Diamonds in the rough

Let’s say you’re a founder building a startup and things are starting to take off. You’ve raised a few rounds of funding, you have some semblance of ‘PMF’ and your team is growing.

Hiring has been a major challenge for years but suddenly you're getting more recognition. As you put out job posts, you see inbound applicants with “Tier-1” credentials. You’re getting resumes from people who went to Stanford, worked at McKinsey, BCG, and all sorts of other fancy places.

Though it can be tempting to hire a bunch of these folks, I’d advise you to proceed with caution. Yes, these folks have impressive backgrounds, but they are also usually 30-50% more expensive than other candidates of a similar skill level. In a sense, the labor market has already priced in their abilities.

In our current cycle (2023) where VC money is less available and burn multiple is the new north-star metric, it’s worth spending the time to broaden your search and find less expensive candidates.

I’ve found that you can find similarly qualified candidates at a lesser cost if you extend the interview cycle by just 15-20% and broaden your search slightly.

There are tons of talented people in the labor markets who remain ‘undiscovered’. These are the people who are hungry, passionate, and eager to prove themselves. Because they lack the status that comes with a Tier-1 brand, they arrive with a bit more humility and sometimes a chip on shoulder mentality that results in great performance.

If you're willing to invest in a broader candidate search to find those ‘hidden gems’, you can build a fantastic team at half the cost. Don't get too caught up in hiring brand name talent. Look for the diamonds in the rough, and give them a chance to shine.