State of the startup and scaleup hiring markets – as seen by recruiters
👋 Hi, this is Gergely with a subscriber-only issue of the Pragmatic Engineer Newsletter. In every issue, I cover challenges at Big Tech and startups through the lens of engineering managers and senior engineers. If you’ve been forwarded this email, you can subscribe here. State of the startup and scaleup hiring markets – as seen by recruitersMore startups and scaleups are hiring engineers and engineering leaders. Advice for tech professionals on how to get noticed by specialist recruitment companies – from two specialist recruiters
Last week, we looked into data from global hiring agency Indeed that found software development job listings are at a five-year low. To check how representative (or not) these numbers are of the tech jobs market, I pinged some tech recruiters. The response was not what I expected:
These data points stick out and I was eager to learn more; after all, they’re bucking the trend in Indeed’s figures, with rising demand for tech professionals! I met Asher and Glenn to get their perspectives, and they also offered some tactics for engineers and engineering leaders to use when seeking new opportunities. Today, we cover:
For updates on how these two recruiters see the market, follow Asher Hoffman and Glenn Murphy on LinkedIn. A quick programming note: there will be no The Pulse on Thursday — I’m taking a short winter break. More details in my publishing schedule. 1. What are boutique recruiters?Coastal Recruiting and Riviera Partners are specialized recruitment agencies; also known as "boutique search”, “contingent”, “retained”, or “executive” recruiters. “Boutique” and “specialized” refer to recruiters which focus on a niche within tech, such as:
Executive recruitment is a subset of boutique recruitment. These companies recruit for executive roles like director of engineering, VP of engineering, head of engineering, CTO roles, etc. In the US, high-profile firms can charge $100K or more to recruit a key position like CTO for a late-stage scaleup. Executive recruitment firms can also focus on individual contributor (IC) roles. Glenn Murphy advises that this usually happens only in the US at their firm, and comes with tradeoffs. For example, the cost becomes justifiable only when the vacancy’s comp package is several times higher than the search cost; usually $500K and above. It is this niche area in which an expert executive recruiter can make the most impact by finding truly standout candidates. Within the boutique search sector, there are two main types of recruiter: Contingent recruitersThese companies work on a “no hire, no fee” basis, and only get paid for successfully filling a position; usually 10-40% of the role’s first-year salary. This service is an easy sell; it’s low risk financially for an employer to work with a contingent recruiter due to no-hire-no-fee. Contingent recruiters also often have more clients than retained ones do. Coastal Recruiting mostly does contingent recruitment, with a couple of retained contracts. This company specializes in hiring software engineers from the first hire to engineer number 20 to 30 at early-stage startups. Retained recruitersMost executive recruitment companies operate a retainer model and charge upfront, regardless of whether a hire is made. Payment comes in a fixed number of instalments, perhaps in this order:
A search company may also be paid monthly while conducting a search. Total retainer fees are usually 25-50% of the value of the successful candidate’s comp, which increases the more challenging the search is. For example, it’s challenging to find a new CTO for a 300-person scaleup growing at a 10x pace, who is hands-on, has worked with AI / machine learning (ML) before, and who has experience at a hypergrowth company, and also in Big Tech. There aren’t too many people who fit this profile, and not many of them may be interested in switching jobs. Guarantee periods can also be an important part of retained searches, under which a portion of the fee may be refunded should a successful candidate quits shortly afterwards. Retained recruiters are a lot more expensive than contingent ones, and are the go-to choice for executive recruitment where vacancies may not even be publicly listed by an employer. Riviera Partners is one of the best-known executive recruiter companies. They hire for director+ roles in engineering, product and design. In our deepdive Finding the next company to work at, they were the most recommended by engineering leaders. Seed-stage and early-stage startups typically only use executive recruiters to hire for VP-and-above positions which report to the CEO. Later-stage startups also hire for director positions, and may pay for a search for senior-and-above hires and ICs. However, the cost means this is rare, happens mainly in the US, and by funded scaleups with very specific needs. Given this process can be so expensive, it may not be immediately obvious what the upside is. Glenn explains:
Riviera’s pricing is atypical, compared to many other retained recruiters. Glenn shares:
2. Hiring by tech stack at early-stage startupsAt Coastal Recruiting, Asher hires early engineering teams at early-stage startups: from seed-stage startups to Series B and Series C companies. They work with some of the largest US VC investors (like a16z, Y Combinator, Sequoia, Index, Lightspeed, Founders Fund and others). Types of engineers and tech stackAsher sees the hiring demand split like this: ‘50% of hires we make are backend engineers. I don’t think this will always be the case for startup engineering. The first 3 hires for a company with technical cofounders are almost always backend engineers. It’s a bonus if they have some frontend skills, but I’d peg it at 80% backend, 20% frontend. ‘For backend tech stacks, these are the languages founders use, which candidates would be expected to pick up quickly. By popularity:
‘25% percent are fullstack. These roles almost exclusively employ the following technologies:
‘AI and ML is 10-15%,” says Asher. “This hire is almost always one of the first 10, and doesn’t need to be an “in-depth” ML specialist. They usually fit this profile:
‘Someone we recently hired for such a role had worked for a year as an AI/ML engineer, not an in-depth, “research-caliber” ML candidate. ‘As startups grow and mature, eventually they tend to hire more in-depth ML and AI people. However, early-stage companies look for builders who can use AI tools effectively. ‘5% are frontend engineers. Almost universally, the seventh or eighth hire at a startup is the first frontend engineer. The reason almost always is – and I kid you not! – that the founder is fed up with owning the frontend themself, and is ready to bring in a frontend specialist. ‘Ironically, this role is one of the hardest to fill because technical founders whom we work with typically expect two things:
‘Another reason this role is so hard to fill is that the founder often looks for a staff-level frontend engineer. This person might be the first frontend hire, but they ideally want someone who will head up the frontend team, as it grows. It’s difficult to convince people with staff-plus frontend jobs at stable companies and who head up teams, to come and join an early-stage startup where they would be the only frontend person – at least at first! ‘The best startups are embracing AI – and look for devs who do the same. AI coding tools like Cursor and GitHub Copilot are used by all the best startups we recruit for. Founders at these startups often mention that mastering these tools can 10x the productivity of their engineers with faster iteration and the ability to parallelize work. ‘We don’t see demand for native mobile engineers at all; only React Native. We work with a few “mobile-first” startups who have built impressive mobile apps. All use React Native and look to hire for such experience. ‘I would assume native hires might become more important after the Series B or Series C rounds. In the early-stage in the US, they are absent – or at least, we see no such demand.’ 3. More demand than before at Coastal and RivieraBoth recruitment companies are seeing record, or near-record business in terms of the number of searches executed. More demand from early-stage, VC-funded startups. Asher says:
Will more companies increase recruitment? At Riviera partners, Glenn Murphy does engineering leadership searches for startups and scaleups. He shares:
4. Changes across the marketI asked both Asher and Glenn what changes have been surprising in their part of the tech hiring market... Subscribe to The Pragmatic Engineer to unlock the rest.Become a paying subscriber of The Pragmatic Engineer to get access to this post and other subscriber-only content. A subscription gets you:
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