Startup Recruiting Trends

STARTUP
RECRUITING
TRENDS
2016-2017

2
Introduction
Insights
Key takeaways including metrics, headcount planning,
compensation, people programs, and diversity.
Report Data
Results are organized by our recommended
recruitment process: Plan, Execute, Measure.
 Recruiting Team Makeup
 Reporting Structure
 Hiring Goals
 Pipeline Metrics
Why Analyze Recruiting Trends?
Few startups have adopted a strategic and consistent
approach to planning, executing, and measuring their
talent and people programs. As a result, startups are
making recruiting decisions with little to no data.

3
Insights Involving the Head of Recruiting in
headcount planning is the top predictor
of achieving annual hiring goals
Fewer than two-thirds of startups actively involved
their Head of Recruiting in annual headcount plans.
This can lead to misalignment between business
objectives and recruiter hiring capacity.
Recommendation:
100% of startups should
include their Head of
Recruiting in all headcount
planning discussions.
Compensation beats culture
The top two reasons for offer rejections – compensation
and counter offer – were agnostic to stage. This
contradicts common wisdom that startup culture is the
deciding factor for candidates.
Recommendation:
Train your hiring managers
and recruiters to clearly
explain your compensation
packages and position
against competing offers.
INSIGHTS | PLAN | EXECUTE | MEASURE
The rule of “Happy Thirds” for
hiring is 1/3 sourced, 1/3 applied, 1/3
employee referral
Data confirms the common hiring recommendation of
“Happy Thirds.” Startups across all stages maintained
similar ratios, confirming the importance of investing
in multiple hiring sources. Surprisingly, inbound
applicants remained a significant hiring channel even
in Early Stage startups (22%).
Recommendation:
Invest in building a
careers page, engaging
job descriptions, and a
compelling talent brand
to encourage inbound
applications.

4
Insights
It costs more to replace an existing
employee than to invest in People
Programs
Findings show a significant underinvestment in People
Programs. The 3 critical programs lacking sufficient
investment included Manager Training, Performance
Management, and Internal Mobility. These programs
directly support employee development and retention.
Recommendation:
Building People Programs
takes considerable time;
dedicate an internal
resource or hire a
specialized consultant.
Less than 50% of startups have a
diversity hiring goal
Investment in diversity does not reflect its importance-
less than half of startups have a diversity hiring goal.
Most diversity hires are proactively sourced (outbound
outreach), yet only 4% of Early Stage and 6% of
Expansion Stage startups have a recruiter with diversity
hiring goals.
Recommendation:
If diversity is important to
your startup, set a goal and
have a recruiter
responsible for attaining it.

5
Insights More than 20% of startups do not
track recruiting pipeline metrics
Recruiting needs to be more data driven. Metrics are
necessary to allocate recruiter and interviewer time,
identify areas of weakness in the interview process, and
invest in the most effective hiring channels.
Recommendation:
Every startup should track
conversion ratios of 3 key
recruiting metrics: Phone
Interview pass through
rate, Onsite Interview
pass through rate, and
Offer Acceptance rate.
Under-resourcing your recruiting team
can lead to a greater cost per hire
Recruiter output is generally low volume, with technical
recruiters making between 5-6 hires per quarter. The
size of your recruiting team should reflect both realistic
recruiter output and headcount plan. With an under-
resourced recruiting team, additional hiring channels
(agency, candidate marketplace, contractors) will be
needed. These channels can have variable cost, quality,
and speed.
Recommendation:
Don’t under-resource
your recruiting team; you
will end up paying for it
in missed hiring goals or
agency fees.

Recruiting strategy should be tied to
Annual Operating Plan, clearly communicated
across teams, and reassessed quarterly.
Plan

7
Reporting
Structure
Regardless
of reporting
structure, recruiting
organizations
should have a
direct line of
communication
with executive
teams to ensure
calibration and
alignment with
operating plans and
startup goals.
RECRUITING ORGANIZATION
REPORTING STRUCTURE
60%
13%
24%
CEO
4%
19%
5%
CFO
13%
26%
5%
COO
1%
2%
9%
CPO
(PRODUCT)
1%
0%
5%
CTO
19%
34%
43%
HR
1%
4%
9%
LEGAL
1%
2%
0%
OTHER
KEY: EARLY EXPANSION LATE

8
Not enough startups
involve their Head
of Recruiting in
headcount planning.
Our analysis showed
that startups which
reached or exceeded
hiring goals were
significantly more
likely to involve the
Head of Recruiting in
headcount planning.
Headcount
Planning
ANNUAL STARTUP HEADCOUNT PLAN
HEAD OF RECRUITING ACTIVELY
PARTICIPATES IN HEADCOUNT PLANNING
Early
57%
Expansion
56%
Early
25
Expansion
80
Late
210
Late
71%
= 5 people

9
A surprising number
of startups do not
have a recruiting
budget. This will
impede their usage
of the proper tools
and systems.
Recruiting tools,
systems, and
programs are not
cheap. All startups
should expect to
pay for an Applicant
Tracking System,
sourcing platforms,
and talent marketing.
Recruiting
Budget
STARTUPS WITH AN APPROVED
ANNUAL RECRUITING BUDGET
AVERAGE RECRUITING BUDGET
*Annual budget excluding team salaries
Early
30%
Early
$75,000
Expansion
58%
Expansion
$267,000
Late
77%
Late
$400,000

10
While startups find
product market
fit between Early
and Expansion
stages, non-tech
attrition increases
significantly.
Incorporate
projected employee
attrition in
headcount planning.
Attrition ANNUAL ATTRITION
12.6% 12%
16.5%
23%
14.2%
18.2%
Tech Non-Tech
Early EarlyExpansion ExpansionLate Late

Investment in recruiting programs tends to concentrate around
employee sourcing and onboarding, while programs related to
employee retention receive little attention. Account for recruiter
capacity and invest in supporting People Programs.
Execute

12
There is a significant
underinvestment
in critical People
Programs, such as
Manager Training,
Performance
Management, and
Internal Mobility.
People
Programs
MOST COMMON PEOPLE PROGRAMS
Average Across Stages
Career Laddering 31%
38%
46%
55%
58%
59%
64%
79%
82%
Internal Mobility
Manager Training
Compensation Reviews
Interview Training
Intern Program
Performance Management/Reviews
New Hire Onboarding
Employee Referral Program

13
Early Stage startups
should build New
Hire Onboarding,
Employee Referral
Programs, and
Performance
Management first.
People
Programs
MOST COMMON PEOPLE PROGRAMS
By Stage
CAREER LADDERING
INTERNAL MOBILITY
MANAGER TRAINING
COMPENSATION REVIEWS
INTERVIEW TRAINING
INTERN PROGRAM
PERFORMANCE MANAGEMENT
EMPLOYEE REFERRAL PROGRAM
NEW HIRE ONBOARDING
21%
22%
29%
40%
43%
37%
44%
62%
65%
CAREER LADDERING
INTERNAL MOBILITY
MANAGER TRAINING
INTERVIEW TRAINING
INTERN PROGRAM
NEW HIRE ONBOARDING
28%
41%
53%
63%
66%
75%
75%
81%
94%
CAREER LADDERING
INTERNAL MOBILITY
MANAGER TRAINING
INTERVIEW TRAINING
INTERN PROGRAM
NEW HIRE ONBOARDING
43%
50%
57%
64%
64%
64%
71%
93%
86%

14
Every startup should set
individual hiring goals for
recruiters, although a surprising
amount do not. Similar to the
way sales targets operate,
recruiter hiring goals drive
measurement and performance.
Recruiter output is generally
low volume, with 5–6
technical hires per quarter.
The size of your recruiting
team should reflect both
realistic recruiter output and
headcount plan. Don’t under-
resource your recruiting
team; you will end up paying
for it in missed hiring goals
or agency fees.
Recruiter
Goals
STARTUPS THAT TRACK INDIVIDUAL
RECRUITER HIRING GOALS (QUARTERLY)
INDIVIDUAL RECRUITER HIRING GOALS
BY FOCUS AREA (QUARTERLY)
TECH RECRUITER
6 6
5
NON-TECH RECRUITER
6
10
8
SOURCER
444
Early
41%
Expansion
47%
Late
57%

15
Data confirms the
common hiring
recommendation
of “Happy Thirds:
1/3 Sourced, 1/3
Applied, 1/3
Employee Referral”.
Surprisingly, inbound
applicants remained
a significant hiring
channel, even for
Early Stage startups.
Hiring
Sources
SOURCE OF HIRE
KEY: SOURCED APPLIED EMPLOYEE REFERRAL AGENCY OTHER
Early Expansion Late
35%
31%
22% 27%
27%
30%
13% 8%
3% 4%
33%
23%
34%
6%
4%

While recruiting metrics are critical to sustained
success, not enough startups track them. These metrics
allow teams to identify strengths and weakness in the
hiring process, and can minimize the cost of recruiting.
Measure

17
Recruiting metrics are
necessary to allocate
recruiter and interviewer
time, identify areas
of weakness in the
interview process,
and invest in the
most effective hiring
channels.
Every startup should
track the three
fundamental conversion
ratios: Phone Interview
to Onsite, Onsite to
Offer Extend, Offer
Extend to Offer Accept.
Pipeline
Metrics
STARTUPS THAT TRACK PIPELINE METRICS
MOST TRACKED RECRUITING
PIPELINE METRICS
TAKE-HOME
ASSIGNMENTS
PHONE INTERVIEW
ONSITE INTERVIEW
OFFER
HIRED
46%
30%
78%
45%
41%
75%
50%
21%
81%
OUR ANALYSIS
SHOWED NO
CORRELATION
BETWEEN TAKE-HOME
ASSIGNMENTS DURING
THE INTERVIEW
PROCESS AND BETTER
INTERVIEW OUTCOMES–
AS DEFINED BY HIGHER
RATIOS OF INTERVIEWS
TO OFFERS EXTENDED.
Early
76%
Expansion
65%
Late
92%

18
The top two reasons
for offer rejections—
compensation and
counter offer—were
agnostic to stage.
This contradicts
common wisdom
that startup culture
is the deciding factor
for candidates. Train
your hiring managers
and recruiters to
clearly explain
your compensation
packages and
position against
competing offers.
Offer
Declines
TOP REASONS FOR OFFER DECLINES
Across All Stages
1 COMPENSATION
2 COUNTER OFFER
3 SCOPE OF ROLE
4 LOCATION
5 JOB TITLE

19
Few startups have
diversity hiring goals
or a recruiter dedicated
to achieving them. As
most diversity hires are
proactively sourced, a
dedicated resource is
necessary.
If diversity is important
to your team, set
a goal and have a
recruiter responsible for
attaining it.
Diversity STARTUPS WITH DIVERSITY HIRING GOALS
STARTUPS THAT HAVE A
DIVERSITY RECRUITER
TOP DIVERSITY
HIRING SOURCES
Across All Stages
4% 6%
44%
1
SOURCED
2
APPLIED
3
4
UNIVERSITY PROGRAMS
Early
36%
Expansion
50%
Late
60%
EMPLOYEE REFERRALS

Demographics
About Lightspeed
Appendix

21
Demographics
Survey results were calculated based on self-reported 2016 hiring metrics provided by participants
SURVEY SIZE
STAGE
RESPONDENT
TYPE
LOCATION
STARTUP SIZE
Respondents
83%
San Francisco
Bay Area
8%
Greater New York
3%
Los Angeles
6%
Other
FUNDING
3% $0-$3 million
7% $3-$10 million
19% $10-$25 million
27% $25-$50 million
9% $50-$75 million
8% $75-$100 million
27% $100+ million
0-50
People
28%
50-200
People
42%
200-500
People
19%
500+
People
11%
STARTUP INDUSTRY
36%
50%
14%
Consumer
Enterprise
Other
Recruiting 78%
HR 18%
Founder/
Other 4%
Early: Seed–Series B
53%
Expansion: Series C–D
33%
Late: Series E+
14%

22
Lightspeed Venture Partners
is an early stage venture
capital firm focused on
accelerating disruptive
innovations and trends in
the Enterprise and Consumer
sectors. Over the past two
decades, the Lightspeed
team has backed and
helped build more than 300
startups globally, many of
which have become market
leaders, including Nutanix,
AppDynamics, MuleSoft,
Snapchat and The Honest
Company. The Firm currently
manages over $4 billion of
committed capital and is
currently investing out of
Lightspeed XI, a $715 million
fund and Lightspeed Select
II, a $500 million fund.
About
Lightspeed
SURVEY DIRECTORS
Luke Beseda
Talent
luke@lsvp.com
Cat Surane
Talent
csurane@lsvp.com
Alexandra Makreas
Marketing
alexandra@lsvp.com

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