test for select candidates.

Contrary to popular media opinion, Dan Hynes argues that Europe does not have a talent shortage.

The problem with this methodology is similar to the education in US high schools. Tests rarely signify the smartest students- rather test takers are good at doing just that- taking tests during a limited time frame, and thus limiting the pool of applicants that could potentially be great employees. Google has a not-so-secret recruitment strategy in which they developed a software programme to select users who are searching for specific programming terms, then integrate a gaming method in which a pop up box asks the Google users if they would like to play a game? Users who continue to play this game and accomplish their goal are contacted for an interview to work at Google. 

This kind of strategy works to find those unique candidates working under the radar that might somehow not be selected by traditional job outlets. Y-Combinator, similarly uses HackerNews contributors to select their candidates for the accelerator, which could be in part, to detect for the right culture match (ie, agree with everything Paul Graham has ever written).

Every company has a way of hiring employees, and most companies use traditional methods which have a tendency to select Type A personalities for the highest positions. I recall my own experiences with HR recruitment agencies in which the common feedback consisted of either: not enough experience or overqualified, in addition to the fact that I tended to jump from one position to another after a year or so as most HR agencies typically have a preference for candidates who have been in positions for 5+ years. The latter was partly because I was transitioning into different sectors and also preferred working for smaller companies and startups with less than 20 employees due to the flexibility and the self-directed work involved, in addition to the fact that I felt I was making an active contribution to the development of the company despite the fact that the average lifespan of a startup was around 3 years.

The Anti-Type A personality coping method I had learned from my days learning martial arts. In contrast, Type A personalities are typically characterised by competitive behaviours, impatience, hostility and aggressiveness coupled with controlling attitudes, micromanagment styles and self-described "stress junkies".

I did not want to work for a large corporation and be stuck in a routine and be another slave to the grind. What I was looking for was flexibility, ability to wear many different hats, be involved in many different roles, and also where I could interact with many different sorts of people. One of the things I loved about working for startups was that my schedule was different everyday. At the KidsApp mobile gaming startup in which I became initiated into startup culture, we would sometimes work late into the evening or start the day by taking walks in the park, or a day where I would be on several conference calls with VCs from Switzerland, Singapore and Hong Kong, or other days where I was engaged with product management and the tech team before a project deadline. I would often meet with other companies at lunch, spend the hour at a conference and head back to the office. Our office had a flexible schedule, and we worked towards project deadlines and did not count the hours by sitting at our desks from 9-6. Sometimes, one of our developers who had a late night would be sleeping in one of the meeting rooms in the afternoon. It wasn't uncommon for us to have varied schedules. However, our main obstacle was user retention. Although we had hit a 3 million download of our apps, we had no idea how to harness those users to come back to download more apps, which at the time, was the problem with many EdTech startups. Without a monetisation policy in place, we were attempting to navigate through and re-define our revenue model, bleeding through cash and our sole source of revenue at the time came from B2B: from clients like Google and Samsung, becoming completely dependent on these corporations to keep us afloat.

After the mobile gaming startup I was working at was shut down in 2013, my cousin, who was then the Director of Marketing for a large corporation offered to recommend me for an opening position that was not advertised at his company and I turned down his offer, partly because I knew that the culture at that company was not a match for me. In addition, I had many friends at the company already who were under extreme stress due to the paranoid, backstabbing and sabotaging culture there. The philosophy at that company was "never accept responsibility nor blame". My renumeration would not be as much working for another startup, but that is what I chose to do.

I think the right culture match is something that is often overlooked by HR. Around the time of the financial crisis, as a producer and part of the management team, I was in charge of hiring all the new members of a new media company. I did not select them by looking at their résumé. I selected candidates based on their personal websites, and then I would have a brief conversation with them to open a dialogue about their interests and future plans, then invite the ones who I felt were sincere and actually had an interest in the content we were developing at the time. I probably overlooked a lot of people who had great technical skills and a great résumé, but when you are going to spend a great deal of time with the people you're working with, my philosophy is that is it better to train people in technical skills, as long as they had a willingness to learn and receive feedback rather than try to work with people with a closed communication style who are easily prone to anger. In my experience, I have found that many Type A personalities- especially those with multiple ivy league degrees or sitting on many laurels may have a closed communication style and will easily point the finger and project blame when something goes wrong, but often, they have the best looking résumés.

In addition, I also think hiring people from cross sectors with compatible skill sets can be advantageous. Sometimes, people who have worked for many years in one industry will be resistant to change partly because "it's always been done that way." Or they will have the attitude "we can't do that because it hasn't been done before." A product manager who has always been a product manager will do the same thing over and over again, even if the product is not a right fit for the demographic, and a stock trader with only a finance background will trade in the same exact way, even if his method is not working.

Despite the demise of Groupon, what I liked that former CEO and founder Andrew Mason did was that he hired out-of-work actors as his sales team, instead of people with sales backgrounds. His sales team was largely uncredited, but they were responsible for the astonomical growth of his company at the inception:

"We found that improv actors are usually quite empathetic, think quickly and really connect with customers, making them perfect customer service representatives."- Groupon's original management team when they achieved the highest rate of growth

Of course, the demise of Groupon was mainly due to scaling prematurely, perhaps from the pressure by VCs. David Jackson, founder of Seeking Alpha recently shared a slide deck of the most fatal mistake to avoid as a startup: 

Although this might be true in the U.S., and apparently the strategy with many high profile unicorns, I have found that UK VCs differ in this regard and focus on the product first before scale. After assessment of one of my current ventures, Atelier.World, an eCommerce startup, one VC I spoke with discussed the necessity for quality control- and so we completely re-envisioned our tactic in that area by coming up with a tri-part strategy that uses a checks-and-balances system. I have also found that UK VCs do not push founders to scale prematurely but rather develop a well-honed revenue model.

Michael Moritz, of Sequoia Capital, said he was “an incredibly enthusiastic fan of very talented twenty-somethings starting companies.” His logic was simple:

“[Twenty-somethings] have great passion. They don’t have distractions like families and children and other things that get in the way.”-Michael Moritz, Sequoia Capital

In 2011, famed V.C. Vinod Khosla told a conference that “people over forty-five basically die in terms of new ideas.” I wonder what would happen if the above VCs happen to recruit people to replace their own positions? The entire irony of their statement of course, is that both those VCs are way over 45, so perhaps they are perpetuating an old idea that is no longer relevant in our current era but rather symptomatic of the bygone 70s-90s dotcom eras whose ideas were novel then (ie, the 70's motto "Don't trust anyone over 30") but are firmly established now as the norm.

I think though that VCs like Mr. Moritz bring up an interesting and important point regarding "distractions like families and children". One of the problems with many companies is the lack of flexibility in scheduling. Currently there is an untapped pool of potential employees: ranging from single mothers, which according to the U.S Census Bureau, there are about 12 million single parents in the U.S.: around 17.4 million, and nearly half living below the poverty line, and Britain has more single parents than almost any country in Europe, with 1/3 being unemployed. This represents a largely untapped area of potential candidates for flexible positions. It is the case that often single mothers cannot find work without also similarly paying for a child care provider and so many single mothers stay home and receive public funds instead.

Another demographic that has largely been untapped by HR are former military veterans.  It is estimated that nearly 10% of military veterans in the U.S. are unemployed and make up 9% of the homeless with 50% of the homeless veterans being from age 18-50. In the UK, according to some surveys, 1 in 10 homeless is a military veteran

One of the problems that military veterans face is that they lack civilian work experience. They might have other qualities: such as discipline and leadership, but their lack of direct experience in sectors that do not specialise in military functions become a huge obstacle for them when they leave the service. Also, I have found in my experience when speaking with military veterans, they often receive no support nor training from the government in how to look for jobs and positions as part of the transition into civilian life, and often aim towards entry level positions in sectors in which they are not familiar. Out of curiosity I decided to browse some military job recruitment boards for veterans, and it was an incredibly complex, disorganised database, and as a tech savvy person, I found it difficult to navigate the site itself without spending hours upon hours just looking for content that might fit particular skill sets as it was fairly clear there was no one actively managing this database in a user-friendly way with no algos to facilitate users with just information dumped on top of each other as it came in. 

As part of a startup, I think one of the important long-term goals, aside from creating a product-fit, is also job creation. It is clear HR is in dire need of disruption itself, and could potentially be indirectly responsible for the false belief in the media that there is a "talent shortage" when in reality, we have these untapped populations of people that could potentially fit into a new model of how we hire and train people for positions.

For myself, I have a particular fondness for candidates with history, literature, philosophy and economics degrees because often, I find they have innovative minds and can differentiate between short-term and long-term trends and can connect many different ideas together without the myopic focus of a purely engineering degree or technical education (although I think the latter are also important as well for some functions). However, according to Peter Thiel, it's not all that important to even have an engineering, technical or any sort of degree at all. Despite that, I also think life experiences, and what is not written in the résumé or CV is just as important. It takes time to train people, but that amount of effort is worth it for any company when people have the motivation to learn. Since the dot-com era, we have heavily relied on job databases, HR recruitment agencies and VCs with "an unconscious bias" (a euphemism of saying those dreaded words: racism, sexism, ageism) to find our best talent. Perhaps it's time that we acknowledge some of these are outdated methods and look to the new.

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