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In the weird and sometimes wonderful, sometimes worrying world of tech start-ups, rapid acceleration is commonplace.
Perhaps the more accurate term is “scale-up,” a point in the lifecycle of a company defined specifically as when a company’s headcount or turnover has grown by above 20% for each of the last three financial years.
As a scale-up, the company has a well-defined set of products and services, a solid customer base, and is rapidly attempting to gather speed on its charge to profitability and eligibility for some kind of exit event.
Hiring becomes a business priority, and the rate of growth can become mind-boggling for even the most job-requisition-hungry recruiter.
Anduril goes “big” on hiring – but is it too aggressive?
One such company is defense tech start-up Anduril Industries, which has hired at least a staggering 1,000 employees in the past nine months alone.
The rapid acquisition of recruits has swelled the company headcount by over 45% as the company prepares to deliver on contracts with the Department of Defense and Department of Homeland Security, open a new manufacturing site, and go through an Initial Public Offering (IPO).
Granted, in the tech start-up sector, growth is the name of the game. And, as Executive Chairman Trae Stephens told Fortune last week, Anduril’s headcount remains “very small when you compare to our competition, which are really the big five primes.”
The company certainly has some catching up to do if they wish to compete with the big industry players of Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, and Raytheon.
But with a backdrop of ongoing tech layoffs which have overwhelmingly cited overly optimistic hiring when economic conditions appeared to be more favorable mashed with inefficient operations, and a history of tech start-ups blindly overhiring announcing mass layoffs, the question has to be asked – when it comes to recruiting, how fast is too fast?
What goes up can come (crashing) down – will employers learn the lesson?
Cast your mind back to 2021. It was the year that Megan Markle and Prince Harry did their infamous interview with Oprah; TV shows, concerts, and even sports events like the Olympics were still in their bizarre, eerily quiet Pandemic-induced hangover; and seemingly every business executive still hadn’t figured out how to unmute themselves on Zoom.
Remember? Good. It was also the year the tech industry was booming with post-pandemic confidence. Their hyper-growth mode meant vacancies were coming in thick and fast.
I was recruiting Cloud Engineers for a bunch of tech start-ups, many of whom were in the scale-up stage. One company, a famous cybersecurity firm, was perhaps the hungriest of all the hungry hungry hiring hippos.
The start-up went more or less quintupled its headcount in just over a year from a couple of hundred in early 2021, to over 1,000 by March 2022.
With sky-high optimism and confidence, I heard first-hand that the company’s in-house HR and talent team was not focused on strategically guiding the business through this critical phase, but instead on executing as much hiring as the company’s leadership demanded. Great news for third-party recruiters like me, but as for the employees? Unfortunately, not so good.
A few months later, the company laid off 20% of its workforce with its multi-billion-dollar valuation of early 2021 in tatters. It now looks set to be acquired for a fraction of its past worth.
In one form or another, this is a very familiar story in the tech industry. One loses count of the sheer number of tech companies that burn through the cash with rapid hiring as they aim to hit dazzling valuations, only to leave themselves with an organizational structure that is imbalanced and unflexible. Some teams are drastically understaffed, others are bloated. Particularly when acquisitions are involved, the complexity of systems and processes stacks up, and very quickly, layoffs feel like the easiest and most financially attractive option.
Surely a more measured approach, with the support of HR and talent teams, could avoid this outcome that all parties would prefer not to experience? As the last of the big tech companies to make layoffs, and to a much smaller extent, Apple’s cautious growth in 2021 seems to have been a very solid course of action that others would do well to emulate.
Anduril will have it's own reasons for hiring so rapidly, and of course will have a firm plan of action for further growth in the months and year to come. But perhaps Stephens, alongside the company's people leadership team, would do well to dust off their copy of that famous fable of the Tortoise and the Hare. Slow and steady...
