Executive Summary

Startups begin with a great idea, but they grow with great people.

For high-growth companies, the first few hires at the earliest startup stage are crucial to the culture, growth and, in many ways, direction of the company. In a startup, where the mission to scale is big but the workforce small, finding the best people is essential, and a step that founders cannot afford to get wrong.

At Taylor Jones we have spent the past eight years working as recruitment consultants with some of the top startups in the UK, the US and elsewhere globally. We know that making early hires is a daunting task: it’s difficult to define who the right people are. We’ve seen first-hand how important and challenging it is to build the right team and we’ve also seen the exponential growth that ensues when these hires are spot on. The importance of this growth step is especially true for the first ten hires.

Individually, market-disrupting startups are wildly unpredictable and idiosyncratic entities, almost by definition. We’ve learnt, however, that there are certain clear patterns that can be seen in the attributes, ambitions and experiences of those who join in the first ten and help a company succeed. However, while attributes are not likely to change, personal contributions to a startup and attitudes towards work-life balance have shifted significantly since the onset of the COVID pandemic.

• Candidates of all ages do not necessarily prescribe to what they once correlated with success prior to the pandemic: long hours at the office; working weekends; answering client and senior manager requests at all hours of the day and night. Startup teams over the lockdown periods reflected on how burned out they had become, despite the glory they could now attribute to their unicorn status.

• Candidates are not valuing sweat equity as they one did, they are looking for higher earning power in the here and now in the form of salaries and cushy benefits. With 4-day week trials and Work from Home almost embedded into corproate and startup life, founders and investors are now dealing with a new set of challenges: startup life has changed forever.

That’s why in this report we set out to add to our own experience to reveal the hiring trends of top startups on a deeper, more quantitative level. This report details our findings and how they reflect what we are seeing in the market, with the aim that current and future founders of ambitious companies can emulate these trends when making their own early hires.

The findings are also a reminder to founders and investors that reaching unicorn status may take longer post-pandemic now that candidate attitudes are changing towards a better work-life balance. They value and prioritise higher salaries and benefits to match inflation rather than a slice of future equity ーthat is a huge change in our estimations. That means luring and securing high calibre talent acquisition at the right price and package will be more competitive than ever.

The Unicorn Report: Who and How?

There are many ways to define success for a startup, but perhaps the highest marker for success is unicorn status. For this report we chose to look into unicorns and the trends among the first ten people hired into them. This involved thousands of hours of original research.

We researched unicorns split evenly across the US and Europe; the 50 most recently founded in each (as of January 2021). We identified the first ten hires into each of these unicorn companies and looked into their experience, educational background and journey within the company. We surveyed these early hires to learn what they thought of their experience growing a unicorn company.

We also reviewed a selection of startups that had the potential to become unicorns, but ultimately failed and have closed: those with a disruptive idea and strong founder and comparable fundraising success to companies that became unicorns. For certain criteria, information was not available for every individual researched. This was a very small minority, yet as such all statistics mentioned are based on those known only.

Unicorns: When, Where, and What?

The unicorns reviewed were some of the biggest, most famous companies of the past decade including Deliveroo, Revolut, Alto Pharmacy and Fair. These charts detail the spread of companies we reviewed; when and where they were founded, and what industries the companies were in.

When?

There are many more unicorns in the US, so the 50 most recent unicorns researched were all founded in 2015 or later. In Europe, the startup space is rapidly growing with top VCs now opening European offices, but historically it has not been as active or as focused on fast growth. As such, the 50 most recently founded European unicorns were founded from 2009 onwards. Across the US companies it took an average of 3 years to become a unicorn, and in Europe it took an average of 5.5 years.

Where?

US unicorns are predominantly in California, with a secondary hub in New York. There are growing hubs in Boston, Georgia and Texas. In Europe the major hubs for startups are in the UK and Germany.

What?

The sample of unicorns selected was determined according to founding date, rather than industry. Nonetheless, there was a pretty even balance between B2C and B2B companies (47:53). The most common industries were B2C Fintech, B2B SaaS, Healthtech and E-Commerce, followed by hubs of Automotive and Security startups.

The Rapid Growth Mindset

A startup candidate must be determined, have grit and be able to execute.

Highlights

Founders are typically defined by entrepreneurial nature, and this natural aptitude for startup life is essential for their early-teams too. This is what we call the Startup Mentality. There are several traits that comprise this mentality and for candidates joining a very early-stage team, many of these are non-negotiable.

In our survey, we proposed a list of attributes that we surmised to be important aspects of an entrepreneurial nature and asked respondents to rate their importance for a startup candidate to have. The responses were stark and are depicted in this chart:

The most important traits were ‘Determination/Grit’ and ‘‘Ability to Execute’, both rated as Essential by over 55% of respondents and as Very Important or Essential by 95% and 95% of respondents respectively. The ability to get things done, and withstand pressure in a novel, fast-paced environment with a workforce to required-output deficit is essential.

Creativity, Ambition and Intelligence were at least ‘Quite Important’ to all respondents, so while they are not rated as the most important attributes, they are the ones for which agreement on their, at least partial, necessity was unanimous.

All seven of the suggested attributes were rated as Very Important or Essential by over 67% of respondents, and not one was rated ‘Not at all Important’ by anyone. Startups require all-rounders who are both capable of and willing to wear a lot of different hats.

The Rapid Growth Work Ethic

Joining an early-stage startup team is really hard work, and work-life balance often suffers. Luckily, those who join expect this.

Highlights

The first years of a startup are undeniably tough, particularly for hyper-growth companies such as unicorns. Where pace of growth and ambitious targets outweigh the available employee resource, the shortfall is typically made up by the efforts of the first ten employees.

The limited work-life balance and associated pressure crucially engages the importance of determination and grit as part of a startup mentality. A strong, entrepreneurial work ethic is required. Employees, like founders, must live and breathe their startup.

In our survey, we asked respondents both about their expectations of work-life balance (how important it was to them on joining) and about the reality of work-life balance (how much did they have a good work-life balance) to establish the importance of both a candidate’s willingness to commit hard work to the company and ability to do so.

The results were not as unbalanced in favour of work as either we, or the survey respondents themselves, had anticipated.

They in fact reveal that while no employee had a perfect work-life balance, the vast majority (76%) had quite a good balance or a very good balance. Furthermore, those who join a startup anticipate hard work. On joining these unicorns, 28% of respondents expected little-to-no work-life balance, 42% expected quite a good balance and 30% expected a very good balance. There was a 17% increase in the proportion who had a “Very Good” balance than those who expected as such, even when combined with those who expected a perfect balance. In reality, an equal number of people found the balance better than expected as those who found it worse (38%). 23% said their work-life balance was as anticipated.

By comparison, those at failed companies expected a much better work-life balance and even though they reported a worse balance than anticipated, they still had a better balance on the whole that those at successful companies.

The Start-Up 'Bug'

Once people get a taste of the startup life, they tend to get the ‘bug’, and previous experience within startups can be key to success.

Highlights

Despite the hard work, the startup experience seems to be an enjoyable one for those with the right Startup Mentality. The kind of candidate who joins and succeeds in a startup is clearly drawn to the exciting high-risk, high-reward atmosphere, and, it seems, to a career in serial startups.

For a company, the tendency to hire those who have experienced the startup culture and journey previously is a clear benefit. It’s highly desirable to have someone with a proven record of success in designing and owning a business function and building out a team. Previous startup experience also serves as a reference for a candidate’s grit; proof they can take on a challenge and thrive in startup culture.

Previous startup experience is, of course, not essential for every individual hire. However, the first-ten team should have at least one hire with startup experience. At only 3 out of the 100 companies reviewed had none of the first ten hires previously worked at a startup. At 40 of the 100 companies over half the first-ten team had specific startup experience. The proportion of those with startup experience within an individual company was significantly higher in the US companies than the European companies. The US has a greater density of startups, therefore the prerequisite of startup experience is a more realistic and achievable hiring requirement. As such, in our experience US founders yield less on this criterion than European founders.

From the candidate perspective, the decision to join another startup is often organic. The type of person who has the aforementioned startup Mentality, with entrepreneurial aptitude; one who enjoys the startup journey and is good at it, is likely to seek out another startup opportunity. This desire is emboldened by a successful unicorn experience too it seems, as when asked in the survey whether they would do the startup journey again, 48% said they would “definitely” do the startup journey again and 45% said they would be “likely” or “highly likely” to. Only 7% said “maybe” or “unlikely” and no one said they definitely wouldn’t. The unique career path, excitement and reward form components of an experience candidates overwhelmingly want to repeat.

Not only did the respondents say overwhelmingly that they would want to do the startup journey again, but our research demonstrates that the first ten hires into these unicorns very often do in fact continue in startups.

Overall, 47% of the first ten hires into the unicorns have stayed with that company. This proportion is higher in the US companies (56%) than in the European companies (39%) but this is largely skewed by the fact the European companies are older, so the employees have had longer to move on.

Of the 53% that have left the unicorns, 34% have gone to bigger companies, a few have returned to education, gone freelance or retired, and by far the majority have chosen to do the startup journey again. 43% have joined another startup and 17% have founded their own startups. While the startup experience is tough, the journey is exciting and, of course, the financial reward where equity is granted can be life-changing. It seems to be an experience that many wish to replicate.

Experience: The US Advantage

In Europe 74.42% were in the first 10 years of their careers. In the US, it was 60%. US startups hired those with more experience.

Startups that become unicorns in general are neither ‘dorm room’ startups (the image Facebook’s story conjures up) nor are they full of people with decades of experience in the industry applying years of knowledge. In fact, the vast majority (over two thirds overall) of those hired as one of the first ten to join a unicorn were in the first 10 years of their careers. Yet on the whole the US unicorns hired those with a bit more experience.

We considered the unicorns across the two continents in tandem, yet there was a key difference observed between the US and European hiring patterns in terms of candidate experience. US companies tended to hire those with a bit more experience on average.

This graph shows the spread of experience of the early employees in unicorns, separated out to compare the US and European hiring patterns. We divided the level of experience into seven brackets (0-5, 5-10, 10-15, 15-20, 20-25, 25-30, 30+).

We also looked at companies individually to see how the first-ten team as a whole was composed in terms of experience.

We found three key trends:

1. Most companies had a fairly even spread of experience in their first-ten hires. 55% of companies had representation in at least four of the seven experience brackets. No company had all the first-ten in one experience bracket, but only one company had at least one employee from each bracket.
2. The most dominant experience bracket was 0-5 years. A dominant bracket is when over half the first-ten team (6+) were in the same experience bracket. In 28 companies the 0-5 bracket was dominant, and in 5 companies the 5-10 bracket was dominant. No other bracket was dominant for any company.
3. Almost all companies hired those with less experience and there were few with very experienced hires.In only 6 out of 100 unicorns overall, did none of the first ten hires have only 0-5 years experience. Only 10 companies had anyone with over 30 years experience and only 15 had anyone with over 25 years experience.

Not only were people hired largely in the first ten years of their careers, but for a significant proportion in Europe, it was their first job.

For 21% of those hired into the first-ten teams of unicorns in Europe, it was their first full-time role (predominantly these people were recent graduates). Comparatively, in the US it was only 5%. In Europe, 35 out of 50 companies had at least one entry-level hire versus in the US only 19 of the 50 companies did. These graduate hires were not concentrated within companies, but were very evenly spread. Companies mostly had only one or two graduate (first-job) hires among their first-ten.

This tendency for US startups to hire more experienced candidates, most starkly seen in the difference in hiring graduates between the two regions, is likely reflective of the differences in fundraising patterns between the two startup ecosystems. US seed rounds tend to be much larger and US based VCs often operate a more ‘because it will succeed’ attitude. As such, they can invest much more money much earlier, so startups may have more available capital enabling them to afford more experienced talent.

By comparison, European VCs generally operate a ‘because it has succeeded’ model of investment, with small seed rounds only expanding once a company has got off the ground. At the point of significant investment, European startups are often more established having already hired their first ten. As such, they have less available capital at the point of hiring their first ten, so can only afford less experienced talent, and hiring those with no experience (graduates) is often the cheapest option.

The significantly reduced trend in the US implies that with more available capital, companies would not be inclined to hire those without experience and the tendency to hire graduates and less experienced teams is largely needs based.

For candidates however, it works well. Anecdotally, we have experienced an increased number of top graduates seeking a startup role upon leaving university where previously they would have sought a graduate scheme at a top company. This could be due to the rise of the tech space and fame of success stories such as Facebook and Instagram. Perhaps, more graduates are seeking instant gratification in their careers, and equity in a startup that succeeds is a way to achieve this.

It could also be the result of aptitude. Startups attract risk takers and those with the entrepreneurial, startup mentality may want to join one straight away rather than climbing the typical corporate ladder first. Another factor could be that as the number of startups increases and the tech space becomes an even more well-trodden, prestigious path, ‘joining a startup’ is now as aspirational for a top graduate to say as ‘joining a Fortune 500 Graduate Scheme’, for example.

Lateral Hiring: Quality over Quantity

While the level of experience tends to be lower, the relevance of experience is key. Across all 100 unicorns, 67% were lateral hires.

Unicorns when hiring it seems did not demand years of experience, but they were discerning on the type of experience. In addition to the desire for those who had previous startup experience, unicorns tended to hire laterally. For example, a startup hiring a Head of Sales opportunity looks for a candidate who has already fulfilled a Head of Sales function rather than someone who is currently a Senior Account Executive or Sales manager, for whom the move would be a career promotion. This reflects a trend we are increasingly seeing with startups and founders as they seek candidates who are already in the same role as the one they are being considered for.

The proportion of lateral hires is marginally higher in the US when considering individual hires. The distinct difference between the US and Europe is in the composition of companies in terms of lateral hires and promoted hires. In the US, 70% of companies had 6 or more lateral hires among their first ten, whereas in Europe only 36% of companies did.

The difference could be partly financial, partly cultural and partly practical.

Financially, the increased disposable capital that US startups have due to higher seed rounds allows for higher salaries, therefore startups can be more demanding and discerning when looking for those with specific experience and can afford to match salaries of more established companies, rather than relying on attracting those who will take career progression but at the same salary as a position a step down.
Culturally, the US startup ecosystem focuses on extremely fast growth and market disruption, therefore hires must be experienced enough to own and expand their business function quickly. Comparatively, the European startup culture allows for a slightly slower burn, and more leeway for less experienced hires to learn and adapt on the job.
Practically, there are more startups overall in the US and the US is a linguistically homogeneous, united country. In Europe, there are fewer startups overall and they are split across several countries, which differ in culture and language. As such, in the US it is easier to find someone within the US with startup experience in a specific field. For example, if hiring for a food delivery startup in the US there are an abundance of predecessors already there to hire people from. In Europe a startup that becomes the unicorn is much more likely to be the only startup in that field in that particular market, therefore those with the specific experience either do not exist or are much harder to find.

As with the level of experience, when financial pressures are lesser (as in the US), there is a preference for lateral hiring. This implies it is an impactful and generally sought after attribute for a candidate, and a trend that may taper off in Europe due to need not want. An interesting consideration is that the lesser experience both in terms of years and in terms of relevance could be both the cause and the effect of the generally slower pace of unicorn growth in Europe.

This trend is also startup specific and emerges far less when hiring for bigger companies, as in startups training and support structures usually do not yet exist. In the first ten hires a company, each hire is likely to have total ownership of their function, therefore needs proven experience of their ability to do the role largely alone. They need the knowledge and willingness to do the grunt work in their ‘department’ initially too, but also the experience to eventually build out and manage a team.

Academic Rigour Quantified: Do you need a top degree?

Highlights

It’s unsurprising that successful companies were built by intelligent people. There is a clear trend of fast scaling companies hiring people with a strong academic background. The vast majority of hires into startups had degrees, and a large proportion of these degrees were from top universities. Not only had they attended top universities, but 45% of unicorn early hires also had a Masters Degree. The drive it takes to get into one of these top universities is an early marker for the drive to grow a company. The academic rigour at them is a clear indication of intellectual horsepower and the capacity to work hard and withstand pressure.

Interestingly, it is not a non-negotiable criterion as the majority (53%) had not attended a Top 200 Global University. Nonetheless, within teams the unicorns do demonstrate a preference for those who attended top institutions. At 47 of the 100 unicorns considered, over half the team had attended a Top 200 Global University and at only 6 companies had none of the first ten.

We also looked into the type of subject that those who attended university studied. Reflective of the trend that startups are largely in the Technology space, 54% of those who attended university and then joined a unicorn company had studied STEM subjects (over 30% had studied Computer Science or Engineering). 30% had studied a Business related subject such as Business Administration or Marketing. Only 11% had studied a humanities subject and 5% had studied Art/Design.

There is also a trend of subject relevance to role function. 56% had studied a subject at university that had direct relevance to the role they were hired to fulfil. For example, Software Engineers had studied Computer Science and CFOs had studied Accounting or Maths.

A relevant degree from a top university is a marker of aptitude and capability. The training university offers in functions, especially those such as Software Engineering, allows candidates to hit the ground running. This can substitute some full-time work experience, which to some extent explains the trend for hiring those early in their careers.

Importantly, however, university is absolutely not an exclusive marker of a candidate’s potential. Several individuals had experienced a directional shift in their career path or joined companies without the degree backing, but these people were in the minority.

University degree choice is also not limiting. Several software engineers for example had studied a non-relevant undergraduate degree and then retrained. 22% had studied subjects that were not at all relevant to their future positions. Work history and experience is the more important factor in a hiring decision, but a good degree is a strong trend and advantage.

Winning the War on Talent

The best candidates are in high-demand and usually have their choice of startups. When choosing which to join, the Founder is the most important factor.

The ideal candidate has determination, grit and the ability to execute.

They have experience in the job function and are highly educated. They are prepared to work hard, and most importantly they are enthusiastic about startups. This combination is rare and a plethora of companies are often competing for each candidate. It’s a candidate-led market, so how do you win the war for talent?

When a candidate joins a startup they are essentially investing in that startup but with their time not their money. In truth, a candidate’s investment is more risky than a financial investment. A financial investor can build a diverse portfolio and invest in several companies with the hope at least one will succeed and produce a lucrative enough return to make up for any losses. A candidate’s investment, however, is exclusive – they can only entrust their careers to one company at a time.

As such, candidates ask all the same questions as an investor, if not more. They assess the size of the market, the level of opportunity, the quality of the rest of the team and the track-record of the financial investors. We wanted to understand what matters to these candidates most, so we asked respondents to our survey how important certain factors were to them when deciding to join their specific startup. We looked at equity, salary, the company mission, the founder and the company growth potential. This graph shows the response:

Founder, Company Mission and Company Growth Potential were overwhelmingly deemed the most important factors when joining a startup, all ranked as Very Important or Essential by over 75% of respondents.

Equity and salary are not as important to the decision to join a specific startup, rated Very Important or Essential by 45% and 38% of respondents respectively.

The order of importance between these factors is firstly due to the fact that equity and salary are generally expected when you join any startup so less likely to inform a specific decision. While many would presume equity to be an exciting prospect and driving factor, equity within a startup is valueless to a prospective candidate unless the potential return has been established through belief in the company. The founder, company mission and company growth potential form the basis upon any equity-driven decision is made.

Respondents also interestingly deemed equity only marginally more important than salary, and notably equity was the only factor that any respondents deemed not at all important. While equity is highly valued, the respondents seemed unwilling to risk relying primarily on prospective earnings, and salary ultimately remains at least quite important to more people than equity.

Essentially you are investing in that start up, but with your time not your money, so really you should be asking all the same questions an investor would. In fact it’s more important because you only get to invest in one and the personal stakes are much higher.

Conclusion: The Ideal Candidate

Unicorn startups are unique and often intense companies to join, and the earliest stage first-ten team is an extremely important part of growth. Startups are concentrated in the US, but their market is growing rapidly in Europe. There are several differences between the two startup ecosystems in terms of fundraising patterns and culture, but in the type of candidate that unicorns hired, the trends are surprisingly similar.

Who is the ideal startup candidate?

What should companies look for in their first ten hires?

1. A Startup Personality and Mentality

Determination and grit as well as the desire and ability to actually execute on tasks are essential for the type of person who can withstand the tough moments and sometimes scrappy nature of a startup, and the type of person who will accept the risk of a startup to begin with.

2. Someone Who Understands the Work It Takes

At the earliest stage of a startup, there is a big journey to growth ahead. Candidates must recognise this mission ahead and be willing to work really hard for success. A track record of or interest in startups is a marker of commitment and understanding. Transparency on expectations from the company’s side is key.

3. Experience in the Job Function

A candidate doesn’t need to have several years of experience but they should have done at least aspects of the job before. Lateral hiring is a strong trend where the candidate has already proven their ability to fulfil a job function.

4. Academic Rigour

While not essential, a relevant degree from a top university offers transferable skills or even a functional grounding and can be a clear indicator of intelligence, ambition and work ethic.

5. Buy-in to the Founder and Company Mission

BUY-IN TO THE FOUNDER AND COMPANY MISSION: A candidate can be perfect on paper, but a company needs commitment; someone who understands and supports the mission. Belief in the company mission means equity has value and a candidate will be willing to work extremely hard for success.

Authors

Taylor">

Richard Taylor

Co-Founder

Chris Jones

Co-Founder

Katherine Steiner-Dicks

Editor and Content Writer

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Unicorn DNA: Hiring for High-Growth

Executive Summary

The Unicorn Report: Who and How?

Unicorns: When, Where, and What?

When?

Where?

What?

The Rapid Growth Mindset

Highlights

The Rapid Growth Work Ethic

Highlights

The Start-Up 'Bug'

Highlights

Experience: The US Advantage

We also looked at companies individually to see how the first-ten team as a whole was composed in terms of experience.

Lateral Hiring: Quality over Quantity

Academic Rigour Quantified: Do you need a top degree?

Highlights

Winning the War on Talent

The ideal candidate has determination, grit and the ability to execute.

Essentially you are investing in that start up, but with your time not your money, so really you should be asking all the same questions an investor would. In fact it’s more important because you only get to invest in one and the personal stakes are much higher.

Conclusion: The Ideal Candidate

Who is the ideal startup candidate?

What should companies look for in their first ten hires?

1. A Startup Personality and Mentality

2. Someone Who Understands the Work It Takes

3. Experience in the Job Function

4. Academic Rigour

5. Buy-in to the Founder and Company Mission

Authors

Richard Taylor

Chris Jones

Katherine Steiner-Dicks

You may also be interested in...

Get in touch

Unicorn DNA: Hiring for High-Growth

Executive Summary

The Unicorn Report: Who and How?

Unicorns: When, Where, and What?

When?

Where?

What?

The Rapid Growth Mindset

Highlights

The Rapid Growth Work Ethic

Highlights

The Start-Up 'Bug'

Highlights

Experience: The US Advantage

We also looked at companies individually to see how the first-ten team as a whole was composed in terms of experience.

Lateral Hiring: Quality over Quantity

Academic Rigour Quantified: Do you need a top degree?

Highlights

Winning the War on Talent

The ideal candidate has determination, grit and the ability to execute.

Essentially you are investing in that start up, but with your time not your money, so really you should be asking all the same questions an investor would. In fact it’s more important because you only get to invest in one and the personal stakes are much higher.

Conclusion: The Ideal Candidate

Who is the ideal startup candidate?

What should companies look for in their first ten hires?

1. A Startup Personality and Mentality

2. Someone Who Understands the Work It Takes

3. Experience in the Job Function

4. Academic Rigour

5. Buy-in to the Founder and Company Mission

Authors

Richard Taylor

Chris Jones

Katherine Steiner-Dicks

You may also be interested in...

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