a16z: Why Web3 Startups Should Hire Recruiters Early?

Author: Aurora Petracca, External Entrepreneurial Advisor at a16z Crypto

Compiled by: Luffy, Foresight News

When startup founders find product-market fit and secure funding, investors and advisors often suggest that hiring the right talent will lay the foundation for the company's growth. Conversely, poor talent selection can undermine the company's efforts.

This advice is undoubtedly correct, but it lacks a concrete implementation path, as there is no practical operational guidance. Learning how to recruit is a full-time job. Therefore, founders should start looking for suitable recruiters as early as possible. In this article, I will share how to do this.

In fact, recruiters should be among your first 10 employees. This may seem counterintuitive: if founders urgently need the right technical talent, why prioritize hiring someone else? I have helped Airbnb (when I joined, it had 50 employees) and Coinbase (when I joined, it had only 7 employees) scale, and I can attest to the importance of hiring recruiters in the early stages. When I joined Airbnb, I was the third recruiter at the company; when I joined Coinbase, I was the second.

Recruiters Can Save a Lot of Time

The process of conducting multiple rounds of interviews and finding the right employee among many candidates takes a significant amount of time. Saving time is crucial, especially in the crypto space. This is because the number of candidates with expertise is limited, and candidates may be considering job opportunities at multiple companies simultaneously. While it may not be difficult for founders to keep in touch with 100 candidates, they also have other priorities to manage, so something will eventually go wrong. The actual impact can be poor candidate experiences, missed hiring opportunities, and damaged reputations. A poor candidate experience can easily make you lose your competitive edge; not just with one candidate, but all candidates will steer clear of you.

Recruiting takes a lot of time. If it doesn't, your startup's hiring process may be too simplistic, or your company may be growing too quickly, which could lead to personnel issues and turnover. Remember, as a founder, time is your most valuable resource. Hiring a professional recruiter means you can focus on other more important tasks and allocate your time wisely. You will still be involved in the hiring process, but only in key parts of the overall process, making it more strategic and efficient.

I often see new entrepreneurs in this situation: they want to hire their first batch of technical staff, they have good connections, but often these connections are not timely. They may have hired a few people this way, but they need to proactively reach out to candidates. This raises a series of new questions: how many people should you contact? Should your company use a targeted recruiting strategy or a bulk recruiting strategy? Startups may need to combine both strategies. Each has its own applicability depending on the position, but both undoubtedly require a lot of work.

Recruiting the right technical talent can take a lot of time. Statistics show that you need to contact 50 to 100 people to hire one person. Every message you send to candidates needs to be thoughtfully crafted, and the response rate from candidates to recruiters is at most 30% (if contacted by founders or technical leaders, the response rate may be higher).

Assuming your company is hiring only 2 engineers. You might have 30 candidates go through the hiring process, each candidate undergoing 2 to 5 interviews. This means you need to manage and schedule 60 to 150 interviews in a short period. As a founder, you may also need to lead work in product, engineering, marketing, fundraising, customer support, and daily operations, and communicate with external advisors daily, etc. Therefore, even if you genuinely care about the candidates, the candidate experience will suffer. Negative experiences will quickly show up in Glassdoor reviews, which future candidates will read.

Recruiters work closely with hiring managers to develop appropriate strategies that can alleviate these issues. In the early days of Coinbase, I collaborated with engineers and managers like Brian Armstrong, Rob Witoff, and Varun Srinivasan to help them build their teams. I would list the candidates I thought were the best, and if they liked them, I would communicate with the candidates first; then they would conduct phone screenings while I managed the entire process. This collaboration worked well, and Coinbase hired a lot of talent.

Founders Are Talent Magnets

Founders play a crucial role in early hiring, including articulating the company's vision and mission, defining the values that the team can achieve through the hiring process, and of course, evaluating top talent. Once onboarded, excellent recruiters can help create and run a rigorous hiring process, with founders only needing to appear at key points in the process. Founders should participate in every interview until the leadership team has established excellent hiring standards.

Founders also play another key role. Great engineers want to develop cool products alongside other great engineers. Technical founders need time to write about the novel technical projects they are working on and why these projects are important to other engineers. These will become well-packaged recruitment content. They can tweet (and have friends retweet); share on Farcaster, Discord, Signal, and Telegram channels; share on LinkedIn and in company newsletters; send to their entire network. In this way, founders can better attract talent.

The entire company can use this content in any outreach messaging. Don't forget to regularly update the new content created by the team. This approach also benefits the founders personally: imagine if you spend time building an excellent product and writing related articles instead of emailing and following up with every open position on the recruitment page; you would save a lot of energy. Of course, founders still need to engage some candidates from the start. But the idea is to have them spend their time more strategically, focusing on a few impactful positions.

In the Long Run, Early Expenditures Can Save Money

All of this sounds great, but isn't the cost of hiring recruiters too high in the early stages? After all, every startup has limited funds.

Investing precious funds in people who can accelerate team growth is a wise decision. Delays in product launches due to an inability to quickly hire engineers can allow competitors to seize your market share. In the long run, this will cost your company even more money.

When Airbnb had 18 employees, they prioritized cultural assessments and candidate experiences. Therefore, they first hired an external recruiter to ensure that someone could manage the entire hiring process from start to finish, ensuring that no candidates were overlooked. Similarly, when I joined Coinbase as the first internal recruiter, the company had only 7 employees, and they had already invested a lot of time and resources into recruiting. When the company had only 4 employees, the founders established a partnership with an early technical recruiter because they knew how much work recruiting entailed. Once there was a sustained hiring demand, this person would join full-time, and when hiring needs surged to the next stage of expansion, I joined.

Both Airbnb and Coinbase prioritized bringing in recruiters (whether internal or external) to help with the long-term growth of the company.

How to Identify Excellent Recruiters

How can you distinguish between excellent recruiters and poor ones? Here are some guiding principles:

• They proactively meet with hiring managers to brainstorm and develop creative candidate sourcing strategies.

• They immediately implement these strategies.

• In urgent situations, they seek out the founder/hiring manager to discuss and resolve compensation issues rather than risking losing candidates by delaying action.

• They meet with candidates "after hours." If necessary, they will meet candidates in person at 9 PM or on Sunday afternoons.

They are not only charismatic but also action-oriented:

• They have a comprehensive organizational system to ensure no calls are missed.

• They know who to contact.

• They keep the recruiting team focused on submitting feedback tasks and drive the entire process through summaries.

If recruiters do not form a systematic organization, the recruiting efforts will fail.

Qualities of an Excellent Recruiter

Excellent recruiters often start their careers in competitive sales or recruiting agencies. Alternatively, they may have worked as customer support representatives at companies known for their high talent standards.

When I look for talent from agency recruiters, I prefer candidates who have worked internally at a company for at least a year, as this indicates they can adapt to the internal culture and workflows. However, if candidates are adaptable, humble, eager to learn, resourceful, and able to find ways to succeed, these are excellent qualities based on my years of recruiting experience.

In addition to these core traits, you should look for recruiters with the following experiences:

• Fixing broken processes;

• Solving data issues;

• Managing complex relationships with hiring managers;

• Developing creative talent strategies.

They can use startup equity incentives (a mix of cash, options, tokens, RSUs) to attract candidates, and they know how to incorporate valuation as part of the pitch.

Finally, find a recruiter who is passionate about the company's mission. Many recruiters have experience selling different products and visions, but for them, it is just a job. Look for someone who truly believes in what you are building, as their energy and genuine enthusiasm will come through in conversations with candidates. In most startups, early employees are often attracted by the mission, and without this sense of purpose, it takes a lot of effort to get through those tough early days. In the cryptocurrency space, a sense of mission is essential for navigating industry uncertainties.

The ideal recruiter is someone who deeply believes in your mission, has a sense of ownership of the company, and is protective of what you are building. I have indeed heard people say that Airbnb is like a "cult." If it is, then I am one of them. As a recruiter, my energy needs to infect candidates; otherwise, I cannot persuade them to join. When I joined in 2011, many skeptics thought Airbnb was a rough idea that would never succeed. In that environment, to succeed, one must almost have a cult-like obsession.

I have a similar obsession with Coinbase and the power of cryptocurrency to change the world, which keeps me focused during the crypto winter. Moreover, recruiters, as early cultural guides of the company, are crucial for the long-term success after the company scales.

How to Recruit Candidates in a Turbulent Environment

The regulatory environment of Web3 may cause some candidates to feel concerned, especially when negative news spreads. However, to be fair, we encountered similar sentiments when Airbnb experienced public turmoil. It is easy to imagine that any company trying to change our way of life, like Uber and OpenAI, would face the same situation.

Both Airbnb and Coinbase employed an effective approach by telling stories (the power of mission and narrative) about the mission we undertake. We also emphasized the regulatory preparations the team made to implement change. A similar approach can help other Web3 companies.

One unique aspect of Web3 is market volatility and bull-bear cycles. Showing trend charts of Bitcoin and Ethereum markets over 5 to 10 years can help candidates understand the current challenges. I also often use articles written by industry experts to assist in storytelling.

Do Recruiters (and Candidates) Need Cryptocurrency Experience?

Do your recruiters need to be experts in Web3? I would choose recruiters who are passionate about the field rather than experienced ones, as long as they possess the traits I mentioned above and have worked at a company with high hiring standards.

What about the talent pool? When I first started at Coinbase in 2014, there were no candidates with "Web3 native experience." Many candidates considered "crypto native" were only interested in short-term projects and did not possess the persistence we required.

Therefore, I looked for engineers who not only had expertise in payments, infrastructure, scaling, and security but also had an interest in Bitcoin or decentralized concepts and their value. Their experience helped build a solid engineering foundation for the company. Our most successful hires were excellent Web2 engineers with expertise in key areas who were developing side projects in the cryptocurrency space.

If you cannot find Web3 talent willing to work long-term, you can hire individuals with the following traits:

• Analytical skills

• Intelligence

• Creativity

• Open-mindedness

How to Hire Excellent Recruiters

Recruiters are typically good at interviewing, which is not surprising. So how can you distinguish excellent recruiters from mediocre ones?

I like to understand recruiters through behavioral questions. These questions can delve into their experiences in tackling recruiting challenges, how they collaborate with hiring managers, and how they attract candidates. These three aspects are core competencies of excellent recruiters, and if you can get recruiters to talk about their specific experiences solving real problems in these areas, you can learn more about their thought processes, creativity, and how they handle adversity.

You can also test recruiters' conversational skills with candidates through live role-play interviews. Excellent recruiters should be able to handle this type of interview. Additionally, observing how candidates react under pressure through unconventional interviews is a great litmus test to understand how they handle unexpected situations.

How to Evaluate Recruiters' Performance

Once you find a recruiter you approve of, what should you expect from them? How do you assess whether they are doing well? They should:

• Take control of the hiring process for all candidates and complete the hiring tasks.

• Establish a hiring process to ensure consistency and organization for all candidates.

• Collaborate with other hiring managers at least once a week to understand what is going well and what is not, and develop hiring strategies.

• Provide excellent candidate experiences as well as hiring manager experiences.

• Keep detailed records of compensation packages and work closely with financial leaders to inform them of observed trends (e.g., compensation declines due to salary issues) and extract data to ensure the compensation packages they offer are competitive.

• Take control of their recruiting business by implementing ATS and maintaining clean data. They should be able to use this data to provide leadership with brief reports on hiring progress. They should also use data to identify issues in the process and then develop plans to address those issues.

• Help integrate the company's cultural values into the hiring process so that the employee base reflects the company's values.

• Help you understand how the company achieves diversity in hiring. A lack of diversity can harm products. If you do not invest time from the beginning, the road to achieving employee diversity will only become more challenging. But in the early stages of a startup, you may have to hire people with the right skills to build the company. Recruiters can help you think about how to address this issue and execute the strategies you deem most reasonable.

Depending on the volume of recruiting work, these tasks may be shared among multiple people.

What Else Can Recruiters Do Besides Hiring

But what should recruiters do after completing the first round of hiring?

First, remember that people who do not proactively seek ways to make themselves valuable should not enter your company, especially startups, where many early employees must wear multiple hats. Besides that, recruiters can play a significant role in talent and human resources in early-stage companies. However, be aware that if you plan to hire someone to handle both recruiting and HR work, you must interview someone with the right skills who also wants to work in HR.

Typically, recruiters can assist with general onboarding or manage HRIS systems. But if you need someone to help with performance management, career development conversations, terminations, employee relations issues, and off-site events, you will need to choose someone with experience in these areas. In startups, HR work is often done by people without HR experience, and this should be avoided when hiring recruiters.

Secondly, if a company is growing rapidly, this "dual role" may just be a stopgap until a full-time HR person is hired. However, if a company is growing slowly, having recruiters also serve as HR personnel may be a long-term solution. As the company scales, each of the following areas will eventually need people with specific expertise.

These are also the most suitable tasks for recruiters when they are not hiring. When hiring activities resume, they return to their area of expertise.

• Talent branding work: Attend conferences and gatherings to build a public talent brand; collaborate with engineering leaders to brainstorm interesting technical blog content for recruitment branding; work with developer relations leads to present work correctly to potential candidates.

• Onboarding, offboarding, and terminations.

• Manage HR systems to track employees and their internal activities.

• Performance evaluation processes.

• Employee career development.

• Regular team-building activities, especially important if the company is fully remote, as quarterly team-building is crucial for establishing connections and trust among employees without face-to-face interaction.

• Cultural ambassadors: In addition to structurally integrating values into the hiring process, regularly communicate these values to the company.

Conclusion

The volume of recruiting work often surprises most people. If you ask an experienced founder, they might tell you that attracting, managing, and retaining top talent is the most challenging aspect of the job. When considering what can make your company successful and what can lay the strongest foundation for scaling your company, consider hiring professional recruiters early on.