With 13,000 jobs currently open in Israel’s tech sector, startups are having to find something other than high salaries to attract top talent.
No asset is more crucial to a business than its people. Whether your enterprise consists of 2, 20, or 2000 employees, their talent, dedication, and ideas are the driving force behind a company’s success.
As investors, we’re always on the lookout for the outliers; the nonconformists who look at challenges with a fresh perspective, unafraid to tread new paths. It’s our job to identify this in entrepreneurs and startups, but once they’ve secured revenue, a bigger challenge lies ahead – finding the team that will make their mission a reality.
In Israel, the battle for talent is raging. Up until recently, top salaries meant top talent, but in today’s hyper-competitive market that logic no longer applies. Instead, unbeatable company culture has become the new talent magnet. A study by Sparks Consultancy Group found Israel’s tech industry relies on 20,000 key employees. Israel’s startups aren’t just competing with each other – our talent is getting poached by Silicon Valley’s tech giants. The only solution is to create a company culture so unbeatable your team has zero interest in leaving.
Israel’s startup ecosystem is a blueprint for the future. According to a recent report from the Israel Innovation Authority and Start-Up Nation Central, tech employment increased 0.6% in the middle of a global pandemic, cementing the sector as a bullet-proof pillar of our economy. It’s our role as investors to identify the key indicators of success, which traditionally has been the consistent meeting of sales and revenues targets. An investor’s eye is instantly drawn to those companies with metric supremacy as they’re more likely to disrupt the market and build long-lasting, successful enterprises.
But investors must start looking at company culture for insight into the heart and future of a business. Click on the news tab of any startup website and you’ll find articles dedicated to mammoth investment rounds alongside plans to change the world. Of course, revenue is crucial to the long-term success of any business, but 60% of Israeli startups are struggling to recruit talent. In fact, as the sector continues to flourish and investment increases, the talent shortage sharpens. Over $15 billion was raised in the sector in the last eight months, leading to a 300% increase in job openings.
We live in a world of constant and instantaneous communication. Injustices are called out in real-time across social networks. Brands and startups are being held accountable, not only for their carbon footprint outside the office but their cultural footprint inside the office. People talk; negative company culture no longer flies. Not only will talent leave a company, they’ll tell their followers exactly why they did it. This will make it near-impossible for that company to hire top talent and just as hard to fulfill the potential of their business.
Entrepreneurs must create a vibrant, productive, and supportive work environment from day one and focus just as much on internal people affairs as they do investment rounds. In our fast-moving sector entrepreneurs have less time to focus on management and interpersonal skills as they enter hyper growth quicker than ever before. Therefore the founding team must lay the groundwork for healthy company culture as early as possible before blitz-scaling takes over. Founders, take some of the time you once invested in your customers, and dedicate it also to your employees and to your culture.
At Grove, we invest in people as well as companies and believe the leaders of tomorrow should do the same. Founders must create a work environment that supports and encourages creative risk so their people can learn and grow together while respecting and listening to one another. The only way for a company to thrive in the future is to ensure its people are thriving in the present.