During late 2019, an early-stage startup hired an engineering lead from a large technology firm. The engineer, with three years of experience and a degree from an Indian Institute of Technology- the gold standard for an engineer from India- asked for a 50 per cent salary hike and some employee stock options.
The startup was excited to hire whom they saw as “a brilliant coder and someone who can take us where we want super fast,” and hired the candidate without flinching. “What he will build for us in five years is anyway going to dwarf whatever I pay him,” the founder of this startup said, requesting anonymity.
A few months back this engineer jumped ship to join another technology company, much to the chagrin of the founder- again with a 50 percent pay hike- as the founder found out later.
Top institutions such as the IITs and the Indian Institute of Management for MBAs have always been highly regarded in India’s startup ecosystem. They have produced founders who have created multiple billion-dollar companies, investors who were savvy enough to spot them early, and given employment to thousands. But increasingly, entrepreneurs are realising the folly in hiring based on education and work brands alone, and are finding success in going beyond.
What’s more, most of the founders realising this, are alumnus of these marquee institutions themselves, but are getting a reality check that their alma mater may not guarantee success.
Revant Bhate and Dhyanesh Shah were clear about this when they set out to hire for their venture Mosaic Wellness- which is building a slew of digital first consumer brands backed by Sequoia Capital and Matrix Partners, among others. Bhate and Shah and alumnis of IIM Kozhikode and Ahmebadad respectively, but that was nowhere in their list of priorities when hiring candidates.
“For Mosaic, the priority has been to hire ex-entrepreneurs and people who want to create something new and disruptive. Degrees don't matter in that regard at all,” Bhate says.
So Bhate actively looks for people who are comfortable in an uncertain environment, who want to build, who may have one or two failed startups behind them even- sharply different from the many graduates of top institutions who often work for a top multinational immediately after, and are used to a structured environment.
When India’s internet ecosystem took off in the late 2000s, founders of these startups as well as their investors were almost always educated from a top institution- in India or abroad. Therefore, this is where they hired from, where their networks were strong, and at a chaotic startup where you’re putting out five fires a day, hiring from here was quick and convenient.
This doesn’t just mean campus placement. A startup may hire a sales manager from a retail conglomerate but based on his IIM degree. “I know he’s from the same college so there’s automatically that comfort for hiring,” another founder says.
But today’s internet entrepreneurs take a different view. Dhirendra Mahyavanshi, co-founder of insurance startup Turtlemint, and a graduate from IIM Calcutta says, “When we had passed out, the job market was a lot different than what we see today. In today’s perspective, knowledge, skills, and talent is valued more than just college pedigree”
“In fact, my hiring experience has shown that we do get good talent from lesser-known institutes as well, other than just the IITs and the IIM’s,” he says. For Turtlemint, which provides a technology platform for insurance agents to sell products, sales is one of its most important functions. And in a sales team of 700, not one is from an IIM.
Some of this boils down to the fact that entrepreneurship is a more mainstream option today, and that first time, serial and unsuccessful entrepreneurs have all come from non-top institutions as well.
It also boils down to what graduates from top institutes expect life at a startup to be like. Large startups- unicorns and those close to the billion dollar valuation still routinely hire these candidates- with generous offers- of Rs 20-30 lakhs straight out of business school, or a big hike from their previous stint with a consultancy firm.
“Quite a few IIT IIM grads would like to join a startup at the same salary as a corporate job and with ESOPs. Not all startups, especially early stage may be able to offer those salaries,” Bhate says. But many startups don’t want these graduates for other reasons as well.
Many early stage startups today are well-funded enough to be able to hire the choicest of talent and pay top dollar for the same. Some founders say that the biggest advantage of raising venture capital is so that you can hire the best talent and make that your differentiator.
Founders are placing prioritising other traits- passion, willing to work in an uncertain environment, working in a team, self starters, and willing to grow in an organisation rather than jump jobs in pursuit of a short term salary gain.
“For something like sales we have focused only on the experience they bring ,along with skills like communication, perseverance, determination, and a go-getter attitude. These skills are developed by an individual and independent of the institute they pass out from,” Mahyavanshi says.
Manoj Meena, co-founder and CEO of fan-maker Atomberg, agrees. “For us hiring from IITs or IIMs is not a priority. We see if candidates have worked at other internet startups and are passionate. That's much more important. Personal qualities are more important because we can groom them,” he says.
The IIT-Bombay graduate also acknowledges that the industry as a whole is reconsidering how it hires. “I am seeing this change in mindset in the industry, that companies aren't chasing the IIT IIM tags as much anymore. It's more about whether the person really wants to contribute to the organization. College becomes secondary.”
Even while hiring engineers, where technical skills take precedence, startups are finding the right candidates at other startups, smaller colleges, and at hackathons of Tier 2 colleges. In some cases, highly motivated students even learn software languages such as Python, C++, SQL and PHP from online courses and Google their way through it- far more painstaking but in some cases far more rewarding as well.
Psychological factors play a role too. "Sometimes people who aren't from these Tier 1 institutions are overlooked by the best recruiters which creates more hunger to create a mark and a zero to one stage startup is a great platform for them,” Bhate says.
To be sure, this doesn’t mean that graduates from these top institutes are not sought after. Large startups may still prefer them and importantly, many candidates themselves prefer a corporate stint and experiencing life at a multinational firm.
But for the first time, well-funded startups are looking beyond education tags and brands to hire key people, and are taking emotional stability, maturity, motivation and other factors seriously.
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