Why is Dedicated Recruitment Very Critical to Recent Funded Hardware Startups?

Published: March 1, 2017

Within the last two years we have witnessed recent 1st round and well-funded hardware technology startups go through a hiring crisis so severe that it has crippled their ability to get state-of-the-art chips and devices designed and integrated into the OEMs on time. Hardware startups that are designing and building world-class systems (IoT, Embedded Devices, Wearables, etc.) are struggling to penetrate and become industry leaders within their domains.

Given the recent explosion of hardware device startups there is an increasing shortage of hardware design engineers. Also the demand for good design engineers is very competitive! The large players, like Apple, Intel, Qualcomm, and Avago are offering excellent salary packages and benefits to their perspective candidates. Not to mention that all of these companies are doing extraordinarily well financially. Hence this is making it almost impossible for startups to hire that “purple squirrel”. Ultimately these large players are hiring an average of 85% of the needed talent within the semiconductor, computer hardware and embedded systems sector.

What does this mean for the true innovators who were courageous enough to strike out on their own and compete with the big guys? This mean that a large number of great hardware startups are quickly on their way to a disastrous demise! In fact, in recent discussions with startup founders, executives and investors, they all indicated that they spend a minimum of 60% of their time heavily participating in the recruiting efforts for candidates. This is alarming! Investors should be on the hunt for sound startup investments, and Founders and Executives should be focused almost entirely of running and mainstreaming their company to ensure success, not recruitment. Founders and Executive will be instrumental in closing candidates, which we will provide more details later.

Not taking anything away from Founders and Investors who participate in the recruitment efforts of their startup, as they have a profound impact. This task should be left to a dedicated resourceful recruiter or recruitment firm. There is a new shift in hardware design talent…the best candidates are never on the market. When founders resign to form their startups they are normally under a 2-year non-recruit agreement from their previous employer. Therefore startup founders are finding themselves in long holding patterns to assemble and build their design teams.

Once the startup has successfully secured their first round of funding, they should immediately partner with a recruiter that is well qualified to begin the recruitment process of searching for hardware design talent. The recruitment process within hardware startups usually takes one to three months to achieve, if and only if a sound hardware recruiter is involved in the process. This recruiter has to have a solid understanding of hardware technology and have a laser beam recruitment strategy. It is imperative that the recruiter immediately build a good rapport with everyone instrumental in the hiring process within the hardware startup.

Let’s understand what is it truly takes to successfully recruit and hire the hardware design team, as we think this will be the make or break of the hardware startup. The attraction of talent must begin with a keen understanding of the system, chip or technology within the hardware startup. This process involves the recruiter and founders having lengthy discussions about the company, its mission, its culture, its technology, its competitors, its market position, its direction and ultimately the final product. Usually the recruiter will need to sign a Non-Disclosure Agreement (NDA) to be given this level of sensitive information. However it is very important for the recruiter to be armed with this information, such that he/she will be able to have an intelligent initial discussion when reaching out to perspective candidates. This process is commonly referred to as sourcing candidates.

The research and sourcing process of candidates is a full time effort of building candidate pipelines for the various positions the hardware startup need to staff. Sourcing efforts many times serve as a twofold advantage for the startup – it creates awareness to the market of new possible systems or devices, and selling the new startup to potential candidates. During the research and sourcing process the recruiter is taking the details from the discussion and forming job descriptions (of course in collaboration with the hiring leaders), and beginning to build candidate pipelines. Once this process is achieved, the recruiter will begin reaching out to the candidates within their pipeline for initial discussion. This process is known as screening candidates.

When the recruiter begins screening candidates it is imperative that he/she is armed with how to effectively sell the company to potential candidates. This may involve the recruiter and founder/executive team of the hardware startup doing some roll playing and/or practice calls to ensure that the initial recruitment calls to candidates go well. Hence the recruiter must be able to capture and gain the candidate’s interest within the first five minutes of the call. If not the recruiter has immediately missed out on potentially recruiting the candidate. During this process the recruiter has to be creative to attract good candidates. The recruiter is essentially the initial evangelist of the hardware startup during this critical process. Also the recruiter is branding the startup that he/she is a part of.

Speaking of branding the use of social media (i.e. Linkedin, Twitter, Facebook, etc.) is sometimes the most efficient way to market and brand the hardware startup to the masses. This may seem like a lot of work, but remember when building candidate pipelines the recruiter must exhaust all means to attract the needed talent. This is the recruiter’s opportunity to highlight the various perks, as well as other benefits that set the hardware startup apart from its competitors. Poise and creativity is very key and critical during branding process. Bloomberg Business has indicated that device startup companies with strong talent branding have a 45% decrease in cost per hire and a 30% faster rate of hire.

At this point the recruiter has successfully gained a lot of insight of the company’s mission, culture, market positioning, and have an idea of the hardware device or system. The recruiter has begun researching and sourcing potential candidates. The recruiter has spearheaded some branding of the hardware startup. The recruiter has even reached out and screened some candidates. What’s next? It is time to begin forwarding candidates to the hiring manager for review. This is referred to as the hiring manager review process.

Once the recruiter has forward their top sourced candidates to the hiring manager and generated some feedback, the recruiter will sometimes need to tweak the job description and re-post the position. More importantly the recruiter’s goal is to gain the hiring manager’s interest of the candidate’s skills and arrange some initial discussions between the candidate and hiring manager. The initial discussion is usually a telephone discussion, where the hiring manager will technically screen the candidate. If the initial discussion between the candidate and hiring manager was successful and there is a mutual interest, the recruiter will arrange an onsite interview. Let’s explore the onsite interview process.

The onsite interview process is the most important of the entire recruitment process. Everyone - the recruiter, hiring manager and interviewing team must be in sync with each other to attract the candidate. This is a great reason why the recruiter and interviewing team must have a good rapport with each other. The onsite interview has to be a great experience for the candidate, as the market is competitive. At this point the recruiter and candidate have a good rapport with each other. On the day of the onsite interview, it is crucial for the recruiter and interviewing team to be prompt when the candidate arrives per the interviewing schedule. The Executive Team should do everything possible to make the candidate feel comfortable. Once the onsite interview has been completed the recruiter should immediately have a round table with the interviewing team to gather feedback on the candidate. This is referred to as the candidate feedback process.

The candidate feedback process is intended to discuss the candidate and gain feedback on the candidate. We recommend using a scorecard to rate the candidate on various competent aspects of the position. The scorecard is usually generated and managed by the recruiter in collaboration with the interviewing team. We recommend the recruiter and Executive Team initiate some time restraints as to when the scorecards have to be completed. This will enable a prompt response to the candidate, hence further generating a good candidate experience. If the candidate has successfully passed the onsite interview process, it is important for the recruiter to immediately  reach out to the candidate and communicate continued interest and move to the offer stage of the interviewing process.

At this point of the interviewing process the recruiter and the hiring manager need to collaborate and determine an attractive, yet equitable salary package for the candidate. There are many salary tools used by the hardware industry to determine base salaries. The Executive Team will need to determine how much equity they're willing to offer the candidate. This amount of equity is usually determined based on the candidate’s level and how critical they are to the hardware design efforts. Nevertheless the entire package should be discussed and ready to be presented to the candidate within 48 hours after concluding to move forward with an offer to the candidate. Generally if the decision to extend an offer go beyond 48 hours, the hardware startup will most likely loose the candidate. Recently staffing studies has indicated that when hardware design candidates interview with startups, 63% of them are actively considering other hardware design opportunities. Therefore it is important to generate candidate offers promptly.

As mentioned earlier the Executive Team should be instrumental in closing the candidate when an offer is extended. We recommend the recruiter extend the offer to the candidate since he/she has built rapport with the candidate. Also, in the event the candidate is unhappy with their offer package the recruiter can serve as the negotiator between the Executive Team and the candidate. 

As you can see the recruiter is responsible for owning and managing the entire recruitment process. This is an enormous and time-consuming task when staffing a hardware startup. The recruiter has to be knowledgeable of the hardware device and semiconductor industry, the players and trends. The key recommendation of this article is to immediately engage a hardware recruitment team once securing the neccesary funding to assemble your hardware team. When staffing hardware startups we methodically take all the steps outlined in this article to ensure that our clients hire the most competent talent in a timely manner! 

Please feel free to reach out to us for any questions.

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