Hooked on Company Performance - Issue 3
Company Performance, the New Currency?
Last week's issue on equity got our brains buzzing. Company performance influences company value in the market, which is directly expressed as “value of equity” for employees. Given the state of the current market, this sparked our interest to explore the idea that company performance could be the new currency.
What’s going on?
Just like that. Last year’s growth at all costs is out, replaced by revenue, preserving runway, and a flight to efficiency. Efficiency extends to all business operations, including sales, marketing, and recruiting. If we narrow this topic to talent, does efficiency mean you should swing the pendulum completely and stop recruiting? Startup founders recently shared perspectives on this. One founder, relieved by the recruiting hiatus after freezing all headcount, said his team is 30% more productive. Instead of recruiting, they are using the time to optimize and build product, and betting on company performance to attract top talent later. Another founder is doubling-down on employee performance, suggesting now is the time to assess and level up those hired last year when there was a slightly relaxed hiring bar. They are also using this time to invest in high impact talent pools, necessary for company success. In Madrona’s portfolio these pools are defined as Heads of Product, Engineering, and Go-to-Market in AI/ML, Data, Intelligent Apps, and Developer Tools verticals.
Why does it matter?
While pausing recruiting efforts can bring much needed space to focus on other areas of the business, this gain is only short-term. Why? When you are ready to hire again, any performance gains will be met by the heavy lift of rebuilding talent pools and pipelines, reminding talent who you are, and initiating calls with startup leaders on your shortlist. Even now, the market is competitive for proven talent, forcing founders to stay relevant, connected, and always recruiting in a balanced and strategic way.
What do others think?
“Founders should always be recruiting. For senior roles in particular, recruiting is all about building and cultivating relationships. It would be short sighted to miss opportunities to build or strengthen relationships with industry leaders just because the company isn't actively looking to fill a relevant position at the moment. Two of our best 2022 hires can be traced back to ongoing conversations that started in 2018.” - David Younger, Co-Founder and CEO, A-Alpha Bio
What do we think?
We agree company performance has never been more important and holds enormous value, even to recruit. There is no right or wrong answer but it’s important to consider the downstream impacts of any decision. Cycles come and go, but investments in relationships with talent can transcend both cycles and companies. Being proactive puts you in an advantageous position to have ongoing access to great people. Consider where you want your startup to be a year or two years from now. Making strategic talent decisions today, increases your ability to achieve the goals of tomorrow.
What do YOU think?
For anyone thinking “What does this have to do with me?” Do you want more negotiation power? Next week we will discuss how to optimize your own performance to create optionality (aka staying power)! A topic no more relevant than right now.
Take Action:
Make a top 10 talent “wish list.” These are superstar talent you’d hire without question or even create a role for given their ability to elevate the business and the team. Connect with these people now and often.
Identify the top three recruiting pain points you experienced in times of growth. Now is the best time to build pipeline for hard-to-fill roles, increase brand awareness in talent pools, and meet talent where they are.
Set a goal to have coffee or connection calls every week to build your network and stay top of mind. These conversations can plant seeds today for tomorrow’s best hires. (Just ask David Younger about that.)
Events, Tools, Insights:
Madrona Insights → See how Magnify brought AI to the CS Lifecycle
Hey! Entrepreneurs —> Take the Leap!
Excellent food for thought in this environment. Thank you for posting!