Negotiating with Cockroaches and Unicorns

(San Francisco) – The last few years were all about the Unicorns; startup technology companies that had a reached a billion dollar or more “valuation.” Yes, I’m using quotation marks as I know I’m one of many who question the generally accepted “valuation” system. A system that values a company at $1B or more one month and then, but a few months later, that same company files for bankruptcy warrants skepticism. But I digress. I’m a huge fan of the Unicorn movement. Fast-paced growth is great for business, and it presents a seller’s market for candidates. There’s no better case study to support how great the market has been than Haseeb Qureshi .

If you’ve not heard of Haseeb, he is the former professional poker player turned app developer who, after completing a three-month intensive coding course, managed to negotiate a quarter million-dollar compensation package with a leading Unicorn. Well done, Haseeb! I suppose congratulations are also in order for the hiring manager at AirBNB who deemed this hire important enough to justify the spend. Trust me, I get it. I understand it. Unicorn companies were – and many still are – in an arms race for top talent. The competition for quality developers (“A” and “B” talent remember?) is fierce and the directive from investors has been to hire for hyper-growth. A quality candidate with decent negotiating skills has been commanding, and in some cases demanding, top dollar. It’s been frothy for a while, but I believe market conditions are shifting to a place where these types of scenarios will occur with less frequency, if at all.

Enter the age of the Cockroach! A Cockroach (credit to Flickr founder Caterina Fake who most recently referenced or resurrected this term in a September 2015 blog post) is what the pundits refer to as a company that builds slowly and steadily from inception, maintaining a watchful eye on revenue, profit and most importantly spending to ensure it can weather any future market conditions. The Cockroach movement is also bringing about significant shifts / changes in the hiring process, forcing hiring manager and candidate to recalibrate.

Scru·ti·ny ˈskro͞otnē/ noun critical observation or examination

In the Cockroach Age, a new level of scrutiny now applies to hiring manager and candidate alike. As a result, the hiring process slows down a bit. Hiring managers still must move quickly, but not hastily. This deeper examination ensures the candidate is not only fully vetted for their skill sets, but has the intangibles to operate in an environment where employees are expected to be cognizant of operational discipline, market conditions and their place within the company, supporting broader goals.

The candidate must respond to this level of scrutiny (side note: this is the way companies and candidates should always strive to vet one another. Sadly, and to one or both parties’ detriment, they often don’t; by taking the time to prepare for the interview process and/or doing the appropriate research. If a candidate is truly serious about an opportunity, then, at a minimum, he or she should walk into an interview with a deeper understanding of the company’s product set, history, competitors, executives and the hiring manager(s) they will be meeting. They should be able to articulate, and often demonstrate, their skills, prior work experience, and how they translate to the position in question. Anything less than this is completely unacceptable. If you, as a candidate, aren’t willing to invest that level of effort, you shouldn’t bother applying for the position; you waste your time and worst, you waste others’ time. Assisting our candidates with in-depth interview preparation is where my Ursus team shines, devoting considerable time and effort working one-on-one with candidates. In some cases, this extra effort often determines whether or not we will continue working with a candidate, presenting him or her to a hiring manager; if we don’t sense a deeper commitment or an elevated ability post coaching, the odds that the candidate will be able to so for a discerning hiring manager are slim at best.

Ursus Insight: Layoffs and Rehires

It’s happening now and the trend will continue as the correction cycle continues. Unicorns TwitterZenefits and Groupon are all recent examples of Unicorn carnage that’s occurred within the last six months. Obviously, this is about spending reduction but the underlying drivers behind the layoffs are two-fold. In the Unicorn-Age companies that hire at an aggressive pace typically overstaff and even worse, create jobs that may or may not be core to the business. When you’re on a hiring spree, you don’t think twice about saying ‘yes’ to “wouldn’t it be nice if we had (fill in the blank here) to do this job?” Fast forward to the Cockroach-Age. These same hiring managers, now forced to manage to budget look to trim fat first and there’s no quicker way to reduce burn than to reduce headcount.

Reduction in staff is normal in any business cycle, but be cautious. All too often when companies are reducing staff, they throw out the proverbial ‘baby with the bathwater.’ Definitely cut the fat but if there are hard decisions to be made regarding whether or not mission critical / key personnel can still remain with the company, there are options. Ursus specializes in the outsourcing of contractors to our Portfolio Companies. The end result is a reduction in spend as the burden of taxes and benefits shifts from the client to us, with a modest mark-up while still being significantly less than the cost of full-time employees. This represents an opportunity for the hiring manager to effectively renegotiate or, better yet, restructure payment structures with his or her employees, often at a similar pay rate but with reduced impact on the company bottom line. Employees win. Manager wins. Everyone moves into their happy place and The Grind continues. The Cockroach age might not be so bad after all!