In 2020, EntryPoint had great conversations with 40+ thought leaders across the country on The Cackle and we all want more! So in 2021, we are continuing the conversation with those guests to dig a little deeper into topics that matter. Like the impact of COVID on startup talent.
Keep Cackling with Patti Glaza from ID Ventures
It has been one year since we went into quarantine. Startups across the world experienced the transition from busy team offices, frequent travel to conferences, and in-person sales meetings to managing a workforce all remotely. Predictions had people back at work in May or June of 2020, then September, then January 2021, and now most are saying it will likely be this fall before enough workers are immunized to risk having teams fully back together in one office.
At the start of the pandemic, I talked with Emily on an episode of The Cackle about how the entrepreneurial ecosystem can support tech startups during a global health crisis, but let’s dig deeper into the impact of COVID on startup talent.
We all see the toll this crisis is taking on a variety of businesses—from main street businesses like coffee and retail shops to tech startups that relied on hospitals doing elective surgeries, restaurants needing equipment services, regional banks looking to offer services beyond delivering Paycheck Protection Program (PPP) loans. When you can’t sell, you can’t make money, and businesses can only last so long.
Subtle Shifts in Talent Trends
The impact on startup talent from COVID has been more subtle and has the potential to be extremely disruptive moving forward. Coming out of the pandemic, some major changes we will be closely tracking are lower risk tolerances and the democratization of the labor market.
A Shift to Corporate America
This past year has been a year of reflection as we cope with a global, deadly disease, an economic crisis, and the generational violence against Black Americans. The constant, unrelentless risk to ourselves and our families was felt around the world. Job security takes on a new meaning in this world. Startups, especially young ones, typically have little to no job security, low pay, and poor benefits. I am seeing strong mid-level talent trade-off high-risk startup jobs with equity incentive for corporate jobs that have higher salaries and healthcare. These cycles come and go, but we anticipate our startups having more difficulty finding mid-career talent over the next few years.
Broader Recruiting Efforts
A big lesson many of us learned, myself included, is that virtual teams do work. Productivity has soared for companies despite their workforce having to manage young kids at home, pets (as you can see on The Cackle, my ‘cat dog’ is easily a fan favorite), internet bandwidth challenges, Amazon deliveries, and all sorts of random interruptions. Go figure. That changes the traditional rules of the game where hires are required to be in the office. Need a marketing person? Hire them from Arizona, Florida, Tennessee and let them live there. The chance of finding the right person for the role grows significantly when location no longer matters.
Unfortunately, when location doesn’t matter, the competition for talent also goes up. We are seeing salary and benefit inflation in a state that has always competed with low-cost, high-quality engineers and computer scientists. The large technology companies are offering salaries 3x what a senior computer engineer can make at our startups. Not so low-cost anymore.
Flexible workforces are the future of start-ups. COVID has changed the workforce, and we aren’t going back to the old normal. Successful CEOs will need to develop culture virtually and find creative ways to attract and retain the best talent. Costs are going up, but access to a global workforce will help to stabilize. We have learned a significant amount this past year and it will take us at least another year to digest and share best practices. But I remain confident in the fact that Midwesterners have amazing resilience, and we will adapt, and we will ‘keep on truckin’.
About Patti Glaza & ID Ventures
Patti Glaza is the managing director of ID Ventures, a Michigan-based venture capital firm that scales promising early-stage ventures into thriving companies that help support the state’s economy, provide jobs to local talent, and bolster Michigan’s growing startup community. Patti is a technology investor, entrepreneur and coach with over 20 years of IT, energy and advanced material industry experience. She believes the powerful combination of amazing people and emerging technologies will continue to change our world at a breathtaking pace.