Startups: Vai-Thee-Fuss?. When talent becomes unaffordable for startups

Recently the founder of a small, growing, and profitable software-as-a-service (SaaS) company visualised an ambitious roadmap for building top-class products to be sold globally. Since great products require great tech talent, the founder immediately developed a technology organisation chart, starting with a CTO/ Head-Technology and down to various levels across experience bands and knowledge sets. Then he set about recruiting a CTO. So far, so good. 

A top-class CTO, preferably with an impressive academic background, must be a strong technology practitioner with past experience in architecting successful products, possess the ability to spec products and features that customers will love, and ensure the coding quality is top-class and the product can scale securely in a robust manner. In addition, a good CTO must be a great communicator with the ability to build a talented team and motivate them to deliver results in a timely manner. As you can see from the job description, it is not an easy post to fill but such people are available and this founder managed to zero in on a few good (wo)men. That’s when the real issue came up.

All the shortlisted candidates were heading technology or product in well-funded unicorn startups but were no longer doing challenging work. Once the core products were built, most of them were primarily in charge of maintenance with some modest upgrades occasionally. 

Without exception, they were looking for a challenge and another opportunity to build world-class products. However, their compensation levels were obscene. One impressive lady was drawing ₹1.8 crore annually, apart from good bonuses and an attractive ESOP. Another gentleman was being paid above ₹2 crore annually and had stocks with a minimum guaranteed buyback of ₹3 crore in 36 months. He confessed he was not doing anything worthwhile and was just biding his time until the buyback.

Job titles were another hurdle. Most of these folks were given fancy designations and almost everyone was at least a senior vice president (one was actually designated very senior vice-president!). Job titles must reflect two things — the broad responsibility of the person and his or her general position in the organisation. When designations are handed out more as a feel-good factor, it creates an enhanced sense of self-importance. 

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A combination of the high compensation packages and fancy designations had basically outpriced most of the candidates out of the market. Many promising startups are trying to build great products. What they need is great talent willing to sign up for the challenge and not always remaining chained to current packages. Otherwise they would be doing themselves and the ecosystem a great disservice.

(The writer is a serial entrepreneur and best-selling author of the book ‘Failing to Succeed’; posts on X @vaitheek)