Who to Hire: Pricey All-Stars or Homegrown Talent?

Earlier this year, Business Insider published the story of a Google programmer who allegedly turned down a 500K annual salary from a startup because he was already making a cool $3 million a year in cash and stock at his current job. Whether that staggering salary is totally accurate or not, it does show that companies are willing to dish out fat paychecks for top talent.

The question is, however, is it worth it?

As HootSuite has gone from a tiny startup to a global social media company, I’ve realized that there are two very different approaches a growing company can take to sourcing and retaining talent.

One we can call the hired-gun approach. Companies—usually large, established players—pay a premium to bring in proven, outside talent: pros who can get the job done … for a price.

The other option—really the only one for many startups—is to nurture homegrown prospects, i.e. to find local employees and develop their skills over the long haul.

Which is better? As CEO of a late-stage startup straddling the line between each of these worlds, I’ve learned that both approaches make sense in different contexts. And both come with caveats.

1. The Hired Gun: A pricey but proven superstar

In the tech industry, the focus at many large, post-IPO companies is on recruiting and retaining top employees, often at whatever cost. The result is an incredible concentration of tech all-stars—the best and the brightest, lured by chances to work in the Valley’s blue chips and be compensated accordingly.

For companies fortunate enough to land experienced industry prospects, the rewards are multiple. Experienced pros act as mentors to younger employees, diffusing expertise throughout the organization. There’s the enormous efficiency gain of bringing on high performers who know exactly what to do and how to do it. Plus, top talent can also help attract other prospects, powering a kind of virtuous recruitment cycle.

But this approach can also create complications. Hired guns motivated by a big paycheck and short-term payoff may have little reason to be invested in a company’s long-term vision. A mercenary focus on bottom lines and bonuses—at the expense of vision and value alignment—is hardly the recipe for a healthy company culture or a business built to last.

2. The Homegrown Prospect: Passionate, locally-sourced

Younger companies are able to embrace a different approach to talent: recruit locally, identify homegrown prospects and, in a phrase, bring them along for the ride.

On one level, this is pragmatic: New businesses generally can’t pay top dollar, so they instead sell junior prospects on youth, energy, options packages and the possibility of a payoff down the road. And they tend to attract workers whose spirit of hustle and entrepreneurialism matches their own.

This was certainly the case with my company. During our first years at HootSuite, we had a great product—a tool to help companies manage their social media accounts—but limited resources. So we found recruits from our own backyard in Vancouver, who made up for what they may have lacked in experience with eagerness to learn and willingness to take a gamble on a company with lots of potential but little bank account.

Five years later, this homegrown approach has served us well. From seven employees, we’ve expanded to more than 400—the overwhelming majority drawn from the city and its suburbs.

These recruits have grown with us, learning as we’ve learned, and that kind of organic unity and sense of purpose has been a tremendous asset.

The key is balance

Eventually, however, any successful startup needs industry-leading expertise and starts amassing the resources to go out and get it. At that point, the question becomes how do you bring in hired guns without upsetting homegrown chemistry? How do you preserve company culture and a spirit of entrepreneurialism while also incentivizing top recruits from outside to join your ranks?

Success, at this stage and beyond, rests on staying true to the place—figuratively and literally—where a company comes from. HootSuite, for instance, is moving out of the startup stage, but hustle and dedication to team remain in its DNA. As we seek outside talent, it’s got to be on those terms. At the same time, Vancouver isn’t just a backdrop to our growth; the city and the great people we’ve found here are part of it. It’s important that we continue to do our part to put the city on the tech map, hire locally and inject tech expertise back into the community.

Understanding and respecting this sense of place is critical not only to winning talent wars but leaving a legacy that transcends bottom lines. Tech companies, for instance, are known to have a finite lifespan: For the successful ones, an IPO or exit is never more than a few years off. But by recruiting locally and developing homegrown talent, companies can build something that remains after they’re gone. People, skills and a culture of innovation persist and—in the best cases—the larger community gets something back.

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