Moneyball for Startups: How to Game Silicon Valley’s System

13 Feb

From Wired

Running a startup isn’t fair.

To succeed, you need talented software engineers who can write good code. You need experienced product managers who can guide those engineers along the way. And in the end, you need savvy marketing types who can promote the finished product. But inevitably, most of the top talent goes elsewhere.

Tech giants like Google and Facebook—not to mention incredibly well-funded newbies like Uber and Dropbox—always have an advantage in the talent wars. They can attract the best and the brightest with enormous salaries, juicy stock options, and a host of other perks, from chic Silicon Valley open office spaces to sprawling coffee bars to of-the-moment artwork.

But there are ways of leveling the playing field. Just as Billy Beane pushed the Oakland Athletics near the top of Major League baseball on a comparatively small budget—finding new ways of identifying useful players that other teams overlooked—tech companies can locate talented developers who’ve been marginalized by today’s rather single-minded tech scene. Or who just don’t like it.

The tech industry is notoriously ageist. It often shuns women, minorities, and others who don’t fit into the rising “brogrammer” culture. If you’re building a tech company, you can start by tapping this vast pool of talent. But there are others ways of gaming the system. Here’s a quick guide to what we call Startup Moneyball.

Change Your Culture, Already!

“Cultural fit” is one of the most corrosive ideas in the tech industry. The prevailing notion is that you should only hire people who fit with your company culture—whatever that is. But this leads to a rather obvious problem: young white men hiring other young white men who share common interests and habits.

That’s bad for equality, and bad for business. There are plenty of good hires out there that don’t fit the “startup dude” stereotype. Older developers, for example, bring a lot to the table. One study found that developers actually get better with age.

“I think there’s a lifestyle mismatch between the demands of software companies and the needs of mature developers who have kids or other responsibilities,” says Doug Neumann, the senior director of systems management at the Raleigh, North Carolina-based tech company Bandwidth. “That particular mismatch means that those engineers aren’t making themselves available to certain software companies.”

In other words, change your culture, and higher some older workers, some women, some minorities and some people who, well, don’t quite fit in. That might mean cutting back on the alcohol and violent video games at work, and encouraging people to actually go home in the evenings. But so be it.

Leave Silicon Valley

Most tech startups set up shop in Silicon Valley—or San Francisco—and that probably means you should go somewhere else. Office space is cheaper almost anywhere else in the world, and the competition for talent isn’t nearly as high.

People often say that tech companies must be near other tech companies in order to succeed. But you’re no more likely to succeed in Silicon Valley than anywhere else, says Thomas Thurston, founder of investment consulting outfit Growth Science. About 9 percent of venture backed companies in Silicon Valley managed successful exits over the past decade. That’s about the same percentage you’ll find anywhere else, Thurston says.

People also say it’s difficult to raise capital if you’re not in the Valley. But Paola Moretto, founder of a cloud computing company called Nouvola, says raising funds is far easier in Portland, Oregon than in the Valley—in part because she’s a woman. She describes the Valley’s investment scene as an “old boys club” with rather particular ideas about what types of companies and founders to invest in.

“In Oregon, we were helped by the local community,” she says. “What matters here is your ability to lead.”

What’s more, according to research firm CB Insights, about 75 percent of tech startup exits in 2014 came from companies that weren’t venture backed at all. So stop worrying, and go to Portland. Or Austin, or Salt Lake City. Anywhere but the Valley.

Give People Some Privacy

In the tech world, open office plans are all the rage. The idea is that they improve collaboration by literally knocking down the walls that separate people, turbo-charging your company’s innovation. But not everyone buys this.

Software developer Matt Blodgett recently unloaded a kind of online attack against open office spaces, and it struck a nerve among software developers. They don’t want openness. They want privacy. “They say they work in an open office plan and wish they could go back to a cubicle,” he tells us.

Indeed, mounting evidence suggests that open offices are a good way to spread disease in the work place—and that they actually reduce productivity. So, in the age when all your competitors are opening up, perhaps you should close things off. Cubicles aren’t that expensive.

You Don’t Need Money for Perks

Don’t have the money for Swedish massages or an in-office coffee bar? There are less expensive perks.

Portland-based code education startup Treehouse lets developers work only four days a week. “You don’t have to work Fridays so you have 50 percent more time to spend with your loved ones or on your hobbies,” says Treehouse CEO Ryan Carson. “That has allowed us to woo people away from Google and Twitter and Facebook even though we can’t quite match their salaries or their stock options.”

That might mean paying people just as much money for less work, but Carson says a four-day work week ends up making his team more efficient, not less. “It basically removes that kind of dawdle time,” he says. “We do information work so it’s more about efficiency, not necessarily sitting in front of your computer for longer.”

In similar fashion, Bandwidth offers 90 minute lunches, so that employees have time to workout in the middle of the day. And it enforces what’s called “vacation embargo.” “You’re not allowed to send or receive e-mail while you’re on vacation,” Neumann says. “If someone is on vacation, and sends an email, they’re in trouble.”

Let ‘Em Work From Home

Yahoo CEO Marisa Mayer doesn’t like people working from home. But you should. It’s another perk that works.

The jury is still out on whether remote work makes people more productive. Though study published by Stanford University in 2012 found that Chinese call center employees who worked from home were far more productive than those who worked from the office, a 2013 analysis by workforce data company Evolv found that those productivity gains drop off over time. But remote work provides other advantages. “People who work from home stay longer, the attrition rates are lower,” says Evolv co-founder Max Simkoff.

Remote work also cuts costs. And, perhaps most importantly, your workers won’t compare you to Marissa Mayer.

Bandwidth
Bandwidth
dialed-in@bandwidth.com
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