Is the Scottish tech talent pool ready for scale-ups?

I remember the shame I felt when some friends, founders and senior members of start-ups, accused me and Skyscanner of “stealing all the good talent”. At its peak, Skyscanner employed around 450 people in Edinburgh and 150 people in Glasgow. With a population of more than 5 million people, that’s not a huge number and I’d guess that around 100 of those employees had moved to Scotland because of Skyscanner.

But, I felt the shame because I knew their point was fair. To make it worse, in our efforts to benchmark salaries nationally, we had probably reset some wage expectations too. All of these things are good for a growing economy but not if you are a start-up looking to hire your first handful of great people. The simple fact is, the talent pool back in 2012-2015 wasn’t big enough to withstand being disrupted by a small number of unicorns.

I have a personal goal to help see the creation of between 5 and 15 potential tech unicorns within 5-10 years. As much as we may believe we have a healthy pool of talent, can you imagine what happens to the start-up hiring potential if that ambition hits the higher end of that?

How big does the pool need to be for the average scale-up?

Whereas start-ups can and will largely operate on first principles there is no doubt that scale-ups also need a good amount of  “been there done that” talent. In high growth companies it’s very hard to get that balance right – you need the correct people for that stage of your business but you can’t over hire or your P&L will feel it (besides other issues with this). As well as a broad range of roles and different skills for different stages of growth, cultural fit is also paramount and not always easy - which will, again, make it harder to find the right talent. So, you need a BIG pool to recruit from.

On top of hiring for new roles, as you expand, its highly likely that you will need to back fill an increasing number of current employee roles. Many people at scale-ups find it incredibly difficult to keep their current role let alone be promoted. For example, someone who was say CTO for a team of max 12 for much of their career may now find they have a team of 60 or 80 or 200 within a couple of years. The skills needed to manage this larger team are fundamentally different. It may well be that the CTO could develop the skills needed in time, but a) they may not want to manage a team of that size; and, b) it is probably unfair to expect them to develop their capability ahead of the growth of the company (especially without an experienced in scale individual above them to learn from).

You may be thinking, just make the CTO a lower level (still paid the same) and bring in a new CTO. Someone brilliant for them to learn from and keep developing. This can work but it is often rejected and here’s why: If you notice a contact on LinkedIn moving from one company where they joined as say CMO with a team of 8 to a new company where they’re now VP digital marketing with a team of 20 you probably wouldn’t think it unusual. It looks like a straight forward career progression. But, when the company name and logo doesn’t change, people find it very hard to accept what they deem to be a "demotion" – even though it very much isn’t – it’s no different from my CMO example, just without having to move companies. In my experience, about 50% of individuals can get their heads around this and around 50% will leave rather than take a “lower” title. So, you will have churn – an even bigger pool is needed.

I often talk to people about the balance in a role between “pattern recognition” and “new”. “New” is significantly more tiring and stressful than “pattern recognition” but “new” is also energising for many – as long as it’s at the right balance. When someone starts with a new company, there will be a huge amount of “new” even if they’re doing exactly the same role as they did at a previous company. Everything from learning who is who, to what the key focus areas are, new productivity tools, new strategies, the cultural biases etc etc. The risk of being overwhelmed is still very high. You can then throw into the mix a scale-up where the headcount might be doubling year on year, as might new tools, new markets, new products … the list is significant. Often people join scale-ups and don’t appreciate this endless compounding of complexity and they later decide it’s not for them after all. Or they start to behave poorly due to the pressures and can’t recover the resultant loss in respect as a leader. Landing in a scale up is hard and you’ll invariably have some hires that just don’t work out. So, on top of churn, you will have failed new hires – and hence an even bigger pool is needed.

If we create 10+ potential tech unicorns across Scotland the outcry from start-ups could be enormous.

Here’s some indicative numbers to give an idea of scale. Indicative rather than accurate but they make the problem visible and that allows for a healthy debate to find solutions.

Between culture, experience, specialism, pattern-recognition, stage of life, role fit etc., let’s assume you need a pool with potentially c.40 candidates for every role. For context, let’s say 500 new roles for a simple large scale-up over two years. That’s a pool of 20,000 candidates who might be happy to move – let’s refer to them as “currently transient”, ie. they’re looking to move rather than you need to take them from an existing company.

However, this “single” large scale-up example will be a worst case for candidate success rate. With more scale-ups in a region there is a higher probability of culture and role fit since all businesses are slightly different – therefore there is a portfolio effect. A candidate that isn’t quite right for one company may be perfect for another – so let’s reduce that hit rate to a very low 10 to 1. Ten scale-ups, 500 people each, 50,000 currently transient people needed in the pool. Around 5,000 of them to then be employed in large scale-ups over two years.

I may be wrong but I don’t believe we have a transient pool of this scale in Scotland right now. So, it feels inevitable scale-ups will start attracting from other start-ups risking us starving the start-up community at a time when we must be supporting them to succeed. 

There are already many brilliant initiatives helping us grow our own talent in Scotland

To name a few: Filament STAC - Smart Things Accelerator Centre , Techscaler , Entrepreneurial Scotland , Foras and of course the outstanding work that is done by our world class universities (please tag any I've missed in comments below).

We must keep supporting and developing these and other fantastic initiatives in this space.

But for scale-ups we need more talent and more scale-experienced talent and that means attracting people from outside our boarders too. There is a responsibility for scale-ups to use their success to INCREASE the talent pool rather than simply take from what is already there. There are also responsibilities and roles for governments, universities, investors and advisors too.  

I aim to raise debate around solutions rather than problems so I plan to post a series of potential solutions for discussion over the coming days.

The areas I’ll cover are:

Sign-posting and Employer marketing

The challenges with Zombies…

Taxes and employee incentives to relocate

• If you have views on these topics then please feel safe to add them in the comments below. I don't have all the answers at all but want to start the constructive debate to make things better. Good debates need good input.
• If you have anecdotes of start-ups that have struggled to scale-up, perhaps because of talent challenges, then please add them in the comments below.
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This is one of a series of articles I’ll be releasing about Scale-up Ecosystems and how we now need to expand our thinking and challenge the status quo if we are to give them the support they need to thrive.

My experience is largely with scaling “tech” companies and so there will be a clear tech bias. However, I believe the principles stand for all businesses scaling up – regardless of sector.

Lastly, these articles are not politically orientated, but I can’t talk about both the positive and the negative forces on our ecosystem without referencing government policies and approach. Please try to keep any comments constructive despite your political views!