Surveying the state of startups after a year out

TLDR:

• Employers want to hire founders, but can’t find them anywhere (spoiler — they’re not looking for a job).
• Companies receive strong CVs, devote substantial time to hiring, and are often dissatisfied with candidates. This process yields unhappy results for everyone involved in the end.
• Brilliant, experienced, and motivated potential employees are hunting for jobs.
• There aren’t enough jobs in startups and tech for the number of people looking. The exception is machine learning engineers. They’re often not looking for a job and want the autonomy to build exciting products themselves.
• People are suffering from the fallout from recent years in VC-backed startup culture of fast growth and scaling. Alternative models of business building are becoming more popular.
• Roles structure work, not projects. Employment is the main link to income and basic living. But it’s this link that seems to have broken down.
• It’s a sad and changing situation. It has some glimmers of hope. But we need some big changes.

Photo by Jason Leung on Unsplash

Speaking to interesting people.

My goal was to speak to 5–10 people who identify as:

• first-time founders
• squiggly-career generalists
• solopreneurs/freelancers
• artists and creative professionals

I based the exercise on a hypothesis. I enjoy working with these types of people and have been most helpful to them in my past career. Learning about their current challenges may help me figure out how I can help.

I had 20+ conversations in the end. I had to shut down my calendar link after feeling a bit overwhelmed with all the support! I’m grateful to everyone who offered, even if we didn’t get to speak.

It’s a very small group and biased towards my personal networks. But, talking to people had a side effect. It gave me an interesting view of the current job market, tech and startups, and people’s thinking. I wrote it all down and thought it was worth sharing in case anyone else might be interested.

These are only my thoughts and observations, rather than any rigorous study.

Employment market and the state of startups

Many companies are having to shut down and make layoffs. They must decide how to stop because their plans aren’t working. This is sad. It’s hard for the founders, employees, and advisors. It’s hard for everyone in the wider circle of the organization.

The only exception is AI and machine learning. People seem to be carrying on as usual in these areas.

There is a huge surplus of overqualified talent. They’ve got deep experience in building tech startups and are available to work. So it’s an employer’s market. Someone told me:

“Employers can be picky about candidates. They can afford to look for someone who has done their exact task before.”

In my own experience, this assumption is often implicit. It is not discussed or debated. It says that this person would be the best at the job. They pointed out, “unfortunately, it leaves no room for anyone trying to pivot or change careers. Or for those working in something unlike their old job.””

As someone who has always been looking for as close to 100% of a new role as I can, I definitely empathise here.

All my interviews, ever in my life, explained

I remember being asked in a job interview early in my career what experience I had in the role (ie. for them, one of the fundamental interview questions to discover whether I met the basic criteria for the role).

I confidently told them I hadn’t done much of it before, although pointed out what I had done previously and how I thought it would enable me to do the job. I was surprised to even be asked that question, because in my head if I had done the job before then I clearly wouldn’t be there!

Who would want to do the same thing all over again?!!

Luckily I got the job, and in fact that conversation has been part of every job I’ve always had (and every one I’ve always failed to get). I think the only difference is the level of risk the hiring manager has taken and I’m hugely grateful for all those who took it on me.

A few years later I was supporting an experienced technical leader to build out an engineering team. He had a very structured, fair process for doing so which I admired and I learnt a lot.

He said that for scoping a role you want a certain percentage of them having done the role before. And, a level of not having done it. This leaves room for them to grow. I forget the actual numbers but I think it was somewhere around 60:40.

I couldn’t disagree with him from a hiring manager perspective. But I went home that night and had a big realization.

The problem was my own 90:10 ratio of new to experienced. It was the main conflict in every job interview I’d ever been in, and would likely ever be in.

And I felt worried, because I didn’t think I could change that about myself, so all I could was hope that not all hiring managers have the same numbers!

The structure of work

Employment (for knowledge workers) is still based around roles, but the work seems to actually be structured in projects. And the nature of the work changes all the time.

Then, the changes often mean the role doesn’t align with their expectations. It’s because the role is what they were sold, not the work.

The structure of roles and expectations + the inevitability of constant change in business = the source of most people detaching from a role

This can happen because they are fired, made redundant, or moved by their employer. Or, it can happen because they choose to leave. They often leave with frustration, ill health, or other negative side effects.

Individuals seeking work

I noticed a trend in my conversations. It was of high unemployment, disillusionment, and struggle. This was true for all groups, regardless of skillset or experience. It felt different from the post-covid layoffs. It was due to systemic problems, not to struggling companies.

Everyone wants work that fulfils them. They want autonomy. They want minimal politics and good management. They want to align with their values and purpose. And, they need to be able to pay the bills. And in the current environment, this seems like it’s too much to ask.

I never met anyone who felt like they were even close.

But people have felt that in their careers in the past (as have I). So it seems that the environments and structures that enabled that no longer exist.

Employers and hiring

Employers are overwhelmed with applications. They struggle to filter them down and to build processes to find the type of person they want. Hugely time-consuming.

Hiring managers and founders often (in startup land) want people who:

1. are skilled in a domain. They also have soft skills and the ability to collaborate with other domains and functions. They have strong values that match a company trying to change the world for the better.
2. have a founder/entrepreneurial mindset and really empathise with the startup journey and
3. want to join their company full-time. They want an all-encompassing, key role for the company’s growth and success.

The Business Starters

These people meet criteria 1 and 2. I judge this because they get asked to interview, move through applications, and have more job options. But, they do not want no.3.

Even if it pays well and gives them wide autonomy. It also has good equity, and so on. In short, the things companies use to incentivise these people are no longer appealing to the people best placed to do them (in the companies’ eyes).

These people have all described their similar-sounding goal with a variety of different language:

• I want to start something myself
• I want to run my own business
• I’m going to build a startup myself
• I want to be in control of my time and schedule

The goal is control.

Control of time, schedule, work (scope and tasks), all the things people often look for in a job anyway. But now they are non-negotiable. The goal is also control over the direction, strategy and decision making of the organisation they are in.

People possessed prior experience in participating in decision-making processes, for example. on the leadership team) and others didn’t. So more knowledge and experience of this didn’t seem to affect the strength of feeling to need to manage these decisions for themselves.

Various motivations drive this:

• They have recent experiences of disillusionment from startups. This is especially from the VC-backed startup world of the past five to ten years. They’re burnt out from that system and need a drastic change.
• They’re going through life changes with new families. They’re caring for relatives. They don’t see their old ways of working as compatible with these changes.
• They have always wanted to start something or feel entrepreneurial. They feel like it’s the time to strike out on their own after gaining enough experience.
• They can’t find a job despite looking. But, they know they can help companies. They see they have enough experience. So, they decide to do consulting, coaching, or fractional work like their last job.

The Job Seekers

Then there are people who are struggling to get their next piece of work.

The people who deep down (or sometimes not that deep) don’t want to start their own thing. It does suit them to have a job. And they are good at their work. They are equally (or more) qualified than those who want to do their own thing.

They are really really REALLY keen to do no.3 with a company that is doing amazing things to change the world.

They are desperate. They are focusing all their energy on ways to show their value to employers. Finding ways of crafting their story, doing projects to show their skills, networking and meeting people they could work with. Much of this is fulfilling and fun.

But, it seems to rarely lead to paid work (unless people commit to starting their own business).

The trough of disillusionment and changing times

Everyone I spoke to had recent stories of burnout, stress, and mental health problems. They also had stories of poor financial and people management, decision making, and culture. They had stories of bad outcomes at their last companies. The outcomes were often for the whole team, including the founders.

The negative experiences varied. But, everyone’s story involved the promise and excitement of building something important with their skills. They also involved huge time and effort with other motivated people. And, they ended with becoming unwell or leaving because they saw it coming.

It felt like everyone is currently in the trough of disillusionment of the startup world (at least the venture capital-funded startup world).

After a few years of ample funding and high valuations, businesses focused on growth at all costs. But, the economy has since led to very different ways of building businesses. Someone said this to me when talking about early-stage venture building and VC-backed companies:

“The problem is that the exception became the default.”

Exceptions are meant to be just that, exceptional. Not common.

Focus on cashflow, profitability, bootstrapping and slower growth. These all seem like very reasonable and positive ways of running businesses from my perspective, so I’m looking forward to this new stage in the industry.

But I do feel the pain of the current shift. And the change will take a while to happen.

What we seem to need

Better planning and managing work

Hiring managers and leaders need to be able to plan work for hiring. Short-to-medium term the more important thing seems to be planning around projects and the actual work.

Medium-to-long term for hiring a permanent role, work changes so much it seems more relevant to hire around skills.

The current state is trying to bridge both of these with one hiring process focused on full-time employees and it’s not working.

Connect talent to work

We need a way to connect skilled people looking for work with projects and companies that need them. Again, current ones don’t seem to be working.

Change employment structures

We don’t have a structure for people being able to live a basic, sustainable life (eg. eat food, have shelter, feel safe) that is not directly connected to income from traditional employment. But this is clearly something work-related that is breaking down in all industries and with multiple skillsets. We need to figure out how to do this better. [This is a whole wider socio-economic issue and I’m hesitant to suggest UBI or similar solutions before I’ve properly read more from others who are much more involved in figuring these things out].

My next steps

• thank everyone who spoke to me
• learn more about UBI and other ways of structuring income/basic living in societies
• think about how I can help connect great companies with the surplus of amazing talent.
• define my initial product offerings for Jigsaw Journeys