Tech startups are changing the way workers are screened and hired.

How to start and grow companies.
Aug. 27 2010 3:34 PM

But He Looked Good on Paper

Out of necessity, tech startups are changing the way workers are screened and hired.

Help wanted sign. Click image to expand.
Web start-ups are having a hard time hiring good programmers.

When Michael Glukhovsky and Slava Akhmechet, the founders of RethinkDB, a database technology startup that changes how people store and access data, received $1.2 million in funding earlier this year, they began looking for their first employee. They turned to job boards. They recruited from their site. They tried to poach talent. They even wrote a blog post on their hiring woes and entered the how-to fray.

Their efforts didn't end there. They briefed a recruiter on their complex technology, but ultimately that was a waste of time—and dollars. And in four months, the hundreds of resumes, dozens of phone screens, and numerous four-hour meetings with viable candidates yielded no one who fit their criteria. So they started their company with students and post-grads eager to tackle a computer-science problem rather than become founding members at a startup.

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Unemployment is chronic in much of the country, but in Silicon Valley, employees have their pick of jobs. In an economic climate that is the near converse of a recession, talent is scarce and star programmers have the upper hand. Pressured to solve the dull hiring puzzle, founders have started reconfiguring the way people get jobs. The result? Americans, more and more, will find work not via recruiters, job boards, and resumes, but by showcasing themselves online and undergoing less subjective automated assessments.

After funding, hiring is by far the biggest headache for startups. Ironically, despite a glut of skilled and unskilled workers, in northern California, available developers who know what they are doing are as rare as mosquitoes in winter. When companies like Apple, Google, and Facebook drain the field, startups can't compete. At the same, young businesses are central to creating many of the nation's jobs. But when an entity like Craigslist employs just 30 people, compared with the thousands of employees at any Fortune 500 company, it's clear that, as the economy shifts to computer screens and more people are hired at startups, the new methods they introduce will stick.

Recruiters, who have transformed the corporate hiring landscape for the past 20 years, are touted for their ability to sift through candidates. But as more jobs require sitting in front of a screen, many recruiters are in a technology fog, which alienates gifted candidates. While they can ask potential hires whether they know certain programs, recruiters in the technology space often can't assess what the applicants know. "They can't tell the difference between the competent ones and the stars," said Paul Graham, founder of Y Combinator, an early stage venture firm in Mountain View, Calif.

In a hiring climate in which companies find talented workers by seeing how they already perform, the RethinkDB founders turned to sites like Github.com and stackoverflow.com, where programmers collaborate and work on special projects. "You can see the code being written and how technically accurate they are," said Glukhovsky, who inhabits a world where 95 percent of coders can't complete basic computer-science tasks. Now, a few months from releasing their first product, RethinkDB is up to six people, a mix of full-timers and interns, both senior and junior. 

Video is another underused tool. Screening candidates between the resume and the interview can help solve the "looks good on paper" problem, in which someone appears for an interview and it is clear that the candidate isn't right for the job. A handful of Bay Area startups, such as Airbnb, a person-to-person site for finding a place to stay while traveling, have started using HireHive, a Y Combinator-funded company that offers monthly plans to pre-screen applicants on video. Another startup, RoundPegg, funded by TechStars, a seed-stage investment firm, assesses how a candidate will fit into the culture of a workplace. A series of short surveys and analysis by an organizational psychologist can tell the hirer whether an applicant will have a problem with the manager or team.

Some of the intricacies of hiring in Silicon Valley are unique to the coding world, but companies increasingly rely on tools beyond the resume and interview. Job seekers are already told to create SEO-friendly resumes, but when established firms like Manpower use video to assess a candidate's bilingual skills, it suggests that these new models will proliferate.

Ultimately, while large companies can afford to hire someone who isn't quite right, even if it can be a nuisance, it usually isn't a catastrophe for the entity. Startups can't. The existence of the entity is riding on the people they bring into the fold. And because startups will be the employers who help drive the recovery, it also means that as more stringent tests for who is suitable become mainstream, candidates who can't pass the rigors will be left behind.

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