- 6 months ago
Finders, Keepers Identifying & Retaining the Best Talent
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00:02Good morning, everyone.
00:04Yep, as Kristen said, I'm Dominic from Index Ventures.
00:11A little bit first about content we've been building at Index.
00:16So over the last six years, we've been building a library of deeply researched content
00:22to support founders and their teams around key strategic questions that they face.
00:28So these have involved topics like compensation, international expansion into the U.S. and
00:35across Europe, and our latest content, Scaling Through Chaos, which I'm going to be talking
00:41to you about today, which is all about organization design, and the topics in particular that we're
00:47going to talk about today are around hiring and retaining talent and leadership.
00:55So first, just to get a sense of the audience.
00:58So just hands up to give me a sense.
01:00How many of you in the audience are working in some capacity with a startup currently?
01:08Okay, so about 40%.
01:10And just keep your hands up if you're a founder of a startup.
01:15All right, yeah, about 15%.
01:17Okay, and then just final question.
01:19If at some point in the future you might consider being a founder yourself, just put your hands
01:25up.
01:27All right, there's some brave souls.
01:29So maybe about 30% of you in the audience are either founders now or we consider being
01:34a founder in the future.
01:35Because I'm going to address you all as if you're founders.
01:37Because really the content that we're creating is for founders, so I want you to be in that
01:41mental frame of mind.
01:44Oh, sorry.
01:47Just a bit about Index First.
01:49So we've been fortunate to partner with many exceptional entrepreneurs across Europe and
01:55North America.
01:57Here in France, our current investments include Alain in health insurance, Swile, who are in
02:06employee benefits, and Adaptive ML, who are an infrastructure AI company, a recent investment.
02:14Now, we operate as one team across all our geographies, but we have three different funds, seed stage,
02:20venture stage, and growth stage investments.
02:23Our roots are actually in Geneva.
02:26So Index started in Geneva in the mid-90s.
02:30But I'd say we're the only European-born VC that's really made it into that top tier of
02:37Silicon Valley firms.
02:38And just my own roots are very much as an operator.
02:41So I was a chief operating officer twice in London and New York, but I've been at Index for 12
02:48years now.
02:49So I've worked with hundreds of our teams over that period, advising them on anything to do with
02:54people issues and international expansion, et cetera.
02:57But it all comes down to people.
03:00And the other half of my role, my insight role, is I've been leading all the research on all the
03:06content
03:06we've been creating, including the Scaling Through Chaos work.
03:12So just a bit, what have we got in Scaling Through Chaos?
03:15Well, really, over the sort of 10, 12 years I've been at Index, we've been collating all the questions
03:22we're asked by founders and building a database of those.
03:26And when you look at that, so many, what a huge proportion, like well over 50% of the questions
03:32we're asked are something to do with people.
03:34So we pulled those into what are the FAQs.
03:37We identified like literally about 100 FAQs that just recur again and again around all these topics.
03:44Oh, I've lost the slides.
03:45We've lost the slides.
03:46Okay, cool.
03:48So we wanted to figure out a way of addressing those also in a quantitative way, not just qualitative
03:54individual case studies.
03:55So we pulled together a data set.
03:57So we identified 210 of the highest performing, most successful startups in the last 15 years,
04:04the likes of Airbnb and Notion and Slack and et cetera.
04:09So we pulled together those companies, and then we collated the profiles of every employee,
04:15anonymized of course, but every employee hired by those companies, taking them between zero
04:21headcount and 1,000 headcount.
04:23So we pulled all of that.
04:25It was well over 200,000 profiles.
04:27And then we labeled it.
04:29So we did all sorts of tagging, like what's the job function and role and seniority of all
04:34those people.
04:34And then we ran hundreds of hypotheses against that data.
04:40So we pulled out all sorts of analytics and insights out of that.
04:43So this is the most comprehensive ever study taken into how successful startups actually
04:49build and scale their teams.
04:51And we launched in March.
04:53And we're already having over, we created the book here and an app called Team Plan.
05:00Like all, I should say, all our content is fully open sourced.
05:04So you can look up, you know, I'm going to give you tasters today from the book, but everything
05:09is available online, freely available.
05:11It's a key part of our philosophy is giving to the ecosystem all of this support.
05:16So we're already going to 300 users every day accessing this.
05:22So one of the key messages in Scaling Through Chaos, one of the key things came out, was that
05:27when you're in high growth, you can expect as a founder that half your time is going to
05:32be taken up on people-related issues.
05:36Now, when you're in high growth, you might be doubling your headcount every year, and you're
05:41doing that for several years running.
05:43Now, that level of hiring, it means at any point in time, half your team is going to be
05:49new to the company.
05:51And that puts in a huge amount of stress, organizational stress, and it brings with it inevitably a
05:57lot of chaos, which is why it's a theme of the book.
05:59It resonated with families that we're calling in Scaling Through Chaos.
06:02It is a lot of chaos involved.
06:04So just something you see in the charts here, we break down all of our analytics by headcount
06:11bands.
06:12So you'll see like 1 to 10, 11 to 50, 51 to 1 to 5, all the way up 500
06:16to 1,000.
06:17So this is what you realized is that the biggest driver of organizational complexity is headcount.
06:25The bigger the organization, everything gets more complicated and alignment issues come
06:29up.
06:29So everything in the book is broken down what is appropriate for the stage of company that
06:34you are.
06:35So you can see here how that 50% of people time breaks out by stage.
06:41So in the early days, the majority of that time is going to be taken up in hiring.
06:46The founders are very involved in directly hiring.
06:49That's what you'll be doing.
06:50But as you grow, as you scale, you're shifting.
06:53The time is spent more on leadership team alignment, keeping that alignment, and on internal
07:00comms.
07:00And that really, it mirrors what I say is a theme about the role of a founder, what shifts
07:06as you grow.
07:07So you start off in the super early days, you start off as a chief building officer.
07:12You're fully focused on product.
07:14You're building, iterating directly on product every day.
07:17In the middle stages, you shift to what we call the chief decision officer.
07:22So you've now got dozens or maybe even hundreds of initiatives going on.
07:26You've got bombarded with questions.
07:28But they often come back to you.
07:29You're the bottleneck.
07:30You need to be making decisions.
07:32What's a yes decision, no decision, high priority, double down, et cetera.
07:37So that's like the emphasis of what goes on.
07:40And really, what we sort of say to founders is really you have to think about when you're
07:44at the start of your journey, are you ready for those shifts and evolution of your role?
07:49Because it's a profound change going between those different roles.
07:53Are you ready to be leading a team and inspiring a team, et cetera?
07:58You have to really think about that.
08:02So just going on stuff around hiring, as I say here, like how do you hire a team of stars
08:07rather than A-holes and B-players?
08:11So the foundations of success around this, we always start, comes back to values, mission,
08:18diversity, three key elements.
08:20You've got to actually be aligned as a founding team on what sort of company you want to build,
08:26what the values are behind the company, and what your mission is.
08:30Like what is your core focus that you're driving to?
08:33What's a change you want to make in the world?
08:35So you have to get alignment around that.
08:36They're also, these aspects are very critical to your hiring bar, and you're thinking about
08:42who you want to hire.
08:43You want to hire people who are aligned and driven by your mission, aligned to your values,
08:49but from a diversity angle, you might have a lot of alignment on those points,
08:53but on the dimension of diversity, you want a mix of capabilities, of experience, and of backgrounds in your team.
09:01So it's harnessing those two.
09:03That's the linkage between them.
09:05Then as you scale, you need to start thinking about introducing people processes.
09:10So I've got six listed here, six of the core ones.
09:13Each of these is documented in the book, but the issue here, and with a recurring theme for the presentation,
09:20is what is stage appropriate?
09:22If you start introducing processes like these too early on, it becomes bureaucracy,
09:27and that will slow you down.
09:29It kills your creative spark.
09:30But if you don't do it until too late, the chaos will overwhelm you.
09:35You've got to be able to harness those.
09:36So we go through in the book, each of these processes, each stage, what is an appropriate type of form
09:43of performance management
09:44or appropriate form of leveling at each stage.
09:47Another thing like this is around planning.
09:49So again, planning, if you're a super early stage startup, is like death.
09:54It's going to kill your innovation.
09:56But if you don't, as you start to have more people, more different teams working on things,
10:01you have to have that alignment, coordination of teams, and things like OKRs and budgeting become increasingly important.
10:09And the final thing here is around hiring bar.
10:11Really critical thing.
10:12Because those very first few hires that you're making, you're going to be directly involved in as the founder.
10:18You're going to be doing the hiring.
10:20But as the team starts to build, you have to delegate that responsibility to other people.
10:24And that's often where problems can happen.
10:26Because all those people are applying the same framing in terms of values alignment, in terms of quality bar that
10:34you would.
10:35So we have in the book, again, a framework for how to widen your interview pool, your pool of qualified
10:43interviews as you scale.
10:45And that's a really critical part of thinking about building business, keeping the hiring bar high.
10:51So first question, first poll.
10:53So this one, of the first 10 hires made by top startups, how many are still employees do you think
11:01by the time the company might reach 125 headcount?
11:04So obviously the maximum is 10, minimum is zero.
11:08Let's give you a few seconds to vote.
11:23All right, I'm going to stop it there.
11:27All right, well, let's see what the actual answer is.
11:30So the most popular answer here, I can't figure this out.
11:34So it's four?
11:35No, because the most popular answer is five, 22%, 6% say 10.
11:40All right, well, let's reveal the answers.
11:43Nope, let me, oh, no.
11:46I think they tried to push the slides more than me.
11:48So we were able to quantify this because of the data we had.
11:52We can actually shed light on this question.
11:55So what you can see here is that of those first 10 employees, by the time you're at 125 headcount,
12:01only five are still, four or five, no, no, four, sorry.
12:07Only four will still, on average, be with the company.
12:10So even by 50 headcount, that's down to five or six.
12:14By the time you're at a sort of IPO type of stage of 1,000, it's down to two or
12:19three.
12:19So there's a really big drop off.
12:21So some of you got that right, some of you were some way off.
12:26The reason this happens is it's a sort of, I would say, inevitable, because the skills and types of profiles
12:33you need in a startup change radically as you scale.
12:38The best individuals to work in very early stage are people who are real generalists.
12:43They want people who can turn their hands to very different types of problems, not just day by day, but
12:49literally hour by hour.
12:51But as you grow, you need to switch to more specialists.
12:55You need more specialists in the team.
12:57There are fewer roles available for people who are generalists.
13:00So generally, there's a natural divergence of skill sets that you have with those early people compared to the people
13:07you want to bring in.
13:08A few people might make the transition, either becoming specialists or being a glue,
13:14so that there are always roles that involve a glue role across the organization, but not many.
13:20So this is a bit inevitable.
13:22And one of the things we advise founders around this, and this will be a recurring theme as I talk,
13:28is do not value loyalty over experience and excellence.
13:33You've got to always, when you're focused on the success of the company,
13:37we obviously, especially with these super early employees, you've just been in the trenches with them.
13:43You've done crazy hours, work weekends, whatever.
13:46You obviously have a loyalty to them, but that doesn't mean that it's the best thing for either the company
13:50or for them as individuals to stay for many, many years with you.
13:55So you've got to recognize that brutal truth, but at the same time, also, you've got to really celebrate and
14:02recognize the critical importance of those early people.
14:05So there's a quote here from Kate Ryder, just recognizing one of the ways you do that.
14:09There are others, like being generous around stock option vesting and stuff like that when people leave.
14:15But you really have to be prepared to have those difficult conversations.
14:20Another thing that we were able to look at in the research was the difference between founding teams who are
14:26younger and less experienced or older and more experienced.
14:30And what you're looking at here is the shape of the technical team that they hire in terms of experience
14:37levels.
14:38So the different shades here are sort of, at the bottom, the lighter shades are entry level, early career, mid
14:44career, advanced career profiles.
14:47And what that chart turns into, this is at 50 headcount.
14:50So at 50 headcount, you might have 20 people in your technical team.
14:53And what this chart means is that by 50 headcount, if you're a less experienced founding team, and remember, these
15:00are the most successful companies out there with the data we're looking at,
15:04you're going to have two fewer people who are with an advanced career profile, and that's substituted by two people
15:12with an early career profile instead.
15:15Now, in a team of 20, that is a big difference in terms of capabilities overall of the team.
15:21And so the way that we work with founders, because amazing founders can be either young and less experienced or
15:28older and more experienced.
15:29You know, we've seen incredible successes with both profiles.
15:33But the support that you want to look for as a founder is if you're earlier, if you've got that
15:38earlier profile, is you want support in accessing more experienced talent.
15:44People, they're not going to be necessarily in your direct network, but who can you have those introductions, you can
15:50bring that experience in.
15:51Because you really need that in order to mentor and develop the more junior members of the team.
15:57And as you sort of, in a technical team, you'll start building squads in your technical team to have, like,
16:03tech lead managers, et cetera.
16:05You want people with more experience.
16:07On the other hand, less experienced, and more experienced founders, the danger there is that they hire, over hire from
16:13network, and you create a sort of monoculture, a sort of clone culture,
16:17because they're all people they know before, and you run out of runway there.
16:21So you really want to help those type of founding teams in bringing in diversity and new profiles and new
16:27experience, et cetera, into the team.
16:30But next vote.
16:33So looking at hiring.
16:34If you're hiring an engineer at a startup, how many candidates do you think you need at the bottom of
16:41the funnel?
16:57All right.
16:59Interesting.
17:00It moves around a lot.
17:05Okay.
17:06I'm going to stop it there.
17:07That's interesting.
17:08So it was between zero and 20, and the most popular answer was 20, followed by 10.
17:14So let's do the reveal on this one.
17:20All right.
17:21So the actual answer, if you look at metrics or what it, in an ideal world, you know, somewhere between
17:3010 and 15, but I'll explain my answer.
17:32I won't go into too much detail about what this is coming, about every item of information in here.
17:39But this is looking at the hiring funnel with actual metrics, like from best-in-class companies.
17:46So this includes data from companies like Datadog, right?
17:49You know, what does their hiring, technical hiring funnel look like?
17:52And this was actually Datadog six years ago, plus a range of other top companies and sort of Figma, et
17:57cetera.
17:59So you've got, in a technical hiring process, you might have something like, you might have all the applicants, all
18:07the people that you source and profiles you look at.
18:11You're then filtering those and having conversations, let's say screening interviews with maybe 80 of those.
18:18Then you have coding check.
18:20People who get through that initial screening, like a Zoom interview, you do coding tests.
18:24And it might be an on-site interview, and then a final founder interview, and then you make an offer
18:29and see if it's accepted.
18:31When you look at all these metrics and ripple it through, that overall funnel conversion from screening to accepted offer
18:39is about 6%, which is about 15 or 16 candidates per hire.
18:45That's a huge number.
18:47If you add up all the conversations involved, that's about 40 conversations per hire.
18:52So for that, if you have like a hiring target of hiring four technical people over the next quarter, that's
18:57over 160 touch points you're going to have.
18:59That's like an enormous workload.
19:02So there's sort of, there's a lot of implications for this chart, but just three that I'll pick up on.
19:07One is not many startups, I'd say, actually have this level of rigor in how they do a hiring process.
19:14And as a result, they're not seeing a broad enough range of candidates, and the quality bar will drop, right?
19:23This 15 to 1, actually just because we're in France, I'll use the David Dog example I said before.
19:27They had a 30 to 1 ratio.
19:30So 30 candidates for every person they ended up hiring back six years ago.
19:34So you've really got to be prepared to get that focus and have that level of engagement with candidates to
19:42find the right people.
19:44A second is, I make a reference here to referral programs.
19:49Because if you look at, you know, candidates who come from referrals, so maybe from your own network, from the
19:54networks of your employees, or the networks of your investors, the referral rate, I mean, the conversion rate is much
20:00higher.
20:01Like two times, maybe even three times as high as this.
20:04So having a really healthy referral program is super important.
20:09You know, if you can get, if you can make two of those four hires from referrals in the quarter,
20:14you're halving the amount of work, really, pretty much, or nearly halving the amount of effort involved in making the
20:20hire.
20:22That's a key thing.
20:23A third one, and this is a piece of advice we give to our startups.
20:26By the time you get to the point where you're hiring 15 or more people in the year ahead, your
20:33most important hire should become an internal recruiter, an experienced internal recruiter.
20:38Because you think about the volume of sourcing involved in this activity and screening and scheduling all of these interviews
20:47and conversations.
20:48It's an enormous workload, and you'll really, really not be able to keep up with your hiring plans if you
20:54don't have somebody in that recruiting role.
20:59Okay, third poll.
21:02We're going to move on to retention.
21:04Which function do you think has the higher team attrition rate, finance or engineering?
21:26Okay, let's stop it there.
21:28It's a pretty clear winner.
21:31Right.
21:37I'm trying to move it on.
21:40Okay.
21:43Cool.
21:44All right, let's look at actual data now on attrition.
21:50So, what we did here is we looked at companies at 500 headcount or more, because that's where you have
21:57a huge amount of data.
21:58You can actually crunch the, we could crunch that number in our data.
22:01And by team, what are the annual attrition rates?
22:04So, looking at our finance and engineering comparison, actually, it's not a huge difference,
22:09but finance has a higher attrition rate than engineering in the companies we looked at.
22:14So, it surprised me.
22:16So, you know, most of you got that answer wrong, but I was surprised by this one as well.
22:21It's not a massive difference, but even so.
22:23So, the highest attrition rates we saw were in, like, STRs, probably not surprisingly, and marketing, and even HR.
22:31Lowest ones, engineering, design, legal.
22:33And although these patterns are the sort of larger scale companies, we also saw a model very closely a similar
22:40pattern in early stage companies.
22:42So, this is very valid to look at.
22:47Now, I'm a massive fan of digging into attrition metrics.
22:52Obviously, when you're at early stage, you don't have metrics as such around attrition.
22:56But what you should be doing is obsessing in detail about every lever that you have in the company.
23:03Like, why did they leave?
23:05Do you regret them leaving?
23:08If you don't regret them leaving, does that imply that it was an error to have hired that person in
23:14the first place or to have held on to them for so long?
23:17Was something wrong in terms of your hiring process there?
23:20If you do regret them leaving, what could you have done, if anything, to have kept them with you?
23:26So, was it an issue around compensation?
23:29Was it an issue around the quality of the manager?
23:32You need to be obsessing about these things and taking corrective action because they can erode.
23:38If you're losing people, especially in early stages, attrition rates should be really very low.
23:44So, if you're losing people that you regret, you really need to dig into that.
23:50Okay, I want to say a few words about leadership and hiring and retention in leadership roles.
23:58So, we define leaders or executives as people with a VP or C-suite level title.
24:06So, the data here, again, broken out by headcount stage, is looking at how large your executive team, so people
24:14with those job titles is, by stage of company.
24:18So, by what you'll see from this is the most intensive shift is between 125 and 500 headcount.
24:25So, your executive team, on average, grows from five people to 10 people over that period.
24:32In fact, it's actually more intense than that for the founder.
24:36For a start, some of those early, those five people, on average, you might have in executive roles at 125
24:42headcount will include people who actually aren't true executives.
24:46But they benefited from job title inflation, which even in those highly successful companies, we estimated about 30% of
24:55the profiles that we looked at wouldn't really count as executives, as true executive profiles.
25:01So, actually, your starting point is not five.
25:04It's actually three or four.
25:05So, that jump in those maybe two or three years in high growth, right, I emphasize that, in high growth,
25:12between 125 and 500, you're going to be maybe hiring six or seven executives.
25:17The other reason it's an incredibly intense period for a founder is because when you have those gaps, you probably
25:24don't have enough bench of talent to fill them temporarily.
25:28And it means that you or one of your co-founders is going to have to be doing the role.
25:32So, you're trying to hire the role at the same time as you're fulfilling the role and running it.
25:37And that's brutal.
25:38It's really a brutal period for founders.
25:40You can see a couple of smiles in the audience around this.
25:43So, one of our pieces of advice, a key piece of advice here, is never to try and hire more
25:48than two executives at any one time.
25:51And so, really emphasize that.
25:53You might have pressure if things are going really well or you're really feeling that strain.
25:57But, again, running a proper executive search process is very time-consuming and very intensive for you as a founder.
26:05You're having to sell to candidates, close them, do huge amounts of referencing, and then onboard them as well.
26:12And if you're trying to do that more than two different processes as well as run the business, you're going
26:17to fall over.
26:18So, do not do it.
26:24So, I'm going to – I might have to be the last – in order to leave some questions at
26:28the end.
26:28I might make this the last piece that I look at, but let's see.
26:32Internal promotion.
26:33So, when you're looking to fill positions, like more senior positions in a company, the other option is you don't
26:40look externally, you look internally.
26:42And I'm a massive fan of internal promotion.
26:45It's a pet passion of mine.
26:46So, we sort of built this framework around internal promotion as part of Scaling Through Chaos.
26:51So, what you're looking at here is, again, by size of company, and this is in high-growth businesses.
26:57So, this is assuming like doubling headcount each year.
27:00What proportion of appointments into different levels should you be targeting to come from internal promotions?
27:10So, 126th of 250 headcount, 30% of director-level appointments as a target for internal, 70% external.
27:20Now, this model was built based on two factors.
27:23A is the time it's going to take to nurture and develop your existing talent so that they're ready for
27:29career progression.
27:30And you set that against what your hiring needs are, what the hiring plan is likely to look like as
27:35you go forward.
27:36So, the bigger the organization, not surprisingly, the more likely you are that you're going to be able to fill
27:42roles internally.
27:44But the more senior the role, the less likely you'll be able to fulfill it internally.
27:48So, we were talking about executive hiring before.
27:50You see, even at later stages, it's only a very small proportion of your hires that are likely to be
27:57able to fill from internal.
28:04Just actually a point about that.
28:06It's a good thing to sort of speak to founders about a lot, is getting that balance right.
28:12So, again, it's the balance, like with the slide earlier.
28:17It's about valuing or balancing loyalty and excellence.
28:21So, it's really important to identify the top, high-potential talent in your organization
28:27and make sure that you offer them opportunities for career progression and including sort of promotions and senior leadership roles.
28:35But you have to balance that against what are the capabilities you're actually looking for.
28:39Do those individuals really have those capabilities or do you need to look externally?
28:43So, I mean, you actually look at, like, executive level here.
28:46You're more likely to make an internal appointment into an exec role for some of your larger functions and more
28:53mature functions like engineering or sales.
28:55They're least likely to happen in things like finance or general counsel.
28:59Again, you're a lot likely to have the talent pool inside.
29:02You have to go outside for the capabilities.
29:06Finally, I'm just going to say a few words about this.
29:07So, we've got time for some questions.
29:11Product, product leadership.
29:14This is like when you're looking at leadership and hiring into leadership as a founder, this is a really key
29:20one.
29:20Because in the early stages, obviously, the founder has a really special relationship to product.
29:25Because, as we said earlier, the early stages are they're the chief building officer.
29:30They're living and breathing the product, iterating it, et cetera.
29:32But, as you scale, the founder has to be prepared to delegate that responsibility.
29:39So, we've looked at here what was the, who was the most senior product leader in the organization at these
29:45different headcount stages.
29:47And, you can summarize that down into what we sort of would say four different phases.
29:52So, in phase one, in terms of scaling.
29:55So, this is like not sort of super early.
29:58But, once you start to get some traction, you've hired a first PM.
30:01Right?
30:02The key role of that first PM is to do the interface, like hour by hour, day to day, with
30:08your engineering team, execution focused.
30:11As a founder, you should still have full responsibility for the roadmap and for the product strategy.
30:16You've got an extra pair of hands to help drive execution, though.
30:21Second phase is around, like, head or director product level.
30:25Typically around maybe 125 headcount.
30:28I know this came up in the last session, actually.
30:30They started talking about this.
30:31So, this is sort of reflecting back a bit on that.
30:33But, head or director level product is appropriate when you've got a product team, maybe three to six different people.
30:39So, you've got a small team.
30:41And, this is an individual with some experience who can work jointly with you on crafting the roadmap.
30:46But, still, as the founder, you fully own the product strategy.
30:49You cannot let go of all of that too early.
30:53Just to explain what's going on, the drivers of this, what's going on in the background.
30:57You know, prime permissible driver, or one of the key drivers, is in the early days, the product vision is
31:03in your head.
31:04And, you're turning it into reality.
31:06That's what's driving the roadmap, is getting what's in here out into software and code.
31:11As you grow, increasingly, the roadmap is driven by feedback.
31:16Feedback you're getting from customers, from prospects, from your sales team, from your support team, from market research.
31:22And, trying to coordinate and bring all of that together is a hell of a lot of time and effort.
31:28And, not necessarily something that the founder is going to be best at.
31:31So, you see this sort of gradual letting go.
31:33So, the third phase, the first executive product leader, VP product, maybe about 250 headcount.
31:39This is all on average.
31:40It can obviously vary.
31:40But, what you see in the data, this is a person who can take ownership of the roadmap, quarter to
31:46quarter.
31:47They're reviewing that with you, and you're jointly agreeing the strategy.
31:52The final phase is usually not till, sort of, much later.
31:56Maybe, often not till post-IPO, of, like, a CPTO, somebody who is executive responsible for the overall technical team,
32:04engineering, product, design, and can pull and unify all of that.
32:09But, very rarely see that pre-IPO.
32:11So, I do, I do sort of get questioned when founders are spending a lot of time or want to
32:17bring in a chief product officer.
32:18Like, as, you know, when they're 20 people, I'm like, come on, is this really a chief product officer?
32:24And, even if they were, is that actually going to work?
32:26You're going to have a clash of personalities with them because you both are going to want to own the
32:31strategy and the vision for the product.
32:33So, really be careful.
32:34You don't want to do it too early.
32:36You don't want to do it too late.
32:37This is the stage-appropriate aspect.
32:40Okay.
32:41I'm going to close there so that we've got time for some questions.
32:45But, just, as I said, everything is open-sourced.
32:48So, yes, we do have physical books.
32:50And, I know we've got a few copies with us to distribute some people during today.
32:55But, the whole thing is available in digital form online at this URL.
33:01And, then the team plan website, which is, again, fully open.
33:04And, it allows you to dig into the data set that we compiled and look at specific groups of companies
33:10and how they scaled their teams, who they hired when, what their hiring plans were, what their attrition was, et
33:15cetera.
33:16Right.
33:16I'm going to close there so we've got a little bit of time if there's any questions.
33:22Okay.
33:22Dominic.
33:23Dominic, thank you so much.
33:24Sorry, Kristen.
33:25Sorry.
33:26That was a fantastic masterclass.
33:27In the two minutes that we have left here, can we just take a very quick question from the audience?
33:32Thank you to you all for your questions.
33:33Okay.
33:33Are there any particular industries or technologies that you believe are currently undervalued or overlooked by the market?
33:41Any industries or...
33:42Or technologies that you believe are currently undervalued or overlooked by the market?
33:48I mean, that's more of a sort of deal for a question.
33:50I'm trying to relate that to what we're seeing here.
33:55But, I mean, I'm going to ask it because it is an elephant in the room otherwise.
33:58And just actually talk about AI and what impact AI has on all the stuff I've been talking about.
34:06And just, I think, the key message there at first, none of the things on the importance of hiring, of
34:12quality bars, of having leadership, of structuring your team, it's managing them, motivating them.
34:18So, none of that changes through AI.
34:20What might change are, A, the pace at which you're growing your team.
34:25So, we've definitely seen, and this is partly to do with capital availability as well after the flood of capital
34:30we saw, you know, a few years ago.
34:33You know, teams are now growing generally a lot smaller.
34:36But we see a smaller subset of companies in our portfolio, and I know this is reflected elsewhere, who are
34:42still doing, growing at hyper pace.
34:44So, some of the messages here at the detail are about hyper growth.
34:48And that is a smaller group of companies.
34:50But a lot of the key themes still are true.
34:53And then the other aspect, I think, one other thing, there's loads to say about AI, but just one other
34:57thing.
34:57I think that where we are seeing it, the impact of it, in terms of productivity gains, is in a
35:04lot of support functions and operations functions, where the emphasis is how to reduce that cost and improve your unit
35:12economics.
35:12And we're seeing some really incredible successes of that in our portfolio.
35:16Fantastic.
35:17Thank you for that.
35:17We've got a few more questions.
35:19At what point can founders delegate responsibilities as they keep their talent and their scaling up through?
35:25So, at what point do you think it's the right time to start delegating out to their teams?
35:29Yeah, I mean, it varies by the role.
35:31I think we talked to some of them.
35:32We talked in detail about product.
35:34We touched on, like, the recruiting aspect.
35:37Part of it relates to what the founder's superpower is.
35:40You know, if a founder is particularly strong in a particular area, they want to hold on and focus on
35:44that.
35:45But a lot of their time is going to be taken up on that orchestration and integration piece.
35:50And so much of that is around hiring.
35:52So, they can't delegate responsibility for a while, at least to 100 people.
35:58I think founders should be interviewing every single person that joins the company, even if it's later in the process.
36:04So, don't delegate that.
36:06But at other aspects, you do want to delegate.
36:08And if it's areas that you're not familiar with, you know, obviously you want to try and bring in great
36:13talent who can do a better job than you can.
36:15Okay.
36:15We do have microphones in the room as well.
36:17So, if you have a question and you want to ask, yes, there's a gentleman right here that has a
36:21question for you.
36:22He's been patient.
36:22Let's get you a microphone, sir.
36:28Hello.
36:29Hello.
36:29My name is Dario.
36:30I'm the CEO of the pre-market startup.
36:33So, a very concrete question from all your research.
36:37Do you have an information on what is the ratio between the product management team, size of the product management
36:44team, against the engineering team?
36:47Do you have data on that?
36:49Yeah.
36:49For a start, go to Team Plan.
36:50You can dig in.
36:52Yeah, I will.
36:53If I can get a copy of it, I would be really grateful.
36:56We have the app.
36:58So, you go to teamplan.com and you can ask that question directly in the data.
37:02And you can pick the company.
37:04So, you can find a company that is a business model, et cetera, that are similar to yourself.
37:09But just to summarize, I mean, generally, the bigger the company, the higher the ratio, right?
37:17You have earlier, it tends to be more like earlier stages, maybe five to one.
37:24By later stages, it might be more like eight to one on average, right?
37:28But generally, you can get more leverage in that ratio as you scale.
37:35There's more defined, broken out problems.
37:38But earlier on, it tends to be more like a sort of five to one ratio.
37:41But you can look at the data.
37:43Fantastic.
37:43So, you need to check out that app and go and get the data from there and all the data
37:47that's packed into there.
37:48Going to come to the second question here.
37:49What about the location of your startup?
37:51If you're in, say, New York or a small mid-sized city, does this have a huge influence on hiring
37:57and talent retention?
37:58And if yes, when do you need to move to a major tech hub?
38:02Yeah, interesting question.
38:04For a start, I'll point you to the international expansion books that we've done, because there's a lot of information
38:10about this in those, expanding to the U.S. or expanding into Europe.
38:15But more broadly, I mean, there's different challenges you face.
38:19If you start in a key tech hub, I'll say for a start, like, the Bay Area is a case
38:25in its own, right?
38:26It's, like, crazy competitive.
38:29Getting cut through in the talent market to hire people is super difficult.
38:33And if you're a European who doesn't have a network moving out there.
38:37And the salaries are super high there as well.
38:39Yeah, and the salary is super high, which is why the fundraisers are super high, et cetera.
38:43It's a sort of, you go through that.
38:44It doesn't mean you don't have brilliant talent there.
38:46But as a European, if you don't have a really strong network out there already, it's very, very brutal.
38:53So if you're in Europe, yeah, there's a variance between hubs.
38:57I think there is quite a distribution of talent in Europe.
39:00Yeah, I'd say it depends on the business model.
39:02It depends what level of technical expertise you require.
39:05So if you need the deeper technical expertise that's driven out of your product needs, then being in a major
39:13hub, I'd say, you know, Paris, London, Amsterdam, maybe Stockholm, Munich are sort of strong places.
39:23But if you've got a sort of mid-level tech proposition, you can be more open because you do have
39:28that wider pool.
39:29But as soon as you're looking for specialist skill sets, you need to be in a big, major tech hub.
39:33So I'd really, that'd be a summary.
39:36I could have loads more to say about it, but that would be a summary.
39:38Okay, and we've got lots of other questions.
39:40So catch Dominic Castro, he gets off the stick.
39:42Yeah, I'll hang around for a while outside.
39:45Fantastic.
39:46Make sure you connect with him.
39:47Thank you so much for a fantastic masterclass, Finding and Keeping Talent.
39:51It's always going to be hard.
39:53You've just made it easier for us.
39:54Thank you so much.
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