In start-up country and especially in tech, there is a phenomenon that takes place when you look to grow your company from 15-30 employees to 50 plus employees. Everyday processes get increasingly decentralized, and for the first time in company history, words like “scale”, “ramp” and “automation” start to creep into hallway banter. The shift from what I call arm's length hires (read: friends and family) to employees’ broader networks is inevitable, and it’s at that time that leadership shifts its focus to their highest cost line – its people.
So what exactly is leadership trying to understand? For starters, they take a deep dive into their existing organizational chart to determine which roles require outside experience and expertise, and which roles are better suited for development in-house. They weigh trade-offs like the cost of building a department with fewer, experienced and more expensive resources versus a department with an experienced manager and a bullpen full of greener college graduates. And eventually, they marry all of that with market realities: What talent is most readily available locally? What impact does the cost of recruiting have on their scale-out plan? Can the business support a remote workforce? You get the idea. The list goes and on and on, and the need for understanding is critical for a business at this stage, because again, it is the people that command the highest cost line on the income statement.
If your company is anything like ours, then success is a recipe that calls for a little luck. Not to mention, being at the right place at the right time can provide that much needed momentum boost when the blows of the entrepreneurial grind seem unending. Here in Indianapolis, we are very fortunate to be a part of a community that understands the role that extended government can have in economic development, and the impact it can have on our bottom line. Longer term, tax credits and other incentives are an important piece of the growth puzzle--but for a high growth technology company like ours, a talented workforce is what we need to assemble and maintain if we ever want to witness those benefits. As we all know, though, that’s easier said than done. That’s why we lean on organizations like TechPoint for help.
TechPoint is a government-funded operation tasked with the promotion and acceleration of the growth of Indiana’s tech community. One of the many ways in which they accomplish this is via their Xtern program. Founded in 2014, the Xtern program has far exceeded any of our wildest expectations of what it could become.
So what makes it so special? Well, consider the cost of recruiting less-experienced and more-affordable talent, and the risks will almost never outweigh the rewards for a business looking to go from 4 employees to 15, 25 employees to 50, or 50 employees to 150. Just look at one cost element – time – and you can stop there. Who will source the candidates at job fairs? Who will screen them? Who will interview? Who will train the new hires? What is the success rate of this more organic recruiting method? How much time is needed from your most productive and expensive resources to ensure the new hire can be successful? How can our small scrappy tech startup EVER compete with the likes of Google, Facebook and Amazon? The answer: create economies of scale.
The TechPoint Xtern program has done just that. In 2014, with 23 employees, SmarterHQ hosted our first 3 Xterns for the summer, two of which were later hired on as part-time employees while still in school. And eventually, we brought one of them on as a full-time employee in our data science department.
Then in 2015, 2016 and 2017, the number grew to 4, then 5 and 5, respectively. Why? The conversion rate of an Xtern to full-time hire was and still is alarmingly high for SmarterHQ. Outside of first party referrals, when an employee refers an all-star employee he or she has worked with in the past, the Xtern program is by far the most efficient and productive use of time and capital when assessing how to scale out the organization. For three years and counting, SmarterHQ has successfully hired a full-time Xtern from each of our summer classes and their impact is immediately felt.
Through the creation of economies, the creation of an experience and the creation of a true talent ecosystem, TechPoint has provided the shot in the arm that all tech startups need at this very critical scale up stage, and they are one of the reasons that SmarterHQ is proud to be headquartered in the Hoosier state.