Why start-up founders spend most of their time & energy on recruitment

The Economic Times (Corporate Dossier)

When Steven Paul wanted to start his own company in California, he had the idea. But he desperately needed somebody to build his dream for him. He went to his long time friend, Stephan Gary, who was an electrical engineer. Paul was sure that only Gary could deliver what he wanted.

Thanks to Paul’s skills at motivating people, Gary agreed to do the job for him. This was the 1970s and they wanted to make computers. Steven Paul Jobs and Stephan Gary Wozniak went on to father the behemoth we know as Apple.
Jobs hiring Wozniak is perhaps the most celebrated hiring decision ever in Silicon Valley folklore. If there was a moral to that story, it would be this: if you are a startup, get your initial hiring spot-on.

It’s a lesson Indian startup founders seem to be taking to heart as they obsess about hiring decisions, spending much time and effort with potential hires before getting them on board.

Founders & former founders

The scene is a food festival in a 5-star hotel in Gurgaon in the cold month of December 2013. Brijesh Agrawal, the co- founder and director of IndiaMART.com, was planning to set up a B2B online platform called Tolexo. He had met more than 125 people to form the core team of six. While he was satisfying his palate with some delicacies, he bumped into Navneet Rai of Inkfruit.

They spent four and a half hours discussing Agrawal’s new idea and eventually, Agrawal got a co- founder for Tolexo. Agrawal says he spends almost 40 per cent of his time in getting the right people for his projects. “Even though you may take a lot of time in hiring good people, it eventually reduces your time and energy in day to day operations,” says Agrawal.

He also points out to a fact that the time available to build a startup has considerably reduced. “When I was setting up IndiaMART in 1996, I spent four years in building it from scratch. In 2014, a startup has to be built in six months.” That is why he hunts down people with a startup background on their resumes.

The co- founders of Tolexo, Navneet Rai and Harsh Kundra are from Inkfruit and Jabong respectively. Agrawal says they know how to build something from scratch to a fairly large business. At Snapdeal, 70 per cent of the senior management are former entrepreneurs.

When asked about his longest hiring process, co-founder Rohit Bansal talks about a four year long affair, “We have been trying to rope in a guy five days after starting up and we were trying to convince him all this while. Eventually he joined us just four months back.”

Today, 50 per cent of Bansal’s time is devoted to hiring. When he was launching Snapdeal in 2010 with fellow IITian Kunal Bahl, he says the first six months were spent in meeting people. For them the concept of job description was not a hard lined one.

A numbers game

The founder- CEOs are glued to the hiring desk partly because they are forced to do so, going by the way they want to expand their business and multiply their revenues. Pepperfry, which started with 20 folks in January 2012, has grown to a workforce of 400 folks today. They plan to increase the count to 750 folks in 2015. In the first year of the company’s operations, founder and CEO Ambareesh Murty would sit in on all interviews of potential hires.

Today, he still ensures he has some interaction with potential hires who are assistant managers or above. In a week, he sits in about four interviews at least. “It is crucial to figure out if the candidate will fit into the culture of the company,” he says.

Agrawal’s firm IndiaMART’s workforce has more than quadrupled in the past ten years from 600 people in January 2005 to 2600 in January 2015. His latest startup Tolexo’s strength quadrupled in the span of just five months from 24 persons in August 2014 to 110 in January 2015.

For startups getting people is as hard as firing people. “We are not very fond of letting go of people. But it can be an expensive affair to have a bad hire. The opportunity cost is very high,” says Bansal of Snapdeal. Murty believes that there are no bad hires.

“All people are essentially good. They may not just fit into the organization at that point of time. A person who is very comfortable in an unstructured environment may be great fit during the early stage of the organisation The same person may not be the best fit when the organisation matures. On the other hand, somebody who is very good in a structured environment is a great hire during the later stages,” he says.

No HR Please

Pepperfry did not have a human resource function for the first two years of its existence, as the founding team looked into most crucial HR operations like on-boarding of employees etc. Today, the company has a HR head who reports directly into Murty.

At Chumbak, the Bangalore based online designer and seller of India inspired merchandise, founder and CEO Vivek Prabhakar follows a unique model of  recruitment. Prabhakar goes through almost 2000 resumes a month. He has a ‘culture test’ for the shortlisted candidates. This test mostly consists of logical reasoning question which analyse the pattern of the candidate’s thinking.

Prabhakar says that startups should foster a creative enviornment and if a candidate doesn’t fit into the culture, he rejects them — however skilled they may be. “If a person passes the culture test and if I like him after the interview, he is hired. I make it a point to meet each and everyone of my hires,” says Prabhakar.

The one question Murty likes asking potential employees at Pepperfry is, “What do you do outside work?” “A person with strong passions outside work is the kind of person I would like to hire.” Another quality that Murty looks for in people is “their ability at grabbing land.” By that, Murty is referring to people who are eager to take up work beyond their areas of responsibility.

Chumbak puts its recruits to work in different departments in the initial months. “After this, they come to me and say, this is where I want to work and this is what I enjoyed the most. If it aligns with our goals, we post them there,” says Prabhakar whose firm had raised a has received a second round of funding, last year from venture capital firm Matrix Partners and Seedfund.

 If Prabhakar goes through 300 CVs to find a designer, he might ultimately recruit one. The company also has a unique position called the BYP (Bright Young Person), wherein a talented person has been spotted but if he is not sure on what to do, they will be moulded into what they are best at. Prabhakar says, “HR really does play a very small role for us. They mostly do paperwork.

The multiplier effect

K Ganesh, serial entrepreneur and co-founder of Big Basket, the online grocery store, believes that the founder — CEO’s basic role is to hire people and raise funds for his startup. “This, if rightly done, disproportionately increases your chance of success,” says Ganesh who has co-founded various startups with his partner and wife Meena Ganesh.

When he was launching Tutorvista (an online tutoring portal) in Bangalore in 2006, he found it difficult to get a product developer for his firm. It took him three months of persuasion and convincing to get his first employee — Ravi Kannan, who joined as the Chief Technology Officer.

“He had to relocate to India from US. I promised him a cab service every weekend to go to his hometown Chennai from Bangalore. He was also given equity. He went on to recruit the entire tech team,” says Ganesh. Agrawal of Tolexo has a rule of thumb for recruiting: “I hire the first employee, then both of us hire the third guy and it becomes the job of three of us to find the fourth person.”

Does a startup need a generalist or a specialist? Ganesh is of the opinion that “it can’t be a generalist. It has to be a specialist and specific to the startup. Every startup needs three key pillars to keep it strong- technology expertise, operational efficiency and domain knowledge. As a company grows, you will have to find the next level of teams who can take it forward from what you have built.”


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