The Main Challenges for U.S. Startups
In 2015, I founded an online service that provides bank guarantees and financial services. A software development team is a fundamental detail for such a company. But, building one can be pretty tough for the founder—especially if you’re in the United States. The main question was how to hire developers.
The American IT labor market is suffering from a strong dearth of software developers, despite having the highest density of software developers in the world. The period of 2020-2021 was even called the “Great Developer Drought”.
And if this is a problem for tech giants, then it’s far more challenging for startups. Established companies have a lot to offer: a name and reputation, more money, technology, and business connections. Startups usually can’t promise golden mountains to their employees right away. At first, they only have ideas, a free-spirited corporate culture, and extraordinary tasks. And startups have to compete not only with other startups but also with big companies for tech talent.
The problem with developers’ drought isn’t new. Back in 2015, I’d hired everyone I needed for my startup, I just needed to figure out how to hire developers.
1. Independent Search
Our recruitment team spent almost half of the year searching for in-house developers. We used the full power of our social networks and word-of-mouth and searched LinkedIn inside out. It was all to no avail. The developers were taken.
As I mentioned above, startups are charming with the work flexibility, opportunities for self-improvement, etc. they provide. But in some cases, it may not be enough. And our case was exactly that: Most of the developers we encountered and interviewed ended up choosing companies that could provide other benefits, such as a higher salary, health insurance, and a nice line on the CV. They knew how to hire developers due mostly to not being a startup. As a result, my startup was left with nothing and was close to being closed.
Failure summary #1: What kind of difficulties did I face?
- Startup: As I said before, we didn’t have any kind of extra benefits that would help us win this recruiting battle with the big companies. We only had great opportunities, freedom, and enough money for our workers so they could live in comfort.
- I looked for full-time developers only. If I had needed contractors or freelancers, the search probably would’ve been much easier and faster.
What mistakes did I make?
- Underestimating the complexity of the task.
- Not considering remote workers.
2. Working with Staffing Agencies
What do you do when you can’t do something yourself? That’s right: You go to get help from someone with more experience. That’s what we did next; we decided to go with a staffing agency. In theory, this seemed perfect to us: In essence, you just make a list of requirements, pay a certain amount of money, and wait until they bring the candidate right to you. The search process itself and interviews are all on the agency’s side. But in practice, things were not so rosy.
In a week, the agency matched us with several pre-vetted candidates with suitable qualifications, but we decided it would be better to be on the safe side and conduct our own interviewing rounds. And it was worth it. Oversells are quite common, so the only thing you can do is properly vet the candidates. Since staffing agencies don’t always do this well enough, as it turns out, in the end, this task falls on you anyway.
As a result, there’s a huge downside to staffing agencies: the candidates cost twice as much, and you have to spend time checking them yourself anyway. And there is no guarantee that eventually you’ll find the right person.
Failure summary #2: What kind of difficulties did I face?
- Finding a trusted outstaffing agency quickly.
- Paying for a poor-quality result.
- Additional vetting took time.
What mistakes did I make?
- Not budgeting extra in case I had to go to agencies.
Was my project closed eventually?
No, it wasn’t. After several conversations with my fellow founders, I found out that hiring in-house developers is almost the #1 problem for American startups. In spite of the fact that tech jobs are growing in popularity every year, 25% of tech vacancies in the American market remain unfilled. Talking to others who had the same problem as me was helpful, not only because I could see that I wasn’t alone, but also because it gave me some insights into the search process itself.
There were two things that all of the people I talked to had in common: They looked for in-house workers, and searched for developers within the US. And these turned out to be the main reasons for their failures (and mine, too). Not all companies can afford remote workers — it requires certain conditions. But if you have the opportunity or are willing to adjust the workflow — be sure to consider this option.
Consider Your Options
To start with, I decided to look towards workers from Europe, as it’s similar in mentality, and developers have lower rates there. Jumping to Asia seemed too extreme to me at that point. But, I’d have been better off looking there right away after all.
I found it best to look for developers where they spend most of their time: on GitHub and maybe LinkedIn. For about two weeks, my team and I sent out invitations to developers and conducted interviews. The ones from Europe turned out to be too expensive considering their skills. Most of them wanted to be paid as much as the senior developers when in fact they were nowhere near senior status.
After hiring a man without a profile picture from India who was great. I looked for more developers specifically in India. And I found some more technical talent who’ve been at my startup for about two years and have proposed and implemented dozens of cool ideas. The main insight I got here is that remote work doesn’t reduce employee efficiency, but rather, usually increases it.
How Insquad Was Born
The experience I’ve shared above led me to create a project that would let you avoid loss of money and—what may be more crucial, as it was for me—time. I know all the pain points startup founders and CEOs have because I’ve been through all of them. In hindsight, I wish there had been something or somebody to:
- get the burden of vetting tech talent off my shoulders
- supply me with developers who really are seniors, not the ones who are just selling themselves as skilled devs
- allow me to get trusted, full-time developers quickly
And maybe somebody who could aid with all the legal paperwork.
If, at the moment, you’re going through the same failures as I did and you still haven’t found the perfect software developer, just stop for a while and ask yourself: what if the perfect match I’m looking for is just on the other side of the world? And then try to look there. Finding out how to hire developers is different for every company, but finding them is key in whether your startup sinks or swims.