A few days ago I moderated a panel discussion at the Computer History Museum with the founders of Dropbox, Evernote, and Wildfire. I asked whether it was worth dealing with outside recruiters, and they all said no. They all had recruiters working for them in house. In fact between 3% and 5% of their employees were recruiters.
They said the best source of people initially were the friends of the founders and the first employees (which is one reason it's helpful to have gone to a good CS school) and that as soon as you've exhausted this source you should start hiring recruiters.
as soon as you've exhausted this source you should start hiring recruiters.
Did they present any evidence to support this position, or does "should" in this case just mean that this is what they did?
There have been a few times when I've talked to technical people at startups and come away thinking "if it weren't for Tarsnap, I'd totally go work for them". In contrast, every time I talk to a recruiter, I come away thinking "if this is the sort of people they have at X, there's no way in hell I'd ever want to work there".
I'm not sure what the best solution is here, but it seems that recruiters are far from perfect.
When a smart small company hires a recruiter, part of the goal is to have recruits never really realize they're talking to recruiters. Presumably most YC recruiters aren't randomly cold calling people; instead their job might involve a lot more of "setting up circumstances so that the right person in their company is likely to end up talking to Colin Percival".
Most of the time, when people complain about recruiters, they're complaining about dialing-for-dollars cold-call transactional recruiters.
Recruiting is a special form of sales/marketing, and most businesses wouldn't expect randomly calling people on the phone to be their best early sales strategy. But that doesn't mean they don't do sales; they just execute on an early sales strategy.
Jeff Cox's _Selling The Wheel_ is a good, if somewhat patronizing, summary of the different sales strategies companies use at different stages of the adoption curve for their offerings. The same insight applies to recruiting.
There is a vast difference between hiring a great recruiter and the kind of recruiter that you describe. So the best solution is to find and hire a great recruiter. Like most "best solutions" this is far from easy, much like most of the work you will have to do to make a successful startup.
This is exactly what's killing the recruitment industry. More and more companies are realising the value of having a decent inhouse recruitment team. Personally I believe it's a positive movement.
If you look at some of the most attractive companies such as Google & Facebook, they all have their own internal recruitment team and they rarely engage outside recruiters simply because their own team is immensley talented.
On that note, if anyone wants to capitalise on pg's insight and wants to hire a talented recruiter, I am really keen to shift to in-house recruitment!
pg, I'm curious about the advice you give to YC founders on identifying and recruiting early employees. Based on tutorspree's job posting they need roughly the same level of technical skills as a founder but they're getting a maximum of 3% equity and a below-market NYC salary. I'd guess the founders are getting 5-10x the equity and a salary that's not too far off from the one offered above.
Is this package consistent with your advice? Does it generally work out well for the companies in question?
Sometimes, very talented technical people are assuming extra risk due to opportunity cost; perhaps some other startup is offering comparable equity but has a longer runway and/or more traction. If those people are good at negotiating, they get better equity grants.
A few factors play in to the gulf between founder and early employee equity:
* Founders have by definition committed to the idea before it had any traction at all. More risk.
* Founders have spent more time at the company than employees. Each day spent at the startup, in addition to accruing compensable effort, carries opportunity cost (not to hop ship to some other company) and thus more risk.
* Founders have often worked, at least for a time, at zero salary. More risk.
* Founders that can get their companies funded, accepted into YC, or bootstrapped to market traction can presumably do that again somewhere else --- again implying they're accepting the opportunity cost of committing to one startup instead of starting another. Most employees, regardless of ability, can't say that.
It's important to remember that founding teams have drastically different compensation packages than employees do; it's almost an apples/oranges comparison. You want to remember this not to empathize with the founders but to keep in mind how different their incentives are from yours.
I would counter that equity grants are ultimately based on negotiating leverage rather than on risk or ability, each of which are important components of the negotiation picture. As a founder of a hypothetical company, I wouldn't offer more than 3% to an employee either if I could succeed without making that sacrifice. I completely understand the value proposition for a founder - pg has outlined it in exhaustive detail over a decade's essay writing. I'm not sure I've seen where he outlines the upside of taking a sub-market salary in exchange for low-single-digit equity.
My best guess is that early-employee startupping is an investment in one's network and skills: The company, like all startups, is likely to fail. Your equity has a low chance of paying off. On the upside, you're getting startup-tier technical experience that would be dramatically harder to come by in a BigCo job. And best of all, you're gaining entry into the professional networking world of startup founders and the extended YC family.
I don't mean to imply that early employees are getting shafted or that they are inherently owed large equity stakes, I'm just working my way to an understanding of exactly what the value proposition is for someone in this position.
It's kind of a banal observation to say that if you can do better than 3% / $70k in NYC, you shouldn't accept a 3% / $70k offer "just because it's a startup". But it's a valid observation, so, there you go.
I must've overstated my case. I've never worked in a technology startup and I'm only trying to suss out the motivations behind the different classes of players. There's plenty of ink spilled about VCs and founders, but not so much about early employees. I assume the people entering into these arrangements are rational players comfortable with their possible outcomes, and I'd like to better understand the deals.
Please don't take my observations upthread as dismissive or authoritative. I certainly don't have the startup experience to make such claims. I have no reason to mistrust pg (or you for that matter) and I'm genuinely hoping for digestible explanations. Perhaps I shouldn't have asked on HN but rather through a private channel.
Early employees accept offers at startups because:
* The working culture is almost always superior to that of better compensated big company jobs
* The career experience at a startup is often more valuable at a startup than a bigco job; at a BigCo, you're unlikely to be able to even use a good language, whereas at a startup you might own a whole product
* Early employees might not want to lock themselves down to a single company for a long time, and if you're aiming to work at lots of different places, the startup career track is more amenable to it than the bigco career track (where "job hopping" is stigmatized)
* The equity upside of a startup is extremely easy to overestimate
* Early employees have a good shot at becoming key employees, and key employees get better comp later on
* If you truly believe in a startup's offering, a 3% stake in it can still be reasonably valued at "life changing". A 2% stake in the second startup I joined was extraordinarily lucrative, well beyond "excellent bonus for every year I worked there"
* Over the long term, early employees might themselves want to found startups, and a good path to doing that is succeeding in an employee role in a smart startup (for the track record, the education, and the networking).
* Finally, most people satisfice. They'll quickly accept a good job rather than expending months of effort trying to find the optimal job.
All good points, the other I'd add is that I really think joining as an early employee is optimizing for happiness. Starting a startup is really hard and more often than not results in broken relationships, tons of debt and several months of severe depression.
As an employee at an early startup, you can still get significant upside exposure (eg make millions or tens of millions in a success scenario) while being able to "just code", have a much more normal work-life balance, and having much less exposure to risk.
If you're decently good at picking good startups to join, it is probably also an easier way to get seven-to-eight digits rich than starting your own company, since a lot of the risk is already removed.
Umm, I will have to disagree that an early employee status is a guarantee to making millions.
First of all i havent heard of that many early employees getting anywhere close to 3%, most of the time its between 0.5% and 1.5% for a salary thats several tens of thousands below market.
Secondly, if we are talking about companies that will get more funding, that means that your ownership of the company will be diluted further.
So in laymans terms, if you get 1% of the company and that gets diluted to 0.66% after Series A/B/C funding, in order for you to reach your $1 million, the company would have to acquired for more than $150 million. And what are the chances of that?
Furthermore, dont forget that while youre giving up some tens of thousands of dollars a year(that you might make at market), your equity stake is vested over 4 years, so if you do decide to leave after a year, you would have given up two years worth of potential market salaries for half of the equity that has potentially no value.
So basically, its a gamble and hopefully people do their research before taking a leap into the startup world.
I never said it was a guarantee to make millions, just that I think over a programmer's career it is comparatively likely to make $5-50M working at a startup than starting your own, and you will be net happier on average by working at a startup than starting your own.
Also, many startups these days do pay market rates. Weebly certainly does. The startups that don't pay market are generally sub-10 people and you get an even higher equity grant for that.
Regardless, joining a startup is obviously a gamble and very far from a sure thing, but at the end of the day, so is starting your own startup.
One way to make sense of the risk premium is to think of the grant in absolute dollar terms. When a company is just starting out with no product and no funding, the value of the business is very low (more or less just the founding team's value). In this situation, the company is likely worth a couple hundred thousand to a couple million tops. 33% of that is likely in the hundred thousand dollars range.
Once the company has a product, funding and some traction, the business' value is now likely at least a few million to tens of millions. 1-2% of that is also in the hundred thousand dollars range.
Yes, the founders' stake is now significantly more, but it wasn't when it was granted. They built the company's value and their stock value appreciated.
When you join a startup, you have the ability to do exactly the same thing!
as soon as you've exhausted this source you should start hiring recruiters.
Presumably the quality of the first recruiter you hire will have a significant impact if they are going to be bringing in other recruiters as well. So how do you hire a good recruiter?
Him: Hello, I need to speak to the person who manages your servers.
Me: Uh, who is this?
Him: I need to report an issue with your servers. Are you the person who manages the servers?
Me: What kind of issue?
Him: Do you manage the servers?
Me: I manage the office. What's the issue you need to report?
Him: Oh! I'm calling because I understand that it's very hard to find good Linux and Ruby on Rails people in Chicago and-
Me: You're a recruiter?
Him: Yes, and-
Click.
Our current recruiter policy, at least in the Chicago office: $50 to the person in the office who can keep a recruiter on the phone the longest using only Emacs Eliza.
In terms of actually recruiting people:
* It's one of the key jobs for the management team; for instance, it is the thing I spend the most time on after billable work.
* We do increasingly generous referral bonuses for good candidates.
* We're doing a number of outreach programs (free classes and the like) to meet candidates.
Ultimately, like SEO consultants and direct sales people, the problem with recruiters is adverse selection. There are good recruiters out there, but they can more or less print money; they aren't cold-calling you. Anyone who is cold-calling isn't a good recruiter. There aren't many good recruiters. The most useful shorthand is "all recruiters are terrible".
I usually respond to conversations like that with "you started this conversation with a blatant lie, why the hell should I trust you enough to do any sort of business with you?". They often call back almost immediately in the hope of someone else picking up the phone instead of me.
Other common lies are "I'm a personal friend of Mr Anderson" (Mr Anderson doesn't exist, we made him up and listed him in a couple of places as our resources/personnel manager) or "I was talking to <some person> earlier today" (that one is particularly fun when they state they were just this minute talking to someone I has been sat opposite me talking to nobody for the last hour or few).
I've stopped being nice to them. I don't even make an effort to be professional.
Some companies will call repeatedly, day after day, sometimes several times a day. The only way to get rid of them I've found is immediately asking to talk to their boss to discuss being taken off their lists and demanding to talk to their boss until you get to or then hang up. And if that fails find the company's address and send them a letter by registered post stating that we do not want to deal with them, will not give them any more of of our time for free, and that any further calls will result in them being invoiced for our time at our consulting rates (we've gone as far as that twice, both times we heard nothing else from the company in question afterwards).
Anyone who is cold-calling isn't a good recruiter.
I completely disagree. The most successful recruiters always need to generate new business in order to stay successful and whilst it's great to pick up business from recommendations, often you are left with no option but to pick up the phone and start introducing yourself to people.
I need to write a post to discuss this at greater depth, but...
I am fucking astonished at how inept most recruiters are. I mean, just awful and useless at their "jobs."
If we concede the point that, especially in the Valley, technical talent is in high demand, it stands to reason that any overture to such talent needs to be persuasive, informative and intriguing. It should explain the role in reasonable detail, while making a sane case for how cool the company and opportunity will be.
Ideally, it should demonstrate that the recruiter has a basic understanding of a given prospect's skills and career trajectory. Super bonus points if it doesn't seem like a form letter.
Instead, what I get is stuff like
"Hey, I'm looking for developers for a role I'm filling. You need to be this, this, and this. Oh, and this is a plus. Mmkay, lemme know!"
Well. Congratulations?
Hey, I have a job. And it doesn't involve proving to a random recruiter that I'm skilled at it. And from such pitches, how would I know that I'd even care? I know nothing about the company and only have the vaguest notion of what I'd be wanted for.
Recruiters are a waste of time, though mostly their own. A founder out being social has a much better chance, I think, at successfully recruiting limited talent. Not that they have time, I know.
And don't get me started on the pitch that opened with "I'm looking for some iOS studs!" I had a friend at the company they were pitching. They weren't impressed when they heard about this one, especially since they had no formal relationship with the bozo.
I've worked with third-party recruiters for many jobs I had while contracting. The pitch you mentioned can work, but only in the high-turnover world of contract consulting for big companies. This is NOT going to work for startups, or anything even close.
Contract programmers often switch jobs once a year. That's driven my duration limits set by companies, layoffs and the wanderlust that contractors often have. Big companies don't seem to want to be bothered with in-house recruiters, so they pay third-party companies to do the work. In the midst of that shuffle, a job requirement is handed from a hiring manager (who may not know how to code) to a company HR rep (who may edit it) to the recruiter. What you end up with looks like this:
Req: JAVA Developer
REQUIRED:
- 5-7 Years Java Experience
- 3-5 Years J2EE Experience
- 1 Year JDBC
- 3-5 Years Oracle
- MUST HAVE WEBLOGIC 10.3.5
PLUSSES:
- C/C++
- Perl
Of course, this may or may not have anything to do with what the job actually requires. They may have a taped-together C/C++ and Perl system they're trying to move to JEE/Weblogic They probably haven't really ordered (or gotten approval for) Weblogic, but it's what all the other companies seem to use.
So, the recruiter goes around spamming folks, and manages to find someone who's just hit their 12-month limit at BigCo and is open to find another position. The recruiter gets paid, the contractor may or may not like the position (but gets paid, anyway), and the hiring manager gets bagels brought in, courtesy of the recruiter's firm. Everyone wins, so to speak. That's why the cycle persists.
I'm describing this as someone who played that game successfully for many years. To someone who's working in startup circles it may seem like madness, and it would be if applied to startups. But it's how Fortune 500 companies, for better or worse, find talent.
To put it in startup terms, the third-party recruiter model seems to work well for companies who've found their business model and need people to execute it. For companies who are in a race to iterate and find a product-market fit, it's the kiss of death. Skip the free bagels, delete the emails and find people on your own or with internal recruiters who really know your company well.
I've worked with third-party recruiters for many jobs I had while contracting. The pitch you mentioned can work, but only in the high-turnover world of contract consulting for big companies.
Big companies have a specific reason for going with contract employees. It gives them (the company) a legal separation from the person who would otherwise have been an employee. That person can be unceremoniously dumped out onto the street if things aren't working out, and the company is willing to pay extra for that option.
Startups can't afford to pay a 30% premium on technical help just so it's less risky to fire the bad apples. And anyway they aren't big fat targets for lawyers like big companies are - good luck finding a lawyer to take your case on contingency when you're suing a company that's having trouble making payroll.
I had one idiot who kept phoning me about a "great position" with an investment bank that offered less money, a lot less holidays, a lot more pressure (which I interpreted as being required to be available 24x7) and less interesting work than what I currently do.
I kept asking him why I should be interested in such a role, of course, he couldn't tell me. The sheer desperation in his voice was almost enjoyable.
The sheer desperation in his voice was almost enjoyable
The first time I sent my resume out to recruiters, my phone rang nearly continuously for two days. I complained about it once to my wife. She said I should never be ungrateful for a recruiter calling. He father went through a few periods of unemployment and in her eyes a call from a recruiter was a cause for celebration. From that point on, I've always been patient with recruiters, even the dull ones.
I've been around long enough now to have the tables turn. In 2002-2003, calls from recruiters almost completely dried up. I had a job at the time, but I was looking to leave for greener pastures and became very grateful for any calls I received. Now I'm back to getting lots of unsolicited emails and calls, but I just politely decline and maintain a contact, because if the table do turn again, I'll have a wide net already cast to pull in my next gig.
You hit the nail on the head. In a bad economy/tech market like 2001, the recruiters were rude, unreachable and acted like Gods.
After 9/11 2001, a recruiter sent me resume of few other candidates vying for the same job and asked me to write a page describing how I am better than those candidates.
Now, the tables have turned, we developers consider recruiters as dirt bags.
I have no doubt that the tide will turn again. We just don't know when.
"Next time it could be you" is not the only or even best motivation for practicing compassion and tolerance. I have been cold called by inept recruiters and hired by companies with barely competent ones. Nurturing contempt for them does nothing good, in particular it does nothing good for you. It's also a missed opportunity: when a niche in the economy attracts ineptitude, that tells you there's a broken system possibly worth analyzing.
I encountered recruiters who were a bit short with me in that era, but I encountered more who had a who had a different sort of desperation than they do now. Third-party recruiters rely on a steady stream of jobs coming available so they can collect placement fees. In 2002, they faced a real pinch in what jobs were open and in what companies would pay to both developers and recruiters. Many recruiters went without work as they didn't have any jobs to place people in.
I talked with one recruiter about a job that paid about 1/3rd what I made just 2 years before. I said "has it really gotten that bad?" He opened up about the situation as he really didn't expect me to go after the job as it paid far less than what I was making, even back then. IIRC, it was the only job he had open at the time and rates had hit bottom, so he couldn't even find anyone willing to take it. Fortunately, things turned around for both of us.
I have one idiot who made me an offer which might have been somewhat realistic: it was at a networking company, doing C++ for APs/controllers (5 years experience wanted). I told him something like "sorry, no, I'm just leaving that field (and that city) for a little startup, I was more of an NMS guy anyway, and I wasn't using C++ - you could do a better job of convincing me that you understand my background and skill-set; I see you even are advertising for NMS positions on your company's site." I also allude to his company's competence using abstruse engineering language: "I've worked with your products before, and already faced some of these 'unique challenges' you promise."
Three months later he contacts me about the same C++ positions, with the same language. After me telling him exactly how to do his job. This time I was a little more explicit, and asked him to keep contacting me so I could make fun of him and his company to my engineering buddies. :P
Probably a bridge burned, but one I'll never use, and I don' t make a habit of this.
"you could do a better job of convincing me that you understand my background and skill-set; I see you even are advertising for NMS positions on your company's site."
I had a similar experience, and because I had multiple people from their office call me about different positions in the same time period, I became convinced that recruiters are just allotted a concrete list of positions that _they_ are responsible for. (think of it like randomly handing out a different list of target customers to each member of your sales team)
Even if you aren't a good fit for a given position, they'll call you about that position and not the one you're a better fit for, because well, it's not _their_ job to fill the other role.
I've always mentally associatted third-party recruiters with 'Glengarry Glen Ross,' so the idea that there are a number of 'leads' they all fight over would make sense. Just reversed with the easy to fill jobs being the good 'leads'. Some of the third party groups I've dealt with certainly had that aroma. (Some of the megaCo recruiting depts, too.)
That's exactly what happens at some places, from what I've heard. In some companies (the more commission-oriented ones) employees even own their "contact list" of candidates.
Maybe you're not looking, but don't you have some iOS dev friends who are less comfortable in their current positions?
I take unsolicited recruitment approaches with a grain of salt, but I make an honest effort to go through my mental Rolodex to see if there's anyone I know who might benefit from making the connection. When I respond to a cold call it's either politely or not at all.
Just tracking the volume and content of these approaches is valuable information that I can use to better manage my own career in the years ahead, not to mention the goodwill I can engender by making the occasional introduction.
We've certainly talked enough about that, especially in the context of tests like FizzBuzz. It's my personal observation from back in the mid-late '90s when I was last involved in recruiting that at least half of the people who call themselves programmers can't program their way out of a wet paper bag. Note that this is before we even ask the question "are they very good at programming?"....
The ultimate issue here is that demand for recruiters (in London at least) far outweighs the talent pool so companies choose to hire decent sales people and mould them into recruiters. Due to the sales culture involved, monetary incentives are the only thing decent recruiters are interested in. If you find a talented and successful recruiter I can guarantee they are earning close to six figures a year (some earn a lot more than £100k) and should they put their own CV on the market they would have dozens of companies throwing ridiculous money at them to get them to come work for them.
Salespeople can certainly be talent, even recruiters. Too many in sales fields are transactionally oriented as opposed to building long term relationships (which are easier & less costly to sell to.)
I have to give a counterpoint, I recently had a great recruiter experience. The company had given him a spec of the person they wanted (someone who had been both a developer and a DBA on 24/7 trading systems), he went out and found me, made a convincing case as to why my career ambitions could be better fulfilled at his client, managed the whole process, negotiated me a great package, and I start there next week. Absolutely professional from start to finish, he's as good as his job as I am at mine. These guys are worth their weight in gold - but I'll admit, they are rarer than hen's teeth.
I'm thinking about adding a follow feature and a map based directory to http://mightycv.com soon. It might make the service a bit more useful for those looking for good hackers to work with and hopefully help put a nail in the coffin of traditional recruiters - at least the bad ones anyway. I'm hoping that if MightyCV becomes a popular place for hackers to create and home their resumes then it might allow people to bypass recruiters completely on occasion.
It's early days, but if you're interested in what a MightyCV looks like then take a look at mine:
The roles that we fill at this stage are highly specialized and generally call for nearly contradictory attributes in candidates. You need incredible good engineers who are not already in golden handcuffs, are crazy enough to join a risky early stage company, do not want to found their own company right now, want to work at all hours, and are aligned with the culture you are trying to build.
It seems that this is indeed what startups are looking for. It also seems that they are generally unwilling to pay market salary. And startups don't seem willing to part with enough equity to make up the difference in the slightest if you weigh in how unlikely it is for employees to see any return on equity.
There may be a reason why these jobs are hard to fill.
Quite. There have been recent discussions on HN which point out the darkside of this: that early employees of startups often take as much risk and work as hard as the founders, yet get a tiny sliver of the upside. Co-founder, or nothing.
I'm personally interested in this because I know first hand about the bottom of EV-comp curve: I personally enjoy working at really early-stage companies, have little in the way of expenses (27yo DINK), but don't have enough saved to start my own thing (payed off 50k in student loans last year).
It feels somewhat akin to working at game companies: Working in the industry is glamorized, so young and energetic people flock to it and get relatively shafted on the margins. My job is nowhere near as bad as working at somewhere like EA, but it's not unlike it either.
I won't be doing this for much longer though, as the market isn't changing fast enough. Next time it's co-founder or series C+. In-between I always feel like I'm being had, to a degree.
It's not just not getting a large part of the up side. If the company fails, there isn't enough base pay to create a financial cushion to rely upon in the lean times. Something I have personal experience with.
Certainly I fall somewhere in that category. I'm not in a position to co-found, but would like to wind up at a startup. However, due to the high-risk nature, I want to have a good solid chunk of equity that I could cash out (loosely equivalent to the valuation of the risk that I took on)
Here's another side of the story: I just moved to SF, and I'm looking for jobs. Two friends sic'd a bunch of recruiters on me, and it is awesome! Here's the process:
1. They email or call me, and I send my resume and short summary of what I want.
2. They send me streams of awesome jobs. (Two have sent bad jobs, but gmail has
a hotkey for that :D )
3. I say I want to talk to XYZ at one of these times, and they hustle to make it
happen.
4. They tell me little nuggets like "The last guy I placed here made $X"
I'm running my own processes in parallel, and I can tell you that they suck a lot more. Non-recruiters -- and even in-house recruiters -- are hard to herd.
Quote: You need incredible good engineers who are not already in golden handcuffs, are crazy enough to join a risky early stage company, do not want to found their own company right now, want to work at all hours, and are aligned with the culture you are trying to build.
That really is asking for everything. I hope you have figured out a way to explain your value proposition to these dream candidates.
There is actually a wellspring: quantitative finance.
There were many people drawn by the allure of finance back in 2006-2008 and are now thinking of leaving. Generally people have enough money to carry themselves for some time on a low salary, have the risk tolerance (after all, they can cover themeselves), and can work at all hours.
Basically, you want that rarest of birds - shy sparks who aren't nestled in a large company yet.
Too introverted to be really aware of their market value and have a life and smart enough that they're going to be obsessed with the work and work at it all the time.
Considering I'm having a hard time finding "reasonably competent" Rails devs, I can't imagine how you might hire for that kind of position.
maybe some combination of an IQ or programming test plus a Myers-Briggs analysis. That would probably be a great way to screen. Or just recruit at MIT/CMU/Caltech...
While I see what you mean with referencing Myers-Briggs, do you really believe that it is useful? Some reference reading: http://www.skepdic.com/myersb.html
The line you quoted stood out for me most. It does seem like a tall order.
Does networking work better (than hiring a recruiter) when recruiting for startups? Do you come to places like HN to build relationships?
It seems you'd have to win people over 1-to-1 -- get them to believe in your vision and culture enough that they'd join you, in spite of all the risk -- which takes time and energy (both worth it) as well as a keen understanding of where to go to find dream talent (tough).
Shameless Plug which is why we built Meeteor.com - our aim is to get you warm introductions into the companies you're interested in, through your friends.
I had a conversation with a recruiter and she said how can you expect to get a job if you have ColdFusion on your resume instead of Cold Fusion?
I directed her to adobe.com so she could see the correct spelling. She went oh crap, I've been throwing away all the resumes with ColdFusion because the employer spelled it Cold Fusion.
No wonder the client is complaining to me about the low quality of candidates that I am sending them. She promised to get me an interview with them but never called back.
Wow. I wanted to LOL at that and claim you made it up, but it really does sound plausible.
I've considered putting together a training course for tech recruiters - something like a one day bootcamp to familiarize them with specific tech, so they know the diff between java and javascript, for example. but... need to find the time to do that on top of everything else!
This is basically an argument that contingency recruiters are bad. You should differentiate this in the title from in-house or contract recruiters (retained search). Contingency recruiters, as you've noticed, have no incentive to filter out junk because they can just take a throw it at the wall and see what sticks approach.
Also, there are a ton of bad recruiters, just like there are a ton of bad engineers. There are awesome recruiters out there and the sample of those who have cold called you rather than going through trusted channels is likely strongly biased towards the bad.
This cuts both ways: looking for work takes a substantial, non-zero amount of time, and it's extremely frustrating when startups decide to speak with you even though they know hiring you is "a long shot."
Searching for work at a startup has been a protracted, fruitless process. They have no problem conversing with you and checking out your background over coffee, lunch, whatever. After a few conversations and a technical interview, you find out there isn't a good fit.
Rinse and repeat for any number of tech startups, and you'll be waving goodbye to a month or two of your life.
Has anyone else had this experience? To me, the whole recruiting process is f'kd on both sides.
It's time for some tough love: If you're getting shot down repeatedly after technical interviews, then maybe you need to expand your search to other areas. That's not a process problem: you're not getting the jobs you want because they don't think you can do them. So the solution to avoid wasting time is not to apply to jobs for which you aren't qualified.
I wish someone had told me this sooner, because after going through the above scenario again and hearing "we'd love to hire you if you had a bit more experience" for the umpteenth time, I realized you're right.
Thanks for the tough love--I'm going to focus on getting that experience.
I've seen it done as a way to avoid openly age-discriminating candidates. You're not a long shot as long as you're young, regardless of experience.
I regret not saying anything. The company's idea was to disregard experience in favor of people who put in long hours. Unsurprisingly, the people in charge were young and inexperienced. The company no longer exists.
I go through this dance a fair bit. At least for us, we're totally serious about hiring. It's just that we're very fussy.
To understand why, think about what we hope to happen. If we do things right, then anybody we hire today will be a de-facto leader two years from now, because they're one of the people who's been around since the early days. Any code they write will be in core parts of the system. And they're going to have a big effect on who we can hire next, because potential hires are going to judge our company partly by them.
We definitely try not to waste anybody's time. But we also don't want to miss a good candidate; some really solid programmers don't interview well. But as soon as we're sure, we politely stop the process and thank them for their time.
Fair point. I suppose it depends what you considerable a reasonable amount of time to evaluate a potential employee. All in all, it took me about two weeks to run the gauntlet at my current job (a startup), and I don't think that's unreasonable, given how busy everybody is.
If you keep getting passed over, however, I can see how that starts to really mount up.
Interviewing is a tricky thing. I have been on both sides of the court, and it is very difficult to get a good idea about a candidate's potential simply from the resume/cover letter.
If you keep getting contacted by companies for interviews, but fail to get past that stage, I would recommend two things.
1. Make absolutely sure that your resume is accurate. If, in the interview, it looks like you 'embellished' your qualifications on your resume a bit too much, it is guaranteed to get you tossed into the 'no' pile.
2. Work on your interview skills. It is surprising how bad some people interview. It took me a couple practice tries before I really became comfortable with the process.
I had expected this to be related to using recruiters to find jobs. I've found that to be primarily a complete waste of time as well, but I suspect the reasons are the same. To most recruiters, it's just a numbers game, as the article points out; they simply "throw engineers at companies in the hopes that one or two will stick and they’ll get their commission". In my experience, it's quite rare to find a recruiter that will spend even a little bit of time actually matching candidates to the position in a meaningful way. It's also possible that, like the author, I've only ever dealt with really bad recruiters before.
I'll often get calls from recruiters telling me they've found a position for which I'm a perfect match. And then they explain it's a senior developer position requiring 5 years of experience, when it's very clearly stated on my resume that I'm a college student looking for an internship.
I've gotten similar e-mails and calls recently, based on a resume I posted to a job site 5 years ago, trying to match me to positions with requirements I don't remotely match. Further, I'm now a full time stay-at-home parent, which is my dream career. What's sad is, when I tell recruiters this, on occasion they'll still try to convince me of what a great fit their position would be.
Sort of. Remember they have two sides of the database: positions need filling and candidates available. If you reply to whatever they send you, they can drop you into the second bucket. So there's benefit to them (maybe even to you) even if the position isn't a fit.
One recruiter reached out to me when I was fresh out of college, and brought me in for a meeting. He then suddenly stopped responding in an email thread and I never heard from him again.
Then again, that's a one-time experience. But my time with the recruiter was as wasteful as time spent posting my resume on Monster and other job sites.
Recruiters use face to face meetings to gauge how well you would do in an interview. Your best use of that time is to ask the recruiter for valuable interview advice, what questions to expect, and how to answer those questions.
Yes. The one valuable ability that is exclusive to a recruiter (and any other deal broker, like real estate) is to abuse their position as a trusted mediator to slyly violate confidentiality agreements to help the deal close: tell the company what salary what employee will accept and any competing offers, tell the employee about what the interviewer wants to hear, etc.
That is a double-edged sword, though, so be careful with it.
The recruiter (or any mediator) is a valuable tool to help the weaker side of a negotiation close a deal. Know which side you are.
Back during the housing boom, I landed two consecutive jobs through recruiters. Both were cases where the recruiter had a well established relationship with the hiring company (and needless to say were only recruiting me for that specific company).
But it took a lot of contacts with different recruiters to land each of those jobs. Among my favorite experiences was the guy who asked me, "Have you ever heard of x, inc?
"Uh, I worked for x, inc. and it is listed on my resume."
I have a couple of conclusions.
1. All it takes is no regular job, a cellphone, a computer, and an account on a resume board to be a recruiter - and it shows.
2. The vast majority of recruiters stand between you and the job because they have no relationship with the company hiring and therefor you are more expensive to hire and more of a PITA to hire because the recruiter is trying to get his cut (and if she doesn't get it, you will get the "company isn't interested" phone call from the recruiter).
3. Really good recruiters are a valuable resource, know their industry and players, and won't put just any warm body forward in hopes of a score - they will screen the hell out of you.
I learned the first question to ask a recruiter is about their contract with the employer - the good one's have no hesitation describing their relationship. The bad one's waffle.
I think the title needs to be changed to reflect the gist of the post: that for _startups_, recruiters are probably a waste of time. For a more established organizations, recruiters tend to work, I think.
It is outrageous when they take 20% of the billing rate (or more) hour after hour, every hour. All for sending a few emails, making a few phone calls, and arranging the interview. Among the middlemen in all industries, tech recruiters do the least work, and are least knowledgeable of the industry they work in - a real estate agent for example, does far more work than a recruiter, and could actually be very helpful.
There has to be a better way to do tech recruiting.
Actually, I would pay up to 25%... for the first (6 mo or less) contract. They got me that, how ever they did it. But I got me the extension so why do they expect more than just a payrolling fee for the extentions?
As a technical recruiter I am not shocked by this post but I am a little frustrated with the large brush that is painted on the industry as a whole. I mean, I have worked with some BAD Developers, everything they write breaks the minute it is in production, you can never pry them away from the foosball table or lunch room, they smell and can’t speak in complete sentences BUT I still recruit for technical talent because not everyone is alike. Just like every industry there are rock stars and other guys just trying to put food on the table.
I have been honored to survive this tough economical climate in the confines of a corporate recruiting gig for a technically forward high frequency trading firm in my hometown of Houston. Over the last few years I know more recruiters who have lost their jobs than I can count, some have lost their homes and their families. Does this sound familiar to anyone, maybe say the days of 2001 for the tech set?
If the stories I have heard our true (I got into the biz in '04) developers making 150/hr one day are banging on recruiters doors begging for interviews the next.
So ya, I get it, some recruiters have zero technical skills, know little to nothing about the job/client but at their core they are human beings. And just maybe, the client doesn't have a lot to sell at the moment, maybe they are still working out the kinks to their "value proposition" but they know they are onto something.
So ignore the calls, politely say you aren't interested but remember, the tides can turn…quickly. The recruiter who doesn't know squat about server level architectural may be next door neighbors to someone who has enough funding to throw you a bone.
Good developers are hardly ever on the market. The majority of them are happy at their current jobs, and they know they could go anywhere else they wanted because their skills are highly valued.
I'm sure it gets annoying when they frequently receive emails about "Technically Forward High Frequency Trading Firms" from recruiters who happened to find them through playing buzzword bingo.
These recruiters tout that this new "opportunity" will give more money, benefits, responsibility, good looks, and sexual prowess, but never do the due diligence to make sure that their client is actually a good fit.
It's the shotgun approach that most recruiters use that turns good developers off.
Maybe once these recruiters treat developers with more respect, so will they.
So great point, the best developers are never out of work. How would you recommend a recruiter network with said developers? How do we build mutually beneficial relationships? I tend not to cold call people, just because I think there are better ways to meet people but not all recruiters have that type of network.
I suppose I am interested in a solution oriented debate. I hear how you don't like be contacted, how can we do it better?
Oh, and a technically forward HFT means that we are using decently cutting edge stuff, HPC, low latency code, etc. As for offering you better looks and sexual prowess I think I have to opt out on that one. If you find that job, let me know I will send it to a few ex boyfriends. :)
"So great point, the best developers are never out of work. How would you recommend a recruiter network with said developers? How do we build mutually beneficial relationships? I tend not to cold call people, just because I think there are better ways to meet people but not all recruiters have that type of network."
As a recruiter myself, understanding the what it is like to be a developer and connecting on the "what makes them tick" level is important. Going to meetups and getting immersed in the startup scene is great, but going the extra mile will have long lasting impact. I am a non technical guy, but over the years, I have tried my best to learn code myself. HTML, CSS, Ruby. Just leveraging the vast amount of learning tools on the internet makes this possible. Although I might never be an employable programmer, I have had a lot of great chats with developers on my own experiences and that breaks the ice and creates trust immediately.
Take no offense, but I think his point (and the point of the article) was that in this situation recruiters are not needed. The market of top notch developers and the companies they would want to work for is small enough to work efficiently on its own with no need for a middleman.
Imagine if someone called you everyday to help you find a local gas station and then charged the gas station 20% of all gas you bought from them in 1 year. You already know about all the gas stations within a 1 mile radius from your house and you're not interested in any gas stations outside of that.
Like the article said once you start looking at larger companies and more entry level developers the market gets much larger and could use the help of recruiters to increase efficiency.
Even if I'm not actively looking for a job, I'm always looking for a good beer. And I'm sure that's true of many good developers. I've always thought it was weird that recruiters never tried organizing drinkups or sponsoring barcamps.
To attempt the argument that there are bad developers in comparison to the amount of bad recruiters is weak. Less than 50% of developers are actually incompetent whereas more than 90% of recruiters are useless.
I'm a Tech Recruiter in London and I work hard to keep myself in that 10% bracket and I blog regularly about the horrible state of the recruitment industry. Most of the arguments on this page are valid and the large brush we've been painted with is deserved.
I suspect you'll get downvoted for this, because the tone of your comment insinuates developers need recruiters. While this may be the case for the lowest percentile, the fact remains that companies need recruiters to locate and hire that top percentile of talent.
The tone of my post implies that the candidate/recruiter relationship is a reciprocal one, in good times we need you in bad times you may need us. The intent of my post is to share the recruiters side and hopefully have a balanced debate. I get that there are BAD recruiters out there, I totally hear that but not all of us are clueless, which is, in my option, the tone of the original blog <recruiters are by and large a waste of your time>
I had a call from a recruiter once, asking if I would be interested in a Ruby on Rails position. I said no, that's not what I'm looking for.
She then asked me to explain what Ruby on Rails was, how it related to other technologies and was it popular because a lot of people seemed to be asking for it.
Of course I explained the best I could, to make the world a better place and all that, but it seems (as other commenters have pointed out) that there could be a real niche for techies to run a recruiting firm that know what they're talking about.
"but it seems (as other commenters have pointed out) that there could be a real niche for techies to run a recruiting firm that know what they're talking about."
I'd love to do that. What would such a company look like?
Recruiters are marketplace makers, not matchmakers.
A recruiter is completely incapable of determining who is a good fit or of asssessing talent, and traditional compensation models (x% of annual salary, paid on hire) are not aligned with succession outcomes for business.
Recruiters are superior to staff at one thing: maintaineding a Rolodex. They have no ability to choose competently from that Rolodex, though.
If you have good PR and a good jobs page, you don't need a generic recruiter.
As a third party executive recruiter, I definitely have to agree with many of the comments and frustrations that have been expressed. Unfortunately, at best the perception of recruiters is that they are a necessary evil sometimes in getting access to job opportunities. No recruiter is perfect and even the best retained ones do some cold calling during the week to establish relationships. However, I do agree the approach should not based on gimmicks and sales tricks, but have the intent to establish good rapport with those that are contacted.
But at the end of the day, a recruiter that is in tune with the market, cold calling should really make up less than 20% of their "deal" flow. Great hires are made through referrals, and great recruiters gets constant networking referrals to keep their pipelines full and their days busy. If the recruiter is doing their job, either they are getting warm leads from their networks when jobs are broadcasted, or their networks is referring strong talent to them.
Like a lawyer or accountant that desires to create a reputable brand in a particular marketplace, recruiters needs to see themselves as resources within this marketplace and not view recruiting as purely a transactional game. From my experience, just because I don't collect a fee does not make a relationship unsuccessful. Providing great customer service and building strong relationships will usually evolve into mutually beneficial interactions in subsequent years.
What amazes me about a great deal of the recruiters I've dealt with is their inability to do basic word-matching.
Recruiter "I have a great role for you as a Ruby developer!"
Me: "Do you have a copy of my CV?"
Recruiter: "Yes indeed, I have it on my screen right now!"
The word "Ruby" does not appear on my CV, at all. This has happened to me more times than I can remember; with Ruby, C++, C# and a whole bunch of other things not mentioned anywhere on my CV.
You don't even need to have heard of a technology (never-mind understand it) to narrow candidates down more than this.
Indeed. I've been out of the job market since 2004 and today after a (thankfully) long dry spell I got a "cold email" asking about a .NET position. I was working on UNIX(TM) when .NET came to be and therefore it's never ever been on any of the resumes I left behind.
Then again, since wherever resumes of mine that are still floating around are so old, a shot in the dark like this has a higher chance of working than your situation, where I assume your resume is reasonably up to date.
A good percentage of the contact I get from recruiters is for Django jobs, for which I have zero experience to offer. "Hey I noticed you have a lot of Django experience, I have a great role for you!"...yeah, actually not, I have never even installed Django, but I do have a lot of Python experience.
I guess this is slightly better than what you're seeing since they're at least in the ballpark, but still horribly annoying. It just gets marked as spam for me.
There is a big difference between agency recruiters and recruiters within a company. I have not had any bad experiences with recruiters who work for a company (that is not an agency). In fact, even agency recruiters, there are definitely some bad apples but a lot of them generally are fairly good to deal with.
If I were you, I might change the title of your post to be more specific on the type of recruiters you are referring to.
If you actually read the article, that distinction is completely irrelevant, since the proper title is more like "Recruiters are a waste of time for start-ups."
I've had very mixed experiences with recruiters. At best they ask reasonable questions and provide informative information about companies. At worst they're rude, condescending, unprofessional and openly confess that "I know nothing about software". I think that the probability distribution is skewed more towards the latter than the former.
There is a bigger problem with recruiters and that is there is a whole group of candidates who don't need them and won't use them. The best candidates are falling over opportunities, they find positions through their own network, not agencies. If you only use recruiters you will never find these people.
http://www.hackruiter.com/ is maybe the only exception to the rule. But they're sort of an invite-only thing... so not exactly useful for most startups.
As far as I can tell, it's like choosing between paying for display advertising or affiliate marketing. Two different mindsets and neither are a bad thing.
You either do the recruitment in-house and absorb all the risk to your business, which means lots of extra interviews, staff looking through high volumes of paperwork, etc. Or you hand it over to a third party, pay them nothing for the process (i.e. they take on the risk) but then pay highly for results.
Except that, most 3rd-party recruiters being clueless, you still have to do all the work. The only sensible way I've seen to use them is as a pure resume source. The folks at Wealthfront explain how: http://eng.wealthfront.com/2011/07/hire-best-forget-rest.htm...
I think if you use a recruiter to help find new people to put through your interview process then they can be highly effective. It doesn't make sense to trust in a recruiter to bring you the perfect fit. They bring you people and then you must determine if they are the proper fit. I see no harm in recruiters. You don't have to hire anyone they bring you.
Try CodeEval.com. It's free to use and we've helped dozens of awesome companies hire awesome talent through out platform. We run the only free technical screening tool out there.
And with out sourcing product, unlike annoying recruiters - we send very little but high quality candidates that are pre-screened.
As an in-house Recruiter at a startup, I thought I'd throw my $0.02 in.
The bottom line: you're right. There are a LOT of "bad apples" out there spoiling the names of the decent Recruiters. One person here said they've never had a call from a good Recruiter; that's because we know better. I don't call people for jobs they're not suited for. In fact, I rarely call Techies at all; you don't answer your phones.
Anyway, it's NOT always the Recruiter that sucks, as I demonstrated here: http://bit.ly/pokYV1
Loved this discussion though. Thank you all for solidifying so many of my beliefs.
I'm not sure what it's like in the states but here in the UK, recruiters are nothing more than glorified salespeople.
The problem also lies in the fact that many recruitment agents get paid a woeful base salary, the rest being topped up by commission payments based on successful candidates they pass on. So it's in their interest to ring as many people as possible and put forward as many people as they can because there's a good chance they'll get a "bite" somewhere down the line
Everyone seems to be hating on recruiters -- I actually just found a near dream job by me actually getting in touch with one. I'm using the language and tools I love, and I'm rolling over into a full time position with awesome benefits. Yes they take a cut of your hourly wage -- but I quoted it so up there that its not that big of a deal anyways (don't undersell yourself).
The comments here about how bad contingency recruiters are point to a lack of three skills:
- listening
- industry knowledge
- politeness
Now, a new recruiter might not have much industry knowledge, but you can pick up listening skills and politeness (for any given culture) in a myriad of jobs. Why don't they have these valuable skills?
Recruiters aren't very good at recognizing people who would be good recruiters...
It seems that the author is confusing placement agencies with recruiters working directly for a company (also see pg's comment).
I've had great experiences with experienced recruiters at a startup, to help us find candidates, while at the same time getting pounded by unethical, moronic agencies.
The recruiter helped us wade through hundreds of CV's, and eventually found an awesome Stanford CS MS that we ended up hiring. And this was while the recruiter worked for us as a contractor, so no 30% salary fee.
So a great recruiter is worth their weight in gold, because they can potentially find that perfectly fitting candidate, giving a boost to a fledgling startup. Unfortunately, such recruiters a far and few between.
Opposed to that, I got daily calls from agencies, that weaseled their way past our operators to talk to me directly, being super aggressive and downright rude when I politely told them to stop calling. This all, of course, because of the 30% fee salary fee when they place someone.
I had an idea of making recruiters put their money where their mouths are. Want to represent me? That'll cost you $2000/year. If you find me a great job in the next few years you you get many times your money back.
Recruiters would not consider such an arrangement unless you're a celebrity of the industry with a stellar resume. The candidate pool is too large to spend time and effort trying to place a single candidate in a great job.
At least this might force the recruiter to admit what his true assessment of your chances are - if you don't call their bluff, they will forever tell you that you are a perfect fit, and that the job is the best ever.
maybe something universities could do to differentiate themselves.
or individuals? I'm horrendous at selling myself and (now that I've been unemployed for >6 months) would gladly pay a ridiculous amount for someone to coach me through getting a job. I keep telling people that I'd like an agent. Everyone takes it as a joke :/
Typical. The one day I chose to ignore HN in order to make a dent in my mountain of work and this article gets posted.
For what it's worth, I agree wholeheartedly with the majority of the article. Recruiters who focus on start-ups are wasting their own time as well as the start-up's time. Yes there are a huge number of start-ups hiring and yes some will engage recruiters but the vast majority don't have the budget.
I would happily wager a months salary on the fact that 99.9% of recruiters don't understand how a tech start-up works and even if they make the effort to learn, every start-up is different with their own individual challenges and quirks and it requires an immense amount of time and effort to truly understand what these companies need. No recruiter will invest that level of time. Instead they will throw a few CV's at the role and hope something sticks.
I'm giving a talk at Hacker News London tomorrow night and the topic is 'Recruiting for start-ups'. It's a brief talk on how to improve your chances of finding the right people for your start-up and how to keep them. At no point do I even attempt to suggest they engage a recruiter, in fact I strongly encourage them not to.
Go to various tech meetups/meetings that seem relevant and then try to identify smart people by what they say in meetings. Then approach them.
Maybe sponsor a relevant meeting by buying the pizza/beer for it. This buys you the opportunity to give a company introduction and let people know you're hiring. Very cheap advertising.
meetup.com is probably the generic place to look for these types of meetings, but every city probably has its own, better site. In Seattle, among others, we have http://www.seattletechcalendar.com/ and http://www.seattle20.com/ among probably others.
Sitting in your office waiting for resumes/cover letters is the absolute worst way to try to get people. It also leaves you with only an interview to get to know the potential hire, while at the meeting you may find out all sorts of desirable or undesirable characteristics about them. Additionally you may get input from that person's peers.
I totally agree with Nate75Sanders. And to build on that, when creating your marketing plan, think about allocating a portion of that effort into recruiting and building a brand that's attractive to the people you seek.
Zappos has built a great brand that attracts candidates. I've known people who've read Tony Hsieh's book, then wanted to join them.
There are lots of startups that not only have some good buzz in the press, but also have outspoken founders & employees that - whether they've consciously thought about this or not - have crafted a desirable impression of their company. What attracts you doesn't necessary attract someone else, but I've heard colleagues saying they'd love to work for Justin.tv, Hipmunk, AirBnB, Quora, Codecademy, DuckDuckGo, etc.
Some of that is because they personally love & use those products. And some of that is because they love & follow the cofounders.
Share with the world your thoughts, your culture, and how your product is making the world (or at least, your industry) a better place, and you'll have a better shot at attracting great people.
What do you do at your startup... is it similar to any open source tools, or does it rely on a lot of open source tools / libraries? Who commits to that open source project the most? Is their code written well? Send them a message on github/bitbucket/whatever. Github/Meetups/Conferences/Twitter are +1million more useful than recruiters or most job sites.
I was the first developer hired at an early stage startup and I knew no one in the metro area where I eventually ended up working. It's unfair not to give someone a shot to interview based on a perceived notion that the best hires only come from your personal network.
Having a good resume with skills A,B and C: 5-10pts.
Interview confirms that your resume wasn't full of BS: 10-20 pts
You can perform skills A,B,C on a whiteboard or laptop interview session: 20-50 pts
1 year of seeing you exhibiting skills A,B, and C under real world conditions and interacting with other people: 100-300 pts
No matter how unfair this seems, if you have the same skills as someone in my network, they have an almost impossible to overcome advantage in my hiring equations.
I wouldn't say that was unfair. Ability in the right areas, demonstrated first hand, is a perfectly valid filter and the ranking you give it with your scoring system seems fine to me (unless the difference between the low and high ends is dependent on how much you like them!).
Yes you might lose someone who could be a star, but no system is perfect.
Hiring someone just because you know them is simply wrong, but giving them a chance because they've shown you an aptitude relevant to the position should not be seen as unfair IMO.
My business had just tanked, I needed a job and I was 22. I had people skills, good communication and I was pretty damn good at what I did (systems engineering, sysadmin'ing) and aligning that with business needs (that's the important bit people sometimes forget). I went for a role that was senior, even though I had no actual job in the industry previously. I had four years of running my own business, but 2 years of that was in college and well I didn't really think they'd take it seriously. (I know better now)
I managed to convince them to hire me, but for a mediocre salary (for me, I was still earning in some cases twice what my fellow graduate friends were) and spent 14 months trying to get that raised (pointless at the time, but I was naive, needed a job and ultimately I loved the work and the people were cool)
My boss there landed a job with another company running the department and asked me to come on as CTO-of-sorts of the department and I got the money I had wanted, no interview (I met with the CEO) and all the autonomy I had wanted/needed.
I've hired a couple dozen top engineers since then and been part of two acquisitions (as the acquirer) and I can tell you that you don't _really_ know what someone's like until they work. What I'm looking for is character + intelligence. Smart and get things done. Whatever you want to call it. The Get Things Done part is the bit that's so bloody difficult to tell.
I've seen people who I did not expect to be rock stars come in and just kill it. They were never put in a position to succeed before and suddenly they've gotten the ball and they're just running with it. There's one guy in particular I'm thinking of who worked for a BigCo and his technical acumen was good (not brilliant or exceptional, just good). I didn't hire him, but he just got it. He does what it takes to get the job done (and then some) and figures out what he needs along the way. I've had guys with excellent references (some from people I know) come in and do mediocre. I've seen candidates that were brilliant end up being a menace around the office.
Saying that it's unfair that you're not being given a shot is not recognising what is happening at the other side of the table - a complete imprecise science of judging people's ability to be brilliant (or even good) based on interview scenarios. You need to do things to increase your value and remove as much of the unknown quantity as possible (network, volunteering, meetups, hacker weekends, open source code, portfolios - whatever is relevant to you).
As a startup - I would take a KNOWN quantity each and every time. You are unknown in this situation. If you are good, in the future the tables will be turned and you will be known. The difference is you cannot manufacture these situations easily, no more than you can manufacture who you will marry. Espouse your best qualities, do great work (which isn't just limited to the code you write, servers you maintain, designs you produce etc.) and you will be a known quantity to people in the future.
You sound like you're young (at least job experience wise), not that I'm particularly old - business is people. People are business. Reputation is everything in your circles and if you're good, you'll start to build a rep and that will become extremely valuable and open doors for you.
My point was that people need to be given a chance at an entry level brought on a contract to hire but the argument prevalent here is to exclude anyone who you isn't in your network.
They said the best source of people initially were the friends of the founders and the first employees (which is one reason it's helpful to have gone to a good CS school) and that as soon as you've exhausted this source you should start hiring recruiters.