EP 54: The current state of the tech industry's labor market. Talent acquisition strategies for 2023 w Asad Zaman
0:00 Hello, I am your host, James Mackey. We're joined by Asad Zaman. Assad. What's up, man? Welcome to the show.
00: 06 Thanks for having me looking forward to this.
0:08 Yeah, this is gonna be a lot of fun and very exciting to discuss the topics we've outlined for our community today.
0:16 I would love for you to share a little bit about your experience, what you do, and how that frames your perspective.
0:23 So everybody tuning in knows where you're coming from.
0:27 I get to talk about myself. I love doing that.
0:29 So I am the CEO of the Sales Talent agency.
0:32 We are a recruitment agency that focuses on helping companies build out their go-to-market teams.
0:39 The founding story has to do with how we think about this space.
0:43 So I'll, I'll tell you very quickly, which was that our founders prior to starting the business used to work at Monster.
0:48 They were with Monster from product market feed to about 100 million in revenue.
0:52 Monster being the first real job board offered the world a cheaper, more efficient, more measurable way to find talent.
0:58 But they learned something through conversations with their clients, which was that it was totally ineffective for sales.
1:04 And the reason for that is that sales is really interesting and all of the demand for sales targets about 10 to 20% of the sales people out there.
1:12 And those people are generally good, they get paid well, they get treated well.
1:15 So they're not going to job boards if you want them, especially before you are Amazon and Google from an employer brand perspective, you have to be the ones going after them.
1:23 So that was the inside that led to the creation of the business.
1:27 They looked at the Canadian landscape and they realized that there was no agency at the time that specialized in solving this problem being sales leaders.
1:35 They knew that the problem was complex enough that it needed a specialist.
1:38 So they started the company, we stayed within Canada and worked in junior and mid-level sales roles for the first four years.
1:45 We're 15 years in.
1:46 So we've evolved a fair bit right now.
1:48 We are across the entire world market team.
1:51 So that's one way that we've evolved.
1:53 We've got practices and customer success, product, marketing, technical sales, et cetera.
1:57 We're end to end.
1:58 So CRO is down to BDRs and everything in between and we've expanded geographically.
2:03 We are one of two leaders of this category in North America as a whole and we are present in Europe and Asia Pacific as of the end of last year, or actually the end of 2021 in terms of our scope of doing this.
2:18 So we've worked with about 1500 companies, mainly tech, 70% pre-IP0, and 30% post-IPO.
2:25 We've facilitated about 700 million in salaries.
2:30 So we've had tons of repetitions doing this.
2:32 And those repetitions have informed our net and have helped us build our network out and our brand out.
2:37 But more so than anything else, it's helped us develop the system that we deploy philosophically.
2:43 We believe that recruitment is not an art, it is a science, and it can be done in a repeatable, predictable, and scalable manner.
2:49 And so we've had the pleasure and the opportunity to develop these systems and tons of repetitions of optimizing them, calibrating and developing frameworks that we feel give our clients a real competitive advantage.
3:03 So, in a bit of a nutshell, that is us.
3:06 Awesome, man.
3:07 Well, that's really great to hear.
3:09 And I think that's what's gonna lead to such a helpful conversation because between the two of us, we've worked with so many tech companies and we've helped so many hires.
3:19 And you know my company, we do some work on the go-to-market side for tech about a third of our business, maybe closer to between a third and half of our business goes to go to market but then we're also on the technical side.
3:31 So engineers products.
3:33 So we have segmented teams and then we have a GNA team for, you know, finance, hr, everything else, right?
3:39 So it must be really interesting to see the market as an overall market like that because we have this one lens in it, right?
3:46 And it's a really interesting lens.
3:47 It's fascinating.
3:49 But I, I really enjoy talking to people like yourself that see the whole side of it and practically see it not just through the data, the data we even look at, but you get to actually practically experience how this market is shaping up in finance versus technical versus sales.
4:05 I find it really interesting too because there's just more of a variety of roles that we get to work with.
4:12 And I have experts on my team, you know, people that specialize in tech and people who specialize in go to market.
4:17 So I can learn from these folks, which at this point, I know we were talking about earlier, staying close enough to the game to know it inside and out.
4:24 But quite honestly, I rely on my team because they have this expertise, and they're still hands-on.
4:29 And so they bring me a lot of insights which I find to be really cool.
4:32 But yeah, it's weird. It's like when we see the market shift from a strong bull market into whatever we're in now, whether it's a recession or not, I think it's interesting because we can see, OK, this is how go-to-market strategy is being impacted by this shift.
4:53 This is how engineering strategy is being impacted.
4:57 And while we're on that topic, I actually have two insights that I can share on that.
5:02 We saw a lot of our category-leading clients significantly cut engineering teams in North America.
5:09 And so what we saw was we saw companies like Affirm and other category leaders cut 500 plus engineers that they hired most of last year.
5:20 So within one year they focused on shifting their strategy to an offshore model.
5:28 So we've seen a lot more international hiring for engineering teams.
5:32 What has been really interesting as well, is we've seen an uptick in international VCs and best in Indian-based companies which are investing more and go-to-market strategies in the US market.
5:46 And I think interesting, well, what's interesting too is I think part of that strategy is us, companies are playing retreat, they're playing OK now, shit we got to scale back focus on profitability and they have to focus on this reorganization versus a lot of Indian firms that already have a low-cost structure, at least more.
6:06 So in the US they could continue to focus on offense.
6:11 So you got international funds like pros that are investing in these Indian-based firms to build their go to market strategy in the US.
6:20 So what we're seeing, it's really interesting.
6:24 I'm from Pakistan and I have tons of family in India.
6:28 So it's been really fascinating to see how India has become this huge player in the tech world.
6:35 And I think it will be really fascinating to see is, at what point does compensation start becoming high enough in tech in India that, that, that arbitrage is no longer available?
6:51 Because right now it's very simple, right?
6:53 Like if you hire tech talent in India, Pakistan, or any one of these countries, if you're paying a fraction and so you will deal with the time zone and the other issues that come with having a team that far away because the cost-benefit is so significant in your favor.
7:09 But I have noticed that there was this one company in Pakistan that started this trend where they started paying closer to European and North American compensation to those people to really be able to attract the best and it increased like the base level for all, all of those roles.
7:26 And so it'll just be interesting to see at what point it get to a stage where now it's no longer competitive to do that?
7:32 And then how does it all play out?
7:34 Well, sure. That's a good strategy, I think, to pay people very well.
7:40 And traditionally, I guess cheaper markets, right, from a US investment perspective.
7:47 So honestly, we started about five years ago, we built a subsidiary in Romania.
7:55 And we could have gone the path of least cost possible where we're going to hire recruiters at market price.
8:04 But we ended up doing is paying people around twice as much as what they could earn elsewhere.
8:10 Yeah, because It was still a lot cheaper than hiring them over here. Right?
8:14 Yeah. Right.
8:15 We were still getting some of that price arbitrage, but we were also not, we didn't get greedy with it.
8:22 Like our goal was, hey, let's compensate people really well now, and since then we've actually scaled back from the subsidiary and now over 90% of our employees are us-based.
8:33 But, for other reasons, you know, I think you're right, like, I think it's gonna be kind of a rising tide with the remote work and flexibility where we're gonna see increased salaries globally.
8:45 However, I do think that possibly time zones in could restrict salary growth to some extent.
8:54 And I'm not an economist.
8:55 As a US-based company, if you're gonna pay full price, you're probably gonna just hire at a minimum in North America.
9:06 You're gonna get somebody closer to your time zone at that point.
9:12 Because if you're going to pay this type of compensation, then you want all the benefits of that compensation, proximity, cultural alignment, all of these things.
9:24 It's only when there's a difference in how much you're paying.
9:27 Are you willing to deal with those issues?
9:29 There is a really interesting company that had built a 24-hour development cycle by building small teams in different markets, which I thought was really fascinating because they were shipping products at a pace that I hadn't seen before.
9:42 And the only reason they were able to do it is they had all-time zone coverage.
9:45 So there are some interesting players of that sort as well.
9:48 It's a really hard one to implement and execute.
9:52 But if done well, it can be a huge advantage, especially in a category that is competitive where the speed of developing and shipping products is necessary in that type of scenario if you can get this right.
10:04 It's a game changer, but it's so hard to get right
10:08 24/7. It's like every business owner's dream. You get people at different time zones and the work never stops, right?
10:14 Literally, your pace of shipping product could be two or three times your competitors at that point.
10:24 Right. That's a real difference-maker.
10:28 So hell yeah. I would rethink my strategy five years out.
10:33 So I feel like as services, it's a little bit trickier because you would need to have clients and all the, a lot of clients in all those different regions because it's gonna be hard to find talent.
10:43 Like one of the challenges with Romania was even with high salaries.
10:47 Culturally, first of all, they didn't, they didn't care quite as much about money.
10:52 They want to earn a good living, but they care about stability, they don't care about, hey, you can make, they don't necessarily care about earnings if it's gonna inconvenience their lifestyle too much because they were recruiters, we asked them to work us based hours and so that cut down the candidate pool still significantly.
11:10 So for us as services, I feel like it's a little harder but like product companies.
11:15 Yeah, I could totally see development teams at different time zones like that.
11:20 As long as it's a process built up properly to keep everything organized.
11:24 I think it's a really interesting point.
11:26 Like I, I used to sit on the board of a software development company that was based out of Pakistan and then one that was based out of Toronto as well and that was completely onshore Canadian employees working with the North American companies, both had North American clients, but they just had different ways of doing it.
11:43 And I learned that it is for technical roles, that the difference in markets, it doesn't make much of a difference, right?
11:50 Like you, the technical aptitude capabilities are that.
11:54 But if you start going into things like sales, right?
11:57 There are horror stories of people that have tried to outsource the BDR function to a company in Eastern Europe or Asia or even Mexico or South America, but it doesn't work.
12:07 And I think for recruitment, it is similar, you know, it, services, in essence, is you're selling the ability to solve a problem.
12:15 You're not selling this tangible product that they buy it, they know exactly what they're gonna get, right?
12:19 Like when you buy a CRM, you know what you're gonna get.
12:22 But when you are buying services of any sort, whether you're going to a lawyer, a doctor, a recruiter, a consultant accountant, you're buying their ability to solve a problem for you.
12:32 When you will, you will, you're taking this leap of faith and you do it based on a couple of things.
12:37 You, they have the niche focus that aligns with your problem or your area.
12:42 They've dealt with some of the clients before they've solved some of the problems before they are communicating with you in a sophisticated and intelligent manner.
12:49 But at the end of the day, you're taking a leap of faith.
12:52 And so the thing that helps you take that leap of faith beyond everything else in my mind is when you are dealing with and talking to and working with true experts.
13:00 And so the job of the services business is to develop expertise in its people.
13:05 It takes time, it takes effort.
13:07 But I think because of this, there is a need to hire people that you can see working in the business for way longer than sometimes you have to think, of a longer timeline than you would think in a product business.
13:21 And so because of that, it's probably better to have proximity, not because people in that part of the world can't work for your company for a very long period of time.
13:30 But to sometimes drive long tenure, you need things that proximity allows for or at least allows for in a more efficient and cost-effective manner.
13:38 So that's, I think one of the major reasons why a company like yours or ours would focus more on hiring people around wherever they operate.
13:47 Because then you can bring them together and then you can, the time zone advantages play out and then you can have events and you can, you know, there's a lot of things that play out of that sort.
13:58 Yeah, for sure.
13:59 It's like you want to show up to, to like 20 deep, like, right, put on some t-shirts and it's like you don't even need to do a sponsorship.
14:07 You're rolling deep with your team 100% right.
14:11 So, well, hey, man, that's so cool.
14:13 We just added like 15 minutes of value and it wasn't even on the agenda, so it wasn't on the dock end.
14:19 That's how it's done.
14:21So to get to the buckets of topics that we had initially brought up for this conversation and invested a fair amount of time and put it together.
14:31 Let's start with, I suppose the elephant in the room, something that pretty much everyone in tech, whether in town acquisition or executive leaders are thinking about right now.
14:41 Let's talk about the overall state of the labor market.
14:44 Let's be tech-centric, let's focus on the tech industry, our people.
14:49 And let's try to give them some insights from our unique perspectives, having worked with hundreds if not thousands of tech companies.
14:56 So I'd love to get your thoughts on what we're seeing in the labor market right now.
15:00 How is it going?
15:02 Maybe common misconceptions.
15:03 We would just love to get your thoughts on what's going on.
15:07 For sure. I think it's just been this really interesting two or three-year period, right?
15:10 Like when we look back, I would say this is probably one of the most interesting economic periods that has played out in the last couple of decades and when we look back, that's probably how we don't look at it.
15:22 If you think about it, it starts with the pandemic, right?
15:25 Where something really interesting happens, you see that demand for technology across the board increases exponentially and for a number of reasons, right?
15:38 Like because businesses had to because of the lockdowns, businesses had to operate remotely so they needed to buy technologies to be able to even just function in that environment.
15:48 And then to be able to thrive in that environment, you need a lot more.
15:52 And on the consumer side, you and I started at home doing and doing everything digitally that we used to do in the analog world.
15:58 And so where does that show up?
16:00 It shows up in demand and revenue growth numbers.
16:03 And when you're sitting in an economy where the cost of capital is 0% right?
16:08 Like 0% interest rates as investors, you look at those two things and you start just aggressively deploying capital.
16:14 And because you're deploying capital and the and you've seen these like once in a lifetime type of growth numbers and revenue and demand numbers, you try to win as many of the good deals as you can and what you have, you know, you have a couple of ways to stand out when you're an investor and trying to win the deal.
16:31 But the biggest thing that they can use is valuations.
16:34 And I think the market was just in this really interesting moment where low interest rates and high demand and high revenue growth converged.
16:43 And it felt like this moment in time where we had to just all get in and we'll do what we need to do to get in.
16:49 And so that led to valuations coming up to a point that we've never really seen before.
16:53 Like if you think about it, a tech company on average is given a valuation of like 10 times to 20 times revenue, right?
17:00 Like that's a good arrangement to keep in mind if you look at the public market markets right now, even the top highest growing fastest growing companies don't get 20 ads, right?
17:11 We were in a market where 50 to 100 ads were normal.
17:14 Like you would see it across the board in the background while all of this is playing out, the thing that led to the demand and the revenue growth that we'd never seen before was also creating inflation-related problems, right?
17:25 Supply chain problems like COVID, basically COVID was causing supply chain disruptions.
17:29 Then you had the war in Ukraine and all and its implications on energy and food prices.
17:34 And so inflation was now coming up and then inflation is something that central banks have this one blunt instrument that they can use to deal with which is the interest rates.
17:43 And so when you take interest rates up, you're cooling the economy down.
17:47 And I think the theme of last year, if we were to say what was last year about, it was about seeing all of that play out because as interest rates were going up, you see our economy start cooling down, layoffs, start happening, demand for talent goes down, companies find it harder to generate revenue in this type of an economic environment.
18:05 And so last year was that I think if you think about the labor market now it is so intricately and deeply connected to the interest rates that because interest rates will cool the economy down if they're growing up and that means that demand for talent is going down and then maybe it happens often but it's still a maybe unemployment grows up but and supply or supply becomes more available, however you want to call it right?
18:32 Those are, there's a chain of events demand first, then this happens, but sometimes this might actually not happen.
18:39 And that's interesting.
18:40 We can talk about that a bit more in terms of like practically seeing how this played out.
18:44 I think the peak in the labor market, at least in our world of tech, in our world of tech sales was Feb 2022.
18:51 At the time, this will, this will help contest it.
18:54 The demand for software sales talent in the top 10 markets of North America, there were 100 and 47,000 open jobs for 92,000 people that do those jobs.
19:03 That was the gap.
19:04 Like if every person took a new job, you would still have thousands and thousands of unfilled jobs right now in all of tech, not just software, but all of tech.
19:14 There are 96.5 thousand open jobs in all of North America, not just 10 cities or there are 10 states, right?
19:21 So demand has dramatically dropped, but you don't look at demand alone.
19:26 You have to compare it to supply.
19:28 There are 96.5 thousand open tech sales jobs for 825,000 people to do those jobs. That's still a relatively competitive talent market.
19:39 And so it's really interesting to see how that's playing out.
19:42 It's fair to say demand has dropped significantly.
19:45 The next thing will be does supply become a lot more available and that's the question, right?
19:50 Has it become more available?
19:52 Is it more available right now?
19:54 There have been 175,000 people laid off in olive tech between last year and the beginning of this year across the world.
20:02 It's really sad. But when you compare, when you just look at it from a data perspective, there's 9.9 million people in North America alone that work in tech.
20:11 So 175,000 versus 9.9 million. I don't think the layoffs have been significant in the grand scheme of things.
20:19 There are still five times as many open tech jobs in North America as there were people laid off in all of last year and the beginning of this year in all of tech and all of the world.
20:30 So the supply impact in my mind or from what I can see hasn't played out just yet.
20:37 We've seen demand drop.
20:38 But supply still wait to see what's gonna happen with that.
20:46 Maybe there will be a lot more layoffs this year and there are a lot of people that think that will happen.
20:52 We can talk about why and that'll change the dynamic.
20:55 But as of right now, what we've seen is demand drop from an extreme peak to a level that when compared to supply is still a relatively competitive environment in which hiring in my mind does not necessarily become easier.
21:09 I could actually debate that it probably becomes a little bit harder.
21:15 That's all very helpful. And I have some follow-up points that I think can also add value.
21:20 I think first off just to echo your point, people tend to look at a top-line number.
21:26 People make this mistake all the time, whether they're thinking about revenue or they're thinking about any type of supply and demand equation.
21:34 I think you're right.
21:35 People are looking at demand dropping and then assuming it's going to be easier to acquire talent.
21:44 I think that is wrong. I think that it is easier.
21:48 I mean, let's not, you know, I think overall it probably is easier, not necessarily for high-level positions, but maybe for some IC roles, it's a little bit easier, in my opinion.
21:57 But I think it's still pretty competitive and you do have to look at supply and I don't think that that's a conversation that is circulating on LinkedIn and in the news, I don't think that it sells copies of whatever people are selling, it doesn't grab eyeballs and clicks.
22:13 I also don't think people, you know, want to look at something for three seconds and get a sound bite and feel like they know what's going on.
22:23 Well, also what happens is that we're good at remembering history and history repeats itself, but it doesn't repeat itself 100% in the same way.
22:33 And so just because in 2000 and 2008, hiring became easier for those that were hiring because I, I layoffs were so across the board and the numbers were so much higher and demand dropped so much we think.
22:45 Well, that's exactly what's happened right now. Because the capital markets have dropped in ways that match those years.
22:53 It's just that we're not there right now, when in terms of demand and supply of labor, at least in our world, which is tech.
23:00 And for me specifically, it's tech from a go-to-market perspective, I would say that, you know, maybe for some roles, it's easier.
23:08 But let me pose a question to you, you know, last year or the, and the year before when we were in a really hot market, demand was easier for companies to generate like they, they were generating tons and tons of demand, right?
23:22 And so when demand is being generated at the velocity that it was being generated at because of the state of the economy, the salespeople you hire, you could have a bab level salesperson in your team who will probably still be in and around quarter, right?
23:42 Because at that point, the job of a salesperson completely changes.
23:45 You're, you're taking demand and you're navigating it through your process and you're maximizing the chance of closing it.
23:52 You know, some would say audit, I would say that's not how I would think of it, but you are more of a conductor at that point.
24:01 Whereas in this market where demand is really hard to generate, you don't have the luxury of hiring from the top 20%.
24:09 You have to hire from the top 5% the people that have the ability to be creative and tenacious enough to generate demand in this market.
24:17 So if you are hiring your pool was 20% of the market that you could hire from last year or the year before.
24:25 And it is 5% right now.
24:27 So, even for those IC roles, at least in sales, it can still be quite hard to make great hires.
24:43 If it's too easy, are you screening candidates properly and putting them through a robust enough interview process, the goal should always be to be the best, the best people are going to the best fit people, I should say, are the individuals that are gonna help your company generate whatever business outcome that you're trying to strive for.
25:04 As I like to say it, it's like top talent is always going to have options in any market condition, right?
25:11 If you get, if you're pushing high enough again, if you want to be the best at talent acquisition, the 95th and up percentile of folks are always gonna have multiple options, particularly as you get to more strategic or a rare skill set, particularly obviously like leadership roles.
25:27 You know, you need great leaders, you need great strategic folks, specialized folks all the time and they're always gonna have multiple options.
25:34 So I think it's a really bad mindset to have that somebody at top talent is, is only, has, has you right, that they're considering they're still gonna have 100% several, several options on the table.
25:48 If you think of investors, investors are looking to invest in the end of one type of company, right?
25:53 The one that can be the category leader.
25:55 And I think what's the difference between a good company and a category leader?
26:02 It's the people that they were able to hire because it's a really hard challenge for companies to solve.
26:07 You will hire these companies at a velocity that we've never seen in history before, right?
26:12 Like think about a triple, triple, double, double, right?
26:15 Like from a revenue growth perspective.
26:17 Well, your employee count is dramatically increasing during that journey.
26:22 And when history has seen an entire sector, there are hundreds of companies that are hiring at that scale.
26:27 It hasn't happened before and this is no, it's going to be to me, the hardest problem for them to solve is to maintain the quality of hires as you increase in size and scale at the velocity that you're increasing at.
26:40 And if anyone and it's the biggest difference, make, make it between them being number one in their space and them not being number one in their space is the quality of the people that they can bring on board and how they enable and equip those people to be able to create the outcomes that those people are responsible for anyone that doesn't give it the due attention, the due amount of resources and recognize the difficulty of that problem to solve.
27:04 To me doesn't have what it takes to build that end of one type of category leader.
27:10 And unfortunately, you know, we've spoken about this as between us, which is that internal talent acquisition, When you think about the challenges of internal talent acquisition that you see quite often out there, you realize that it, for a lot of companies, they haven't given the right attention, they haven't given it the right amount of resources that division is usually quite under-resourced and understaffed and underappreciated and overwork.
27:38 And you, if, if, if those companies truly recognize that this is probably the most important division in the company because it's gonna speak to the quality of the people that we can hire, which is in turn, going to speak to the quality of the product we can build and how well we can go to market.
27:52 Then you wouldn't see that play out the way it plays out as consistently as it plays out.
27:57 And I think one huge missed opportunity for growth stage tech companies that and they usually wait way too long is to have an executive recruiting team or at least one or two executive recruiters that are doing that full time and have a ton of experience doing that because to your point, category leaders are gonna have category leading talent, right?
28:20 I mean, the best talent available in that space and one of the most important things is who are the leaders that you're hiring for that company?
28:30 Because those are the ones that are gonna be operating the business on the day to day basis.
28:35 They're gonna be hiring the team, they're gonna be putting in the process, they're gonna be able to put in the tech and one small layer of protection that you can have is if you build out incredible process and technology and a lot of roles, maybe you can get away with the B player a little bit easier than if you don't have a process in tech.
28:54 So it's all important hiring A players for every role is important.
28:58 But you have to think about starting at the top down and making sure you're getting in the right leaders.
29:04 And you know, if, if there's anything that's most important to get the absolute best folks, it's, it's on your leadership team.
29:11If you think about it, why is that important, right?
29:17 It's so important to recognize the why behind it, which is that if you are in the workforce and you're looking for a job, you and I have spoken to between us, thousands of people that are best in class of what they do and are considering a move, right.
29:35 And you ask them, why are you thinking of moving?
29:37 And it's usually has nothing to do with things like birds and anything of that sort.
29:43 It's usually to do with the fact that they are either not inspired by that mission anymore.
29:49 They don't see growth in the, for that career.
29:52 They don't feel equipped for success or they don't like their manager.
29:55 And a lot of times when you ask somebody, why did you pick that company with?
29:58 They have optionality when they're in the market, why did you choose this company?
30:02 Usually in the top two things is the person that they're going to be reporting into.
30:06 Because that person is going to, they've decided out of all the different options I looked at and all the different people I could report into this person is gonna help me become the best version of my myself.
30:16 This person is gonna help me actualize my true potential.
30:19 They will equip me for success, they'll support me, they'll do what it needed to do, what they need to do for me to become the professional, I believe I can be right?
30:28 And so if you don't have a players over that, then the A player will never join a B player leader, right?
30:34 If there A players will only work for a players and if you want to be a category leader, you're essentially saying we're an, a great company, right?
30:44 Like we're the A plus plus plus.
30:46 And so for that, you need a leadership team that is a across the board because then you have the chance of them hiring a players under them where, whichever division you don't have an, a player leader on top of, you will not have a players under them as well.
30:59 It just doesn't, never plays out that way.
31:01 It doesn't, it doesn't. And even if you do, you're lucky enough to get one because you just throw money at them, they're gonna leave, they're gonna leave.
31:07 It's not, it's not gonna last, right?
31:09 I mean, II, I think too, it's like, what, what thing just to, to really simplify it, the way that I when I talk to CEO that aren't in our industry, right?
31:20 I say, you know, it doesn't matter how good your recruiters are.
31:24 If your hiring managers are not investing and learning how to hire top talent, right?
31:29 If you do the, you can have the, the, the, the coolest most, you know, expensive, whatever talent acquisition department with a fantastic VP of recruiting or talent acquisition.
31:39 But if the VP of engineering or VP of sales isn't committed to best practices, it doesn't matter.
31:46 And so one thing that I discussed with CEO S is look, you need to have hiring performance metrics in place for every VP company wide because a VP of recruiting cannot influence what, you know, how the VP of engineering is operating so everybody, every leader needs to be accountable for their own hiring plan.
32:08 I like that. Yeah, 100%.
32:09 If you look at in our world of, you know, go to market, if you look at the top 100 CROs out there, those top 100 CROs believe that recruiting and people is one of the largest responsibilities for them and their people, right?
32:31 And so they're not, they are not handing this off, because, it's like handing off the most important part of your job is to build a great team that can grow and achieve these targets, right?
32:42 That you've set out for them.
32:43 So it's like the most important part you're gonna give to somebody else and then you're gonna try and deal with whatever they've given you like the best don't do that.
32:50 They want to control the outcome as much as possible and they understand that they're the ones that are best suited to be able to have intelligent conversations with the types of candidates that they want to bring on board and help them analyze the risk versus outside of joining this company and even get them excited up front to want to even talk about this company, right?
33:12 They know how to work with internal and external partners in a really good way, like they know that it the partnership, they know how to excite the partner and equip the partner deal well, with the partner and give great feedback.
33:24 Like you had clients, I've had clients that give the best feedback in the world and then there's the other end of the spectrum as well.
33:30 And what does the great feedback allow for it allows for us to then go and help them really well, because we are understanding and making adjustments along the way.
33:39 You know, there's something I think about which is like what is the best way to set up internal town acquisition?
33:45 You, you tell me your thoughts, you've given this a lot of thought and your firm is like is broader than what we do and it's probably closer to being, I think we just solve different types of problems, right?
33:57 Like you guys are an embedded recruitment partner.
34:01 We are not, we're not RPO style, we are a different format.
34:06 So we see the world from different lenses.
34:09 And so I'm curious to see what you think of this, which is that it's almost impossible to build the right type of internal talent acquisition team at a high road tech company.
34:19 Why? Because in essence, it has to be like an elastic band that can go up and go down based on needs, right, like the hiring needs of these companies happen in spurts.
34:29 And so there are certain moments where you're gonna hire at a velocity that you need to hire to get the right foundation for now, the next phase of your growth and that after that, they'll be like, you know, sustained hiring as well, but there's a, there's a significant spike in these moments. And so you get a choice.
34:47 Do we build a talent acquisition team for that type of spire for that or do we build it for the average, sustained hiring and then supplement the gap with external partners?
34:59 I think that's like a fundamental choice a company has to make because if they build it for, if they decide we only want to do everything ourselves, then those are the companies where you see talent acquisition teams get laid off over and over again as those companies go through their journey because you essentially have to build for your maths and your maths needs, but those maths needs don't stay, they don't stick around for a long period of time.
35:25 And so that's like something that I think about, like what is the right size and structure and way to think about internal talent acquisition?
35:32 What are your thoughts on that?
35:34 I do have, some interesting thoughts. So in the early days of SecureVision, I built myself out, I ran talent acquisition essentially as a head of T A for a few companies.
35:44 I also was a Chief people officer for 100% company.
35:48 And then with my own company as with yours, right? In the CEO role, we've built out recruiting functions.
35:55 So yes. And from an RPO perspective, for some of our clients, we are running talent acquisition, we are 100% right?
36:03 Typically, it's usually a 70-30 split, 70% in house, 30% us to augment that and provide a layer of flexibility.
36:10 But I do have some pretty clear thoughts. One and we've touched on this several times with, you know, the past couple of times, we talked together the best talent acquisition teams operate like revenue teams, as you mentioned.
36:23 You said talent acquisition is a science, it's not an art. And when you look at the technology stack and the data driven approach that companies take to sales and marketing and then you look at that same company and how they're operating in Town acquisition.
36:40 It's like the data driven approach falls off a cliff. It's, it's totally, it's just incredibly disappointing like there's if you keyword search recruiting apps, you don't find like anything man. Like there's just there's just this total gap. So I think that that's one thing.
36:58 It's like building out the talent acquisition team in a data driven way, leveraging process and technology, not this old school like seventies way of like, hey, it's just relationships and feel like no, you need a data driven approach.
37:11 You need to understand not only costs per hire, you need to understand costs per source, you need to understand conversion rates to see if certain channels are scalable.
37:20 So that's why we were talking about Brandon, Founder of Assemble, which is an applicant tracking system based on salesforce.
37:27 For those listening, it's episode one of season two, definitely check it out . It's a very technical good episode.
37:33 And basically what we talked about is having a core sales force license, but then a revenue tech stack integrated so that you can actually run to acquisition like a revenue org.
37:46 And what's really cool about Assemble is you can, it's for internal companies, Brandon's first company was just on the staffing side.
37:53 Now, hyper growth companies, other companies can leverage this in house, which is pretty dope when you have the right my last point when you have the right process and technology in place, it protects you.
38:08 So it helps you achieve hiring plans in a market rebound. So a lot of talent acquisition teams when they don't have processing technology in place, what happens is when they hit a down market first, they cut us right, their vendors, then they cut their internal talent acquisition team, then pent up demand occurs even if they're not growth hiring they at some point need to, to backfill.
38:35 Then they end up trying to hire us right back to us because they're trying to hire internal recruiters.
38:42 When everybody else is recruiter paid jumps, they can't find them.
38:45 We make a lot of money in our companies, we rebound. I think that's how it goes.
38:51 But when companies invest in really great process and technology, they are able to do more with less.
38:59 So if they have to lay off their internal town acquisition team, when they have to plug in recruiters back into the equation, those recruiters are gonna be able to become value creators a lot faster.
39:15 So I always think it's like the you have to invest in processing technology needs to be consistent, it doesn't matter what market environment you're in.
39:23 But that tech stack needs to be in place for the long term.
39:27 As much as I hate this being, the reality recruiters get cut in down markets. And so when you're in a growth stage company, I'm not saying all companies, but there might come a point in time where if the correction is bad enough, you have to cut some of those internal recruiters.
39:42 But at a minimum, you need that process and tech in place to to deal with attrition and to be prepared for a market rebound.
39:50 So it's such an interesting point because one of the things that happens in a market that is going down is that you start believing that hiring is easy.
40:00 We spoke about that and then may maybe it's not easy right now.
40:04 But it is very fair to say that when the market completely goes to shit, that hiring does become easy for the few that are hiring, right?
40:10 Like for that minute in 2020 when the economy just went up in flames right before the government stepped in with subsidies and quantitative easing and low interest rates.
40:20 Before all that happened, you had millions of layoffs, but the few companies that were hiring, it was much easier, right?
40:26 But if you think about like a tricky economy, like the one we're in right now, I would say this is an economy that if you, if you say there are four types of markets as hot, warm, cold and frozen, that frozen market is its own thing.
40:39 But right now, we are kind of going between semi warm and cold, right? Like we keep going back and forth between that in this market.
40:46 If you actually were measuring your data and saying, how many qualified candidates do we have to assess before making a hire?
40:54 I would say that you will probably see an increase in this market than in a hot market.
41:00 We looked at our data and we work on thousands of roles and place thousands of people in a hot market.
41:06 We had to submit 4.5 people per closed role right now, it is 8 to 9 people submitted per closed role.
41:17 Why? Because companies have less hires to make, they have less risk that they can take on.
41:22 They're going to do more due diligence.
41:23 Their power for hiring has drawn out and on the candidate side, candidates are optimizing for risk management just like everybody else.
41:31 And so if you're in the, if you're looking at a job and you've got a bunch of different things you're looking at at the same time, you're the things that are attractive to, you are going to be very different in today's market than they, then what was attractive in, in the hot market that we exited.
41:46 And so candidates are optimizing for things that you might not be able to offer them.
41:50 They might even just decide not to, they might explore a bunch of things and decide I got this job.
41:54 Let me just see how this plays out and stick with this for the next nine months and then make a move.
41:59 And so you need more candidates in play, which means that you actually don't need less resources, you kind of need more.
42:06 And so you wouldn't have the proof point to go and slash the budget and the and the infrastructure and the people in the talent acquisition team, the way that some companies are doing because they think they're right-sizing that team.
42:20 Yeah, I think it's not un company uncommon for companies to cut town acquisition too deep and they end up spending more money and I get it.
42:29 It's hard as a CFO, when you're looking at a PNL, you're looking at a forecast and you have to show a path to profitability to investors.
42:38 It's, it's hard as hell. So I, I do have empathy with companies that are going through that struggle.
42:44 But man, you're right, like I didn't think about that but you're right. Some middles do go up in these markets because like the way that I look at it is if you're hiring 10 exe you know, 20 account executives, a good revenue leader is gonna know, OK, X percentage are gonna be A players, X percentage are gonna turn out to be B and C performers.
43:05 But if you're only hiring three, you better get it right.
43:09 And three that are gonna sell in this market, because, if you're a salesperson, like let's say you're a mid market AE who started your career in a great market and you kind of have built up in a great market.
43:20 Do you have what it takes to sell in this market where it's totally different like it is, this is not, we have not had to sell in a market like this for a very long time, right?
43:29 So there are a lot of people that don't have the skills and capabilities to do that So, if you're making three hires, you have to be so careful that you get those hires right.
43:38 And that means that you don't have to spend a lot more time and energy and attention towards making those hires.
43:44 Then sometimes you end up thinking at the onset because somebody told you that, oh, in this market, at least iron will become easier.
43:51 And it's like maybe it will one day, you know, what could make it easy?
43:54 The we last year there was another record that was set the number of IPO that didn't happen.
44:01Right. What does that mean? Tell me what that means.
44:03 So think about every year there's a certain number of companies that go public, right?
44:08 And last year, the least amount of companies went public out of the last like couple of decades, I think.
44:14 I didn't know that.
So now what happens is that you had all of these companies that were in 2021 at the cusp of going IP O and they had raised a large round, they were preparing to go public and then the market turned interest rates came up, the correction began valuations came down, they couldn't go public.
44:33 And so they'd raised in 2021 at crazy valuations, but a significant amount of money, right?
44:38 Like if you're a PRE IPO company, you raise a pretty large round. And so they were probably careful with their money. As much as they could have been, which got them through last year.
44:47 But how long can you get through without going back to the market for more money?
44:51 Not, I don't see those companies and there are hundreds of these companies out there.
44:55 They're not gonna be able to survive all of 2023 and then summer of 2024 without going to raise money.
45:01 Where do you go?
45:02 You either go to the private investors or you go to the capital markets, the private investors are not gonna be looking to invest in those companies, the valuations they raised that were too high. And it's gonna be really difficult to make that type of a down round that needs to be made for that investment to make sense for it to work out. Right?
45:19 And in the public markets, the valuations are nothing compared to what these companies raised their last round at and want to get.
45:27 And so I think that those companies are in no mans land and there might be a lot of layoffs that have to happen on the land towards the later part of this year.
45:39 And that will make supply significantly different than it is today from a dynamics perspective.
45:45 And at that point, you know, it, we might be in a market where those that are hiring, find it a little bit easier, then I think they will find it today.
45:52 But it's only if that happens.
45:54 Otherwise, if it just stays the way it is from a more dynamic perspective, this is not an easy market to hire in.
46:00 I'm really interested to see what demand looks like for secure vision by week three of January, for your business, for my business because I want to see based on annual planning that occurred in the last week or two of the month, a lot of the customers and prospects we were speaking to were saying we're gonna have everything finalized the 1st and 2nd week of January.
46:26 So what I'm really curious to see is how many companies went on a hiring and freeze versus how many companies are going to aggressively start pursuing hires again, even if it's lower volume, how many are gonna need to hire urgently even if it's just for a few roles.
46:44So it's still too soon. We are seeing an increase of quality pipeline towards the end of Q four and going into January.
46:54 But it's we, we are still, it's too soon for me to give feedback on if how strong demand is versus Q three and Q four.
47:04 And again, this isn't based on a big Deloitte or accenture study.
47:08This is based on us working with 100 and 50 hyper growth tech companies early to mid stage to pre IP O.
47:16 My prediction would be that it has to be higher than it was in Q four at least because Q four was market sentiment was really down.
47:28 And when you look at tech companies, like, let's say you work with a lot of hydro tech companies, a lot of them have SMB and mid market sales motions, right? And a big part of your business is go to market. Those companies hiring season is Q one, Q two.
47:41 And so you might be projecting a lot less growth than you projected last year, but you, you're projecting some growth, right?
47:48 Like most companies that sell something that is mission critical or at the cost of mission critical and nice to have like all of those companies that are going to project some form of growth this year.
47:57 So they have to hire for that.
47:59 There are people that are gonna get promoted, you have to buy, fill those the people that are leaving you because you couldn't promote them because you didn't have more roles for them.
48:06 And so you have to replace them. So that'll be like this is the season where there will be some form of, there will be more demand in this season than there will be in Q four of last year.
48:16 And then hopefully once you get past Q one and Q two, the economy has found its feet again, I don't know if it does if it doesn't, but that would be the best-case scenario for demand for you, right?
48:29 Like it would be that these two quarters you ride out.
48:31 And then by then the economy is back in a good spot and then moving on.
48:35 I was at an executive dinner for Pavilion in New York probably about a month ago.
48:42 And the revenue officer looked around the table and said, how many of you are looking forward to?
48:49 CEO raised her hand and then CRO was like, why?
48:53 And she said, because I want to find out where bottom is in this market. So I think it's, it's, you're right though.
49:00 I think we probably in terms of hiring, we're gonna see an increase in Q one. Because even if it's not necessarily growth hiring, which we are seeing growth, high attrition happens.
49:11 Yeah, like this, there's this of, of all the quarters, these are the most active quarters, right?
49:18 So whatever you saw in Q four, you'll see more of that more than that in Q one. And then we'll see how things play out on our side.
49:25 It's an interesting comment that that person made.
49:28 Actually, I think it's also fascinating to see who is really good, right? Like you get to tell who's really, really good at what they do in this market, s had this deck that they had presented when the world was falling apart.
49:43 The I think it was a crucial moment type of deck to their founders and it had this one slide in it, which was, a quote from Sana, the F one driver, and he said you can't overtake fif 15 cars and sunny weather, but you can when it's raining.
49:59 So I think that's a really interesting lens with which you look at the world.
50:02 And the second is that in a hot market, there are a lot of, a lot of people and a lot of companies that do really well because of the state of the market, you're riding the wave, right?
50:11 And I think in this market, a you develop skills and capabilities that will be hugely helpful in all sorts of markets.
50:21 So I think this is a time to develop as professionals.
50:24 But secondly, this is a time to really see who's got watch, right? Like how good are you really?
50:30 And so as a sales professional, like a lot of them will get to see if I was a was I able to generate demand and close deals.The way I saw some other people on the team do in this market and if the answer to that is no, then you get like a whole range of things that you need to work on to prepare yourself for the next cycle.
50:47 So I think there are really interesting aspects to this. It's painful, it hurts like it is stressful, it is annoying. And for those people that have been impacted by layoffs it's sad and depressing for sure.
50:59 But with, with the, in a lot of things there are, there are positives as well and I think there are some interesting and positive things that will come out of this, at least in hindsight when we look like I, and what?
51:12 Yeah, just to echo something. The f one quote, when we put on our executive hats, I couldn't agree more like, yeah, this is it.
51:22 I don't, you know, up markets, you're basically riding the wave of the work you put in right now.
51:28 So this is our time to position our companies for significant growth as the market rebounds.
51:35 So well, hey, this was fantastic.
51:38 I just want to say thank you so much for your contribution today.
51:42 We're definitely gonna have to do this again soon.
51:44 Brilliant. Thank you so much. I thoroughly enjoyed it.
51:46 We went off of our schedule and spoke about all sorts of fun things and, I hope it was useful and valuable and enjoyable for you and I look forward to coming back whenever you want me aside.
51:56 If people want to talk with you and like you know, connect, where can they find you?
LinkedIn if you want to connect, Asad Zaman, you can search for me. I'll pop up. I don't think there are too many with my name there.
Yeah, perfect. Well, hey, this is a lot of fun, for everybody tuning in, thank you so much for joining us. We will talk to you next week. All the best.