341: Employee Retention in Startups
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In today’s episode of The Startup Chat, Steli and Hiten talk about team member retention in startups.
The success of your startup depends on retaining skilled and talented members of your team. However, it’s very common for founders to take team member for granted, and this can often lead to them leaving your startup, which could destabilize the whole business.
Tune in to this week’s episode to hear Steli and Hiten thoughts on why it’s important to retain good team members, the common causes of team members leaving, how to retain them and much more.
Time Stamped Show Notes:
00:00 About today’s topic.
00:41 Why this topic was chosen.
01:26 Steli thoughts on how long he’d want a team member to stay.
01:49 Why some employees choose to work for Close.
02:33 Why you need to create opportunities for your employees.
02:43 Why honesty goes a long way when it comes to retaining people.
03:55 Why real trust is such a scarce commodity in today’s world.
04:34 How trust can help retain goop team members.
05:37 How distractions can hinder team member retention.
06:15 Why happiness is a key reason why team members leave.
3 Key Points:
- Talented people want more opportunities, and if you can’t give them that in your company, they will leave.
- Honesty goes a super long way when it comes to retaining people.
- Honesty builds trust.
Steli Efti: Hey, everybody, this is Steli Efti.
Hiten Shah: And this is Hiten Shah.
Steli Efti: And in today’s episode of The Start Up-
Hiten Shah: All right, what is it, Steli?
Steli Efti: Yeah, well, today we want to talk about team member retention in start ups.
Hiten Shah: I think we like talking about more than just sales and marketing.
Steli Efti: We just want to bullshit and chat about business and life and hopefully while we’re doing that, provide a lot of value to people.
Hiten Shah: The world’s best business podcast.
Steli Efti: Ooh.
Hiten Shah: Shit.
Steli Efti: Oh, shit. We got it.
Hiten Shah: For people trying to get shit done.
Steli Efti: Done, yeah. We don’t want to give you feedback that’s bullshit.
Hiten Shah: We want you to do your best.
Steli Efti: When I first suggested this, Hiten was like, “Well, you know, maybe you don’t want to be in San Francisco if you want to retain people for more than one or two years.” Because the way I pitched the topic was, what do you have to do? How do you ensure that people work with you and work for your start up for longer than just one or two years and then move to another start up? I interview people.
Hiten Shah: Yep.
Steli Efti: Every day I look at people’s resumes and LinkedIn profiles every day. People that work in the start up world that have worked at a lot of start ups, if I look at their timeline it’s always more or less it’s like 18 to 24 months.
Hiten Shah: One to two years.
Steli Efti: One to two years before they go to the next one, one to two years before they go to the next one. I think that’s a huge problem. As a start up founder, I want people to come and work with me. I don’t have the foolish expectation that they’re gonna stay with my company forever although I want the relationship to be forever, they don’t have to work with me or for me or with the company forever but I don’t want them to just come to hop to the next thing to hop to the next thing. Employee retention is really huge. It’s one of the reasons why a lot of times people tell us, especially the ones that have a lot of offers on the table, the ones that then decide to go with our offer and our opportunity, oftentimes tell us one of the main reasons was I looked at a bunch of people in the company and I saw that they’ve been with the company for four years, for five years, for six years. I was like, wow, this company must truly be awesome when these super talented people stick around for so long and I saw that passion about the business.
Hiten Shah: Yeah. That’s great. I’m only laughing because it’s like when our parents were growing up you’d stay at the same company for 30 years.
Steli Efti: Yeah.
Hiten Shah: You’d be a lifer period, right? The world’s not like that right now. People have options and they have opportunities. They want the fresh, shiny new thing and if you can’t give them that in your company then they will leave. I mean, jumping into this I think there’s a basic thing which is be honest with them. That’s really important. Honesty goes a super long way when it comes to retaining people. Honesty can be everything from feedback on how they’re working out, how their work is, all the way to when you make a decision that impacts them, be honest about why you’re making it. Almost to a point of brutally honest about why you’re making it. That way people feel like they can trust you. So that honesty builds trust. I see so many people who I talk to talking about their managers, their companies and they just don’t trust them. Somehow, I’m sure these people are trustworthy, you know? But somehow, that trust has eroded and it’s because of lots of reasons. One of the big ones is like they don’t understand why the company’s making certain decisions and they don’t feel like the company is not necessarily being honest, but just not transparent with them about it. Another aspect of it is they’ve been told things that don’t come true. They’ve been made promises basically. Nobody’s trying to do all of that usually, it’s just something where people don’t realize what they’re creating in their environments that make it so people are not retained.
Steli Efti: Yeah, I think honesty and transparency, trust is such a scarce commodity in today’s world, right? Real trust.
Hiten Shah: Oh, man.
Steli Efti: Right? Real trust.
Hiten Shah: Yeah.
Steli Efti: That when you have it, it feels so valuable that people really think hard and long about letting that go and going into a new rela- … Think about this. You’re in a relationship that is amazing and where you have complete trust and you feel comfortable and you still experience growth and excitement and there’s still a mission and something to accomplish together. Why would you let that go to go into a random new relationship with all the risks associated with it? Taking the risk only makes sense if you see opportunities you’re not getting currently.
Hiten Shah: That’s right.
Steli Efti: And opportunities usually are opportunities for growth or opportunities to feel like your voice is heard and you’re having an impact or the opportunity to be comfortable and be yourself and feel good about it. The opportunity to believe in the thing everybody works on and believing in your manager or the leadership team and what they’re telling you versus constantly thinking that you’re being treated in a distorted way or where they’re hiding the real truths behind closed doors and all that. So trust is so, so scarce that if you can create that high level of trust within your company and people feel that they are trusted and they can trust their co-workers, they can trust management, the founders, that’s so valuable that people want to stick around usually. They don’t want to let that go.
Hiten Shah: Yeah, why would you? I think that’s big. Another one to me that’s really big is and this is where the San Francisco thing comes in I think, generally there’s a lot of distractions in San Francisco when somebody is in a job physically in San Francisco. I actually am in the San Francisco area and so yeah, my co-founder and I are the only ones in San Francisco or in the area. Everyone else is 30 minutes or an hour or more away or all over the world. The thing I notice about San Francisco the most when I talk to founders who have companies here is that people have more choice and people are ready to go to another company really easily because they don’t have to put up with an environment that they’re just not happy in. Happiness can be as simple as I’m not getting paid enough to be honest. Happiness can be as simple as the product I’m working on is not enjoyable for me and I don’t like this industry. It can be as simple as I don’t like my manager. So there’s a whole bunch of opportunity here, much more physically in terms of here in San Francisco than anywhere else right now. That’s probably likely to be the case for a long time if you’re in tech and thinking about building tech or wanting to work at a tech company of some kind although all companies are probably gonna be tech companies in the future, even a restaurant. But that’s more to the story, maybe not. They all use Square, so … I’m just kidding but a lot of them do. San Francisco is fascinating and I think it’s almost an amplification and a good study of what happens in a company and why people don’t retain. Yes, it’s trust and honesty for sure, but it’s also the idea that … And it really boils down to the idea that there’s a better opportunity for me somewhere else. If you have people who are employed by you who are working on your teams who are team members and your situation, the situation you’ve created for them is not the best for them, it’s your job to identify them and either make it the best or let them go. If it’s not the best for them they’re not able to do their best work. I think at Close what you folks have been able to do is create an environment where people are being able to do their best because it’s the best environment for them. I think for you guys specifically has a lot to do with how you recruit people and how you bring them in and the things you have around your off sites and all that kind of stuff. It’s almost like a tribal sort of culture that you’ve created around people who like to travel. Right? I remember you talking about this and I think those core people that have been there that long there’s like this culture there. Honestly, that’s like not an important factor in the companies that I have and I’ve built. It’s not about that specific one thing and a couple other characteristics. It is fine if you work at my companies and you like to travel. That’s not a problem. We’re not a company that’s gonna facilitate that in a way that you guys do.
Steli Efti: Yeah, I think it really comes back to understanding what your core culture is and what kind of people you even want to work with yourself. What are the main reasons and motivations that people should have that want to work at our company and what are the main reasons and motivations that we have for doing work and working in this company? I think that when you talk honestly and openly about that it makes a really big difference and a lot of times we’ll see that when I ask candidates in the very early process, if I ask them, “Hey, you’re smart. You’re incredibly talented. There’s tons of opportunity out there. I’m sure you’re looking at a bunch of companies, what are your main criteria? How are you gonna decide which one to choose? Let’s say everybody offers you a job. How do you decide? What are your must haves and nice to haves? How do you boil it down to the one offer that you would take?” Them describing that to me explains a lot of their value system and what’s the most important to them. The people that typically choose us are people that usually start with saying obviously the work I do and the product and the market and this that and the other. The biggest, the most important thing, the number one thing I always look for foundationally is the team, the culture there. Are those people people I enjoy working with? Are those people I trust? Are those people that inspire me? Are those people that are good humans? If I have the feeling that I can trust that and that that’s given then I’ll look at product and salary and opportunity and all these other criteria. People that look at team first and culture first, those are the type of people that usually tend to want to come and work with us. There’s people that have different criteria, different priorities. If your number one priority is always working in the latest tech and the hottest buzzworthiest thing that’s going out there, which is totally cool if that’s what you want, but we’re not gonna be a great place for that for sure. The other thing is also coming back to the communication, honesty. When we talk to people we tell them, we want to build the relationships with everybody who works here that will endure long term. Maybe you’ll work here for a few years. Maybe I’ll come and work for you one day. Maybe we’ll invest in each other’s ventures or in something else, but we are only interested in relationships that are gonna be going on for 10, 20, 30 years or have the potential at least for that. So we want to honestly know, what do you want to accomplish in your life and be a supportive part of that story and that journey. We’ve hired people that told us from day one, in three or four or five years I want to start my own business. That’s totally cool and then we’ll talk about how does this fit into the work that you’re supposed to do here? How can we support you with that transition? Just being honest. So we have people that work here that have side businesses, that run their own little side business and it was totally fine from the … We told them it was fine and it was really fine. We’ve supported them and given them opportunities to grow those side businesses. They’ve told us that other companies had told them the same thing, but they’d had really bad experiences where a company would say a side biz, a side app is totally cool, but then would constantly criticize them for that and kind of shut it down and try to downplay it and try to take away the oxygen for it versus us helping them, supporting them in their long term goals. Just that honesty and thinking long term can make a massive difference in how people feel and think about you. People don’t just disappear in our company and go, “You know, I don’t care about this. There’s a shinier thing over there. I’m gone.” Not that nobody has ever left our company, but we don’t have that high churn and high turnover. I couldn’t imaging building a business where you have this massive amount of turnover because it takes so much time to hire great people and onboard them that the last thing I want to do is lose them. It’s the same thing with customers. We talked about retention a million times and how that’s much more important engagement and retention of users or customers than just pure acquisition. I think about it at the same time and I’m at awe of businesses especially the San Francisco start ups that keep growing and growing and that I hear that are like losing tons of people and have these like revolving doors where people come and six months later they’re gone and eight months later they’re gone and 12 months later they’re gone. I’m like, “How the hell do they … How do these companies work?” I think that to me at least, the type of business that I want to run, employee retention is like the most important thing. I want the people that work with me to be happy, fulfilled, growing and to be doing the best work they’ve ever done.
Hiten Shah: I couldn’t agree more. There’s no way that I would want to run a company where people are leaving constantly. Because that’s what happens, once you’re a couple years in if people are leaving at the year mark or whatever, they’re just trying to get their equity and their cliff if your company is set up that way and they leave. I couldn’t agree more. I wouldn’t want to create a company, work in a company, or be part of a company where people just don’t feel like they can work there long enough. I think setting expectations early like you mentioned that you do with your team members, it’s really important. One thing that I say that my co-founder kind of always gives me a weird look when I say this to some of the people at meetings like I want to give them their dream job.
Steli Efti: Ooh.
Hiten Shah: Right, I said that to somebody who I’ve worked with for a long time in the past and he does some consulting with us but he has a full time job. We’re gonna be with him for awhile tomorrow actually on a Saturday because that’s the best time he can meet for a half day. I told him, “I want to give you your dream job.” The thing is, I’ve given him a job before. I’m not saying I screwed it up because he stayed awhile and everything and it wasn’t like a one or two year thing but I want to give him a better job than that job. I want to give him his dream job. I want him to work with us forever if possible. Unless he wants to go start a company or something. I don’t think he does, but maybe he does now. I don’t know. But his dream job, whatever that looks like, it’s my job to give him that. Honestly, that’s how I feel about every team member on our team. Their dream job. What does that look like? Because if you’re able to provide that to somebody, why would they leave?
Steli Efti: I love that. That’s so powerful. Let’s end on that note. What would it take to create your dream job at our company? I want to give you your dream job.
Hiten Shah: There you go.
Steli Efti: I love that. I love that. That’s it. That’s a wrap. Thank you-
Hiten Shah: That’s a wrap. That’s what they say.
Steli Efti: Thank you so much everybody for listening and until next time. We’ll see you soon.
Hiten Shah: See ya.