A clip from the Israeli version of Saturday Night Live perfectly encapsulates the reality and absurdity of our tech scene.
As of the beginning of December, there were 77 Israeli-founded unicorn companies. Given that approximately 30 of these companies reached their “unicorn” status this year, we can speak of a massive boom in investments and fundraising in the Israeli tech scene.
For perspective, there are less than 1,000 unicorns worldwide — about 8% of which are Israeli, even though in many cases they have offices or even headquarters in the United States. In 2021, several Israeli unicorns went public, including the productivity management platform Monday, the digital transformation solution WalkMe, and several others, such as Payoneer, Taboola, SentinelOne, Talkspace, and Hippo.
So, what happened in 2021 and how are these changes affecting the tech job market? In my previous article — Why Are There So Many Israeli Unicorns? — I interviewed several industry experts about the reasons behind the recent boom in fundraising; in this article, I’ll be looking at its consequences.
24 Ice Cream Flavors
A recent parody video by Eretz Nehederet, the Israeli version of Saturday Night Live, mocked the Israeli tech scene by portraying a fast-paced start-up with a growth-obsessed CEO looking to fundraise for a non-existent product while desperately trying to hire talent in an ultra-competitive landscape.
Beyond being hilarious, the 7-minute clip, which you can watch here in Hebrew, sheds a light on the absurdities of the tech world. The CEO is so obsessed with growth and fundraising, that he loses track of what should be at the core of the company — the product.
The clip also mocks the plethora of perks that companies offer their employees in an attempt to attract the best candidates. When the manager is presented with a candidate for a job, she tells him: “We also have an ice cream machine with three flavors.” The candidate — who has absolutely no experience — responds: “That’s it? Three flavors? Where I’m currently working we have 24.”
The 24 flavors of ice cream might be the perfect exemplification of what is going on. Companies are growing fast, fundraising is at its peak, and hiring the most talented candidates has become a massive challenge. Therefore, many start-ups are scrambling to offer the wildest perks to attract talent and compete with each other.
The Great Resignation Wave
In the United States, there have been record numbers of Americans quitting their jobs this year. They’re calling it the “Great Resignation” wave. In August alone, 4.3 million workers left their jobs, as reported by the Labor Department. While this is happening also because of the COVID-19 pandemic, the current environment in the job market makes it easier for people to feel comfortable switching jobs at a much faster pace than they used to.
This is also true for the Israeli tech scene. There is a shortage of workers and specialists, and the ones that are in the workforce are not afraid to switch jobs even multiple times a year in search for a better salary, a better title, better working conditions, or just because they’re able to.
This leaves hiring managers desperate for talent. As a hiring manager, I find myself competing with other companies to hire the best candidates at a pace and urgency that I had never experienced before. Offering the right salary is not enough; you need to offer the flexibility to work from home several times a week, office perks, gifts, cool events, and company outings.
The Challenge of Recruiting Talent
Emil Rozenblat, one of Israel’s most famous headhunters, told me: “There are two types of companies: Those that focus on employee retention, and those that focus on the ‘bells and whistles’ to recruit new employees.” Yet, Rozenblat added: “Candidates choose to work for companies they feel they can contribute to, have their voice heard, and have a direct impact on the company’s growth.”
Tali Rozen, Head of HR at Revuze, said: “The perks certainly do play an important role in choosing a new job. However, they are only a necessary but not sufficient factor in the decision process.”
Revuze offers its employees a “happy hour” twice a week, a form that employees can use to order treats for the office, a leisure room, hybrid work, trips, events, restaurant outings, and so on. However, Rozen stressed, “even with all these perks, people mainly choose to work for us because they want to be part of the development of an exciting and revolutionary product in a multicultural and diverse international team with a family-like atmosphere.”
From the investors’ perspective, the small perks don’t play a major role. Eran Savir, CEO of Menara Ventures — which went public on the Tel Aviv Stock Exchange this past summer — said: “When we invest in early-stage start-ups, the company’s image is less important, as we focus on the existing core team and their commitment to the company’s success. One of the most important parameters in our due diligence process, alongside the tech and business aspects, is how good the founding team is at building their ‘A-team.’ A company that can’t attract talent and retain its existing talent has a higher risk factor.”
“Undoubtedly, finding, onboarding, and retaining talent has become harder, and companies are trying to get more creative to do it,” said Mor Assia, Founding Partner of the VC iAngels. “When we are considering an investment, one of our questions is about budget planning and employee recruitment. Our role as investors is to help the founder of the company not only in their equity fundraising strategy or product roadmap, but also in defining the human capital they need to recruit, and devising a plan to execute the recruitment.”
Assia continued: “In our experience, if a company is having a hard time recruiting and retaining talent, it is a qualifying parameter that needs to be addressed similarly to a company that is having trouble raising money.”
What Next: Boomerang Employees
Yes, too many people are quitting their jobs, but there’s a catch. Many of them might actually end up returning to their prior workplaces at a certain point, becoming “boomerang employees.”
One of the tactics hiring managers are employing is to contact former employees and offer them a significantly better package if they are willing to return. This can be a win-win situation for both employers and employees.
The employees get to return to a familiar workplace, without the need to learn the ins-and-outs of the company and the business, and with a better salary. The employers, on the other hand, get to quickly find the talent they need, while gaining employees who don’t need much training, and who often have acquired new skills while away from the company.
In 2022, therefore, don’t be too surprised if you see some of the people in your network announce on LinkedIn that they are returning to their prior workplaces. They’re just boomerang employees, ready for a kick-ass sequel.
Simone Somekh has contributed to this article.