Francesco de Chirico
Nov 19, 2023
The tech industry in Australia has seen its fair share of ups and downs, but the recent bubble burst has left many startups reeling. Whilst it’s tempting to attribute this to zero interest rate policies, which cheapened capital and funnelled billions into the global startup ecosystem, there’s a bit more nuance beneath the surface.
The market for tech talent has always been incredibly competitive, and locally, this has been exacerbated by the nascency of the Australian tech scene. There simply aren’t enough professionals of the caliber required to fuel the growth of local market leaders and the new upstarts. Ask any founder, hiring manager, headhunter, or investor, and you’ll inevitably hear a version of “Yep, Atlassian, Canva , and SafetyCulture gobble up most of the good ones.”
Does that mean other startups can’t hire good people at all? Nope. It just means they’re doing it at a steep premium. Case in point, Dovetail raised $89m at a stupendous valuation of $960m last year. Benjamin Humphrey, Dovetail’s founder, admitted that he feels “like the market is a bit ridiculous, but you’d be stupid not to play the game.”
Why play the game though? “We don’t really need lots of cash,” he said. “This is more like ‘courage capital’ for us to take bigger bets, whether that be moving to a really awesome headquarters, or paying above market rates for engineering talent. It just takes that constraint off the table entirely.”
Can’t add much here, I think it clearly paints the reality of hiring top talent in Australia for the last several years. Also, this is by no means an attempt to throw shade at this particular startup’s leadership or any other’s. As the design leader of a well funded Australian startup, I used to play tug of war with our CFO and CEO on a weekly basis. “You’re asking us to commit to this goal, but we can’t hit it without an actual team, and we need that Senior PM/PD/TL to start it, and let’s face it, the market is hot right now, so we need to sweeten the deal.”
How clear things were in my mind. And how could they not see it? If you want to place more bets, and you want to hire the best to execute those bets, and you don’t want to pull the plug on ongoing initiatives, you need to cough up.
Looking back there were a myriad of issues that that mentality gives rise to. You rush hiring decisions for high-leverage roles because they are on the critical path of an important project. You grow certain functions, so now you need expensive functional leadership in place to ensure ICs are getting the right mentorship. Before you know it you are forced into creating layers of management that inevitably slow down progress and diffuse responsibility. You delay killing off features or initiatives, accelerate technical and UX debt accumulation, and end up stretching yourself too thin.
In other words, removing capital constraints from the table entirely is not necessarily a recipe for success. It’s a luxury reserved for market leaders (though they too are now doing the cuts), and most startups and scaleups that try to mimic that behavior are in for a world of pain.
Yes, that’s certainly one way to go about it. But rather than introduce another marginally useful dichotomy a là “bootstrap vs VC”, I’d like to offer an alternative. The next time you need to place a bet as a founder, product, or engineering leader, stop and ask yourself the following.
If the answer to a few of these questions is “No”, don’t greenlight this headcount. What you could do instead is explore augmenting the product team with external professionals who help you close the respective competence gap and accelerate your go-to-market.
Over the last several years UntilNow has put team augmentation to the test with a number of Australian startups (Carma , Spriggy , Vouch and Envizi to name a few) to test new business opportunities, validate product ideas before committing to full-time employees, and remove growth bottlenecks by improving UX at critical parts of the funnel.
Here are a few reasons why they chose this approach:
It should go without saying, but team augmentation is not a silver bullet, and it’s by no means a replacement for building a stellar in-house product team. Instead, it allows you to bring top talent if and when you need it, without rushing hiring decisions, increasing management layers, investing too early in unvalidated opportunities and putting unnecessary strain on your cashflow.
If you’ve gotten this far, then I’ve probably raised as many questions as I’ve answered 🙂 Get in touch, and let’s see if I can help answer the rest.