“Are layoffs even that bad?” How startups can hire top talent right now

Jan 27, 2023

I was recently catching up with an Engineer friend who has just been promoted into management at his small startup.

He said, “To be honest, hiring doesn’t seem THAT hard right now. So many people are getting laid off! That will make it easier for me to hire, right?”

Actually… no 😬

This attitude is common, and an easy trap to fall into especially for startups. But quantity doesn’t mean quality, and more hay doesn’t make it easier to find the needle.

Let’s unpack this more below – because whether you’re a first-time manager like my friend or a startup veteran, there’s an important lesson here: to create opportunity out of the chaos, instead of charging into the mess and creating bigger headaches.

[Quick disclaimer to anyone at a Big Tech Co: my company Workflow focuses on startups, so below might not be as relevant for you. But, you’re still welcome to join our free workshop next week and pick up some valuable hiring tips 😉]

First, the facts: As we all know, news of layoffs at tech companies have been relentless. According to Layoffs.fyi, in these first 4 weeks of January 2023 alone, 68,000+ tech workers were laid off. That’s not even counting the countless layoffs at smaller startups less likely to get covered by the press.

Some of these workers are, indeed, newly throwing their hat into startups. But that doesn’t mean smooth sailing! Too many startups are unprepared and may miss this opportunity, – leaving the talent to get snapped up by companies who DON’T take their eye off the ball.

Here’s the main reason why a wave of layoffs doesn’t mean you can get complacent abut your hiring:

The average Big Tech Worker is not a good fit for a startup environment. But your hiring team is likely to get caught up in Shiny Name Syndrome and make a lot of expensive, painful mis-hires to learn this the hard way.

“Oh this person worked at AppAmaGooBookSoft! We should get them!!” First, we can’t assume anything about another organization’s hiring bar just because they have a big, recognizable brand. Underperformers exist in all kinds of environments, no matter how prestigious the reputation.

But more importantly, as anyone who has significant experience in recruiting can tell you: the Google engineer who can be seamlessly plugged into a small startup is more of an exception than the norm. Take someone used to operating in a cushy environment with ALL of the existing infrastructure, resources, team/institutional support, not to mention the perks – strip all of that away and what emerges is a need for a very different skill set and qualifications.

That’s not to say that big tech candidates can’t adapt to the startup chaos, it’s just a matter of exploration of fit to find those who can, which is difficult when your interviewers have their Google-colored glasses on.

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OK, so what should startups do instead?

Don’t give up approaching thoughtfully and rigorously just because you’re seeing previously untouchable/out-of-budget resumes in your inbox. At Workflow, we’ve been training top startups on the HireEd Methodology,* which breaks down elements of great startup recruiting, no matter the climate. Here are a few tips for you now:

❌ DON’T abandon outreach/sourcing efforts in favor of the “newly laid off” pool – there are plenty of people who were not impacted, but now much more open to switching jobs due to low morale and pessimistic trajectory (especially if the layoffs were bungled!)
✅ DO focus on creating an Authentic Employer Brand to stand out – remember, from top talent’s perspective, most startups look pretty much similar in what they offer as a workplace, EXCEPT for those who have made meaningful progress in building Employer Brand. [We cover a lot of this in Workflow]

❌ DON’T assume a candidate has solved certain problems solely based on their previous employer. Just because someone was in the room at their last company, doesn’t mean they can recreate that successful project in a whole new environment.
✅ DO dig in very thoroughly. Ask Behavioral Interviewing Qs and ask lots of follow-up questions (e.g. Tell me about a time you and a colleague disagreed on the best solution to implement; how did you navigate the conversation, and what was the outcome?) instead of Theoretical ones (“How would you do X?”). This way, you can aim to really get into one’s skills and understanding of problems, not just their confidence in an interview setting.

❌ DON’T rush to create new roles just because of a new resume from AppAmaGooBookSoft. This is how many too many startups have blown their runway (overhiring, hiring too senior/expensive, and mis-hiring). Yes you can be opportunistic, but not by skipping the Planning phase!
✅ DO make a careful re-assessment of your hiring plan to consider your talent needs 3-12 months from now. Note that many recently laid off candidates will take a break before getting back into the job search.
💡 Join Workflow’s FREE workshop on this topic next week! Info + register here.

It’s a weird time – many of us are feeling the burden of uncertainty and anxiety in the air. But these are the times for startup builders to step up. After all, many of the most successful tech companies were founded and found critical early momentum during recessions.

Don’t fall into an easy trap of thinking hiring is going to become easier for you because of external factors. There are a few shortcuts to building a great company, especially in learning how to hire well. So join me and my engineer friend in next week’s workshop – because I’m sending him the invite as soon as this post goes out 😉