❗WAR FOR TALENTS: The Real Bottleneck For Startup Growth in Egypt❗

I tried to make every word of this article worth it & I genuinely promise that it will add value to your understanding to a lot of things about startups regardless of if you’re a founder, a talent, an HR professional or someone who’s interested in entrepreneurship in general! (Yours Truly, Selouky)

There are a couple of questions that come to mind.

- Why there is a war of talents in the tech startup ecosystem & will it get worse?

- What can founders & HR teams do to have a fighting chance in the talent acquisition war? (That they NEED to win if they want to survive, scale & raise funds again)

P.S.: It’s very likely that HR professionals/entrepreneurs reading this will open consultancy for HR services dedicated to startups because things are really messed in this domain and there’s a massive opportunity in solving it.

So, let’s get down to business: Why is there a war of talents?

Many factors weigh in this conversation but first let’s give some context about 3 factors, Raising Funds, Scaling The Business by Hiring Top Talent & Retaining these talents.

a- Raising funds is easier than ever now!

There are people out there who have just one job, finding startups worth investing in. They wake up every day worried about what will happen if they DO NOT INVEST THE MONEY THEY’RE RESPONSIBLE FOR. This among many enablers has motivated entrepreneurs to open their startups, raise massive funds, get insane valuations & just WORRY ABOUT ONE THING: SCALING REALLY FAST! (I feel bad for entrepreneurs who opened startups a decade ago who didn’t have this privilege)

b- To scale fast, these startups need to hire great talents really fast too, but there’s a catch:

i) The demand for talents is much more than the supply which led startups to literally steal talents from each other at any cost. (This is one of the factors that led to an inflation of the salary scale in the startup ecosystem)

ii) Startups had to headhunt talents from corporates who will help in scaling as they have experience is building systems and structuring processes (startup talents are “stereotypically” better at kickstarting projects so the balance is important)

iii) Besides the above 2 talent pools, the 3rd pool to acquire talents is hiring “FAILED ENTREPRENEURS” who opened 1 or many startups that failed which usually means they are startup material and might have exceptional results when working in funded startups! Problem is, there aren’t a lot of “FAILED ENTREPRENEURS” in Egypt (probably because we are living in an early-stage ecosystem)

c- Talent Retention:

Even after hiring from one of the 3 pools, these startups face another reality which is that the average amount of time talents stay in startups is relatively lower than in corporates. (I have no data for Egypt but most founders I meet tell me it’s between 1.5–2 years on average)

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Guess what happens next?

I actually feel bad while writing this piece because I’ve seen it happen to so many of my friends who are founders of very promising startups.

Founders keep borrowing from their “social credit and credibility” to hire any good talent out there especially if they haven’t raised a lot of funds and can’t provide competitive salaries so they leverage their network asking for referrals, they hire by familiarity and/or follow their intuition a lot of times until they are faced with a tough reality,

Founders realize they have no mental capacity or time to hire top talents at the pace that their startup is growing at!

This is when they might consider outsourcing this issue to the newly hired and formed HR Team!

A lot of these HR teams naturally come from the corporate world and are left with many questions at their first day of work:

- Why is the salary scale insane in startups?

- Is there a clear benchmark for job descriptions and titles in startups? (Especially for titles that are not common in the corporate world and are relatively new for these HR professionals)

- What is the best pool to acquire talents from? Does anyone from my previous corporate employer really fit this messed up, dynamic, high intensity culture?

- Where are the data sources, benchmarks and references in this industry?

NOTE: This is one area where the startup scene in Egypt is terribly underserved in HR services that are designed for startups as not a lot of people are aware of early stage and scaling startup needs

So, as a checkpoint so far: Why there is a war of talents in the tech startup ecosystem?

Growth is the holy grail of the startup culture.

With the limited time and money startups have, founders are faced with a tough choice:

- Pay high salaries to young talents and take a bet on them to scale the business fast to raise another round of investment & survive

- Pay the price of having to close the company because we didn’t invest in a team that can deliver the growth that convinces investors that this company can become the next big thing

What can founders & HR teams do to have a fighting chance in the talent acquisition war?

Before we discuss what can be done, it’s important we understand that all startups require a lot of blood, sweat and tears to get off the ground. And once things are finally up and running and a pre-seed or seed fund has been raised, there’s this new uphill battle for the top talents in the market.

In the earlier stages of a startup, founders hire generalists who are jack-of-all-trades and are willing to hustle in 20 different roles for a year or two.

But as the company grows, the need for more specialized talents increases, which is where the talent acquisition war starts to become nuclear!

Thing is, top talents are most probably already working somewhere else, but you will have to figure out how to convince them that your startup game is the real deal. But will they believe you when you say it’s the next big thing? Will they believe you when you promise you will IPO soon and they will cash out?

Am I going to share the secret sauce now for talent acquisition and retention? Sorry if I implied that I have it, at the end of the day I’m just an entrepreneur myself who is struggling like everyone.

There is no secret sauce for acquiring top talents, only a mix of innovations, adaptations and evolutions that founders, startups & HR professionals need to go through!

Let’s look at some of them:

1. Educate your talents about how startup packages work:

A lot of top talents are GREAT at what they do, but do not really get what a standard vesting model is, what stock options are and other terminologies that HR teams and founders throw around lightly making these talents feel confused. Educating your potential and current talents makes them trust you more and decreases friction in your efforts to justify the compensation & benefits models you use.

I have heard lots of talents talk about how stock options mean nothing to them if they cannot have the basic salaries to keep them alive. Segmenting early believers from those who are in it as a job is important for startups to know how to approach and handle each talent. Do not dangle equity to talents and expect them to have a full buy-in without knowing what they’re being offered.

2. Culture compensates the broken salary scale:

Let’s admit it, the salary scales in startups are broken. You have some startups that will pay peanuts and others that can pay Head Positions a 6-digit salary. I have seen managers earn 20K EGP in some places and 60K EGP in others when they both share a similar profile and offer a similar contribution. (In my honest opinion I don’t find this entirely wrong because there are many factors to consider when pricing talents but still the gap is just questionable a lot of the times!)

This is where we need to address something that a lot of people don’t like to talk about because it’s not tangible nor quantifiable in a time where everyone is obsessed with data. How can we build a CULTURE that compensates the salary scale madness?

Reality is, smart people want to work with smart people. They want to feel respect, appreciated and given the space to grow and contribute. So what are startup founders and top management doing to increase their talent density and to reach the critical mass of good talents who will turn the culture into a magnetic field for other talents who are considering working there?

I plan to visit tens of startups in the next few weeks to see what elements build up a stellar culture that can compete with the insane cash offerings from other startups. (Accepting invitations to any offices)

P.S. During my research, one article highlighted this company as a case study in talent acquisition and retention, highly recommend you check it) https://www.youtube.com/watch?v=8lPMYk09nUg

3. Fostering up-and-coming talents:

Let me tell you this, the demand for talents in tech startups is insanely high and the supply is just a laughing stock to be honest.

For instance, there aren’t enough competent and experienced growth managers & data analysts, so does that mean you either offer 50K+ salaries or you don’t hire?

This is one of the few interesting things I learned at a bunch of startups that adopted the “home-grown talents” methodology. They are proactive at building pipeline of talents by either head hunting junior and mid-level talents in other startups and building them into managerial levels or even going to the point of creating employer branding and talent acquisition programs targeting top schools and incubators to hire these talents fast.

4. Employer Branding: Where startups fail to truly invest in!

Founders tell me that they’re not a fan of talking a lot and they’d rather let the numbers do the talking. Now let’s agree on something, if you think employer branding is all about overselling your company and stretching the reality, you’ve got it completely wrong! Think of it this way, if all younger talents see on their LinkedIn feed are posts of their friends working in other startups, having fun, posting their achievements etc… eventually they get the FOMO effect (Fear of missing out) and start wondering if they’re in the right place?

HR Teams need to lay down a strategy for each of their online talent acquisition channels to have a fighting chance in the talent acquisition and retention game. The end in mind should be that if anyone checks your social media channels, they’ll end up feeling that they’re going to have fun while learning at your company! Segment the talents you’re acquiring into different personas and decide what are you going to post on which channel at what time to attract the right people. Also, think Automation to save time!

5. The Golden Rule: Great talents refer great talents

Ask your best talents this question: “Think of the toughest project on your plate today, who do you trust to hire and work with on this project? Will they just get it done or will you enjoy working and learning from them?”

Tapping into your talents network is your #1 pool for hiring with predictable results.

People trust people, so when your talents talk to their friends about your company, you want to make sure that they have the most updated data on the vacancies & top projects so that they push it organically to others. You basically need to turn your talents into ambassadors. Just make sure to incentivize them in the right way if they refer someone who gets hired eventually.

6. HR need to be involved in the discussion:

Most startups don’t have a fighting chance in hiring the top talents as long as their HR teams are not proactively discussing with the department managers what the position they’re hiring for is and what is an ideal profile to hire. Unfortunately, there are many startups that use outdated & recycled job descriptions full of buzz words that makes the HR team hunt for irrelevant talents. Recruiters need to do their business intelligence and understand the tech startups ecosystem to be able to deliver what’s expected from them.

If you want top talents to roll the dice on your startup, make sure you try some of the above and tell me in the comments what worked for you and what wasn’t that successful! Talent Acquisition & Retention in startups is a big challenge in Egypt today, but with fine-tuning the above strategies and more, nothing is impossible my friends!