Startup Hiring 101: A Founder’s Guide. Part 8 - Agencies

Welcome to part eight of our series. In today’s installment, we’ll talk about recruiting agencies.

Wherever possible, Founders should start with their network. If you’ve exhausted your network, or if you don’t have a strong network for a specific role, you may want to consider working with an agency (e.g., at Gem, we used an agency to find our first marketing hire).

But there’s a catch… your average recruiting agencies may have mixed ROI for small startups largely due to cost, incentives, and variance in quality:

• Agencies typically cost 20-30% of a new hire’s first-year salary - This is a lot to spend for a small startup.

• Agencies can waste your time - Most agencies don’t care where they place someone, so they usually “shop candidates” across many opportunities, making them harder to close.

• Incentives can be misaligned - Many agencies get paid based on a percentage of first-year salary, so they may be incentivized to convince the candidate to negotiate your offer up or to take an offer from a larger company that can pay more cash. Most agencies are only held accountable for short-term performance and aren’t aligned with placing a long-term fit.

• Quality can vary, especially for engineering roles - Some top engineers don’t want to work with agencies, and the ones that do are sent out to as many companies as possible. Some agencies may fill your funnel with low-quality leads as there’s no incentive against submitting lots of candidates in the hopes one of them makes it through your process.

Because of these gotchas, picking the right agency that you can trust is key.

How to pick an agency

Start by asking your network for a few intros. You’ll want to pick an agency that references well from another founder you trust. Be sure to also pick an agency specializing in the specific role you’re looking to hire for that has a deep network of qualified candidates.

If you’re not sure where to start, I asked my network on LinkedIn just last week and got a ton of recommendations (check out my post here).

Schedule kick-off calls with each agency:

1. [5-10 mins] Give them an overview of your company and the role you’re looking to fill

   • Ask them what advice they have based on your company’s stage and the role you’re looking to fill. The best agencies will teach you something new.

2. [15 mins] Ask them a few questions to dig into searches they’ve worked on in the past

   • Tell me about a search that took longer than six months.

     • What happened? Why was it slower than expected?

     • How did you handle it?

     • How did you eventually close the candidate?

   • Tell me about the most recent full-stack candidate you’ve placed at a startup.

     • What made it successful?

   • Have you recruited for a startup at our stage?

     • How was it different than working with later-stage companies?

     • Were you successful, and what contributed to that success?

   • Tell me about a search you never placed.

     • What made it tough to fill?

   • Write down the companies they worked with for these searches so that you can back-channel.

3. [5-10 mins] Ask them to pitch your company back to you in a few minutes or less. They’ll be the first touchpoint with every candidate they send you, and will likely be involved, so you’ll want to be confident that they can represent your company well. You can also schedule a follow-up conversation if they aren’t ready to pitch on your first call.

4. Do a few back-channel references. You should have a good list from number two.

Outside of references and digging into questions, tiebreak based on who you enjoy talking with the most. If you enjoyed interacting with them, hopefully, your candidates will as well.

Top Startup Agency List

Looking for leads on which Agencies partner with startups? Here’s an Airtable database of Top Startup Agencies that I crowd-sourced across two LinkedIn posts (post 1, post 2, in case you want to see the endorsements yourself)

You can filter down the list to agencies that specialize in what you need:

• Stage (e.g., “small startup”)

• Function/Role (e.g., GTM, sales, design, etc.)

• Level (e.g., IC, Mgr, Director, VP, C-level)

• Industry (e.g., Tech, Hardware, Healthcare, AI, B2B/Enterprise, etc.)

• Location (e.g., North America, EMEA, APAC, NYC, SF, etc.)

• Model (e.g., Retainer, Contingency, Container, Monthly, etc.)

I also tagged 1-2 dozen agencies with “Top Endorsed” & “Hired for Gem” tags, based on who got the most public endorsements on my crowd-sourced LinkedIn posts, and our experience working directly with some of them at Gem.

You’ll also see a short description & recent placements, and links to their website, social, and contact info in case you want to learn more.

As an aside, more specialization is often better. e.g., if you’re looking for your first designer, consider reaching out to agencies that just specialize in design or design and a handful of other roles.

Working with agencies

If you go the agency route, make sure you manage them well by setting expectations/scope/evaluation criteria upfront. Also, be prepared to onboard them so they can do their job and represent your brand.

As a side note, agencies are exceptionally valuable for executive hiring, but that’s not relevant at your stage.

Up Next

In part nine of our series, we’ll discuss some of the ways you may be accustomed to (e.g., if you have experience working at a larger company), and the reasons why they may or may not work as a small startup.

In the meantime…

• Want to use Gem for free for 2 years? Apply for our free for startups program

• You can find the rest of our Startup Hiring 101 posts on the Gem blog

• Check out the complete Startup Hiring 101: A Founder’s Guide, a comprehensive guide to startup hiring, including step-by-step instructions, example templates, and best practices