For growing Philly startups, recruitment can be the hardest part

Every morning Curalate CEO Apu Gupta wakes up and asks himself, “How can we go faster?” He’s referring to scaling his University City visual analytics startup, and he knows the answer: People. But that’s the hard part, he said.

There’s definitely a shortage of good staff in the area, Gupta said, though he added that when he has made hires, they’ve been highly talented and fiercely loyal.

Gupta’s looking to grow his team of 13 by 50 percent in the next few months.

“We’ll take them on as soon as we can find them,” said Gupta, who said he’s felt like for about two months now. He’ll hire sales and finance staff, Gupta said Saturday, but, like technology businesses in Philadelphia and around the country, he wants “all the good development talent” he can find.

His comment is reminiscent of one from Monetate CEO David Brussin in 2010 — “If we had all the right people walk into the office today, we’d hire them all,” he said to Technically Philly, when his ecommerce optimization company wasn’t so much bigger than Curalate. Monetate now has a staff of nearly 160, with plans to grow closer to 240 next year, a representative said at a recent event, fueled in part by a $2,000 reward for headhunting engineering talent.

For technology startups that are growing rapidly like Curalate, finding good people with the requisite skills — engineering, development, design and other STEM backgrounds — can be that one thing that holds you back, as a host of entrepreneurs confirmed for this story, echoing national studies.

Technology job vacancies are increasingly becoming a sign for concern.

Nearly 90 percent of roughly 750 entrepreneurs said it was either extremely or somewhat challenging to find workers with the skills they need to grow their business, in the national Startup Outlook Survey that is put together annually by Silicon Valley Bank, which has Philadelphia-area staff and focuses on serving early-stage businesses, particularly those in the technology sector [This story is underwritten by Silicon Valley Bank, without editorial oversight].

The numbers were only slightly lower (81 percent) when it came to about 80 interviews with mid-Atlantic region entrepreneurs, which also included those from Pennsylvania, New Jersey, Delaware.

Think of lead generation company Leadnomics whose cofounder said that “finding good people is hard” because of brain drain and Monetate, who’s been dreaming up inventive ways to recruit since its early days.

In 2010, the company launched a referral program that offered $500 or an iPad for anyone that referred someone it eventually hired. That prize jumped to $2,000, reminded spokeswoman Marifran Manzo-Ritchie, and it was as high as $5,000 this January, when Monetate was on a “hiring blitz.”

The Conshohocken-based firm is still hiring “all across the board,” said Manzo-Ritchie, though, especially when it comes to software engineers, “not as rapidly as we’d like to.”

Monetate even hired a Director of Special Projects last year: artist turned MBA graduate Britt Miller, whose responsibilities include innovating around recruiting strategies.

Entrepreneurs point to several reasons for the challenges of recruiting, with varying degrees of statistical confirmation:

• Brain drain, with area technical talent being absorbed by other cities, including the hungry hiring hubs of nearby New York, though Philadelphia’s long criticized inability to hang onto its college graduates has been lessening mightily in the last decade.
• Prominence of legacy tech organizations, as in Philadelphia, the vast majority of IT talent are hired by hospitals, universities, companies like Comcast, Sunoco, Vanguard and others.
• Everyone has a startup, as the entrepreneurial bug has bitten more in this post-recession 20-something generation than in the past, bringing those with technical skills to launch something on their own, rather work elsewhere. This is part of a phenomenon of Wall Street executives worrying about investment banking’s declining prestige as a job option and of the rise of hiring by way of acquisition. (Think locally of Artisan’s April 2012 purchase of fledging DreamIt graduate UXFlip)
• Limited spin-off talent, as second-tier technology markets even as large as Philadelphia have fewer big exits

There is a national conversation happening around STEM-centric immigration policy, as our sister site Technically Baltimore has been covering extensively, but another part of the problem could be the lack of STEM-trained students.

Campus Philly‘s Annual Report points to a degree mismatch: in 2011, the Philly region created more than 64,000  science, IT and finance jobs, but local universities only gave out 6,000 computer science, engineering and math degrees. Find more of our STEM coverage here.

Balance that with the four out of five entrepreneurs surveyed in Silicon Valley Bank’s national Startup Outlook who said that they were looking for employees with STEM skills. The number remained the same for the mid-Atlantic region.

In Philly, the story rings true: both Monetate’s Manzo-Ritchie and Cloudmine CTO Marc Weil said that finding software engineers is the biggest challenge, and Curalate’s Gupta said that his shop would be in constant hiring mode for talented developers.

STEM education is one future-oriented way to tackle the issue of recruiting, but immigration reform is another solution that’s more timely and gaining traction at the federal government level. The U.S. Senate is considering a pair of bills, the Immigration Innovation Act and the Startup Act, both focused on attracting and retaining foreign-born talent. (The two ideas, though, will likely have to be enveloped in broader comprehensive immigration reform, a concept that often focuses exclusively on low-wage, low-skill workers)

University City Science Center president Steve Tang and Greater Philadelphia Chamber of Commerce president Rob Wonderling, too, have called for all levels of government to help grow startup companies by reforming policies so that the U.S. doesn’t lose foreign-born, American educated students.

While critics have said that these bills will take away jobs from Americans, a Kauffman Foundation report found that at least one of them could create between 500,000 to 1.6 million U.S. jobs in the next 10 years, if implemented.

The lasting takeaway is clear: if technology is to continue to be a dependable economic engine in an otherwise middling American post-recession recovery, job vacancies are increasingly becoming a sign for concern, not just a badge of honor for a sector’s growth.

This report is sponsored by Silicon Valley Bank.