On today’s episode of the RecruitingDaily Podcast, William Tincup talks to Dan from Filtered about the relationship between tech talent and the economy.
Some Conversation Highlights:
Listening time: 29 minutes
Enjoy the podcast?
Thanks for tuning in to this episode of The RecruitingDaily Podcast with William Tincup. Be sure to subscribe through your favorite platform.
This is RecruitingDaily’s Recruiting Live Podcast where we look at the strategies behind the world’s best talent acquisition teams. We talk recruiting, sourcing, and talent acquisition. Each week, we take one overcomplicated topic and break it down so that your three-year old can understand it. Make sense? Are you ready to take your game to the next level? You’re at the right spot. You are now entering the mind of a hustler. Here’s your host, William Tincup.
William Tincup (00:34):
This is William Tincup, and you are listening to the RecruitingDaily Podcast. Today we have Dan on from Filtered, and our topic is the relationship between the tech talent and the economy. Can’t wait to talk with Dan. A couple weeks ago we recorded a use case podcast with him, so this is going to be a lot of fun. So Dan, welcome to this show and let’s go ahead and do introductions again. Introduce yourself and Filtered for us.
Dan Finnegan (01:00):
Yeah, my name’s Dan Finnegan. I’m the CEO of Filtered and we’re a skills-based hiring platform having pioneered coding simulations so that candidates can demonstrate their ability to code as opposed to describe it in an interview. And we’ve since expanded into cloud simulations and all kinds of DevOps and data science engineering as well.
William Tincup (01:29):
I love what you do, you know that, because it kind of, not kind of, it cuts through all of the bias and all of the fraud and all of that stuff because it’s like, “Hey, listen,” and I think it’s actually more interesting for tech talent because they get to, again, they get to see where they’re at. They might think they’re at a certain level with Java or Python or whatever the bit they’re doing, but to actually go through a simulation and go, “Okay, all right.” I love it. I absolutely love what you’re doing. I think it’s a wonderful way to engage tech talent instead of taking a test. “Here, take this quiz.” I was like-
Dan Finnegan (02:07):
Not really. If life was a series of quizzes, but thank you very much.
William Tincup (02:15):
Well, there’s a Buzzfeed quiz like what type of pizza are you? And that might be interesting, but for tech talent, it just doesn’t, I understand why it’s needed because people… You’ve hired a ton of tech talent, so have I, you don’t understand really the breadth and depth of a skill. It’s hard to get to the texture of a skill that someone has when they’re on a flat thing like LinkedIn or a resume when it just says, again, Java development. It’s like, well, what does that mean? Does that eight years you were in Java and that’s all you did? So I-
Dan Finnegan (02:48):
William Tincup (02:48):
Dan Finnegan (02:49):
I used to be a newspaper reporter, those printed things that-
William Tincup (02:58):
I’ve seen them in the museums. Yeah. Yeah. I got it. Yeah.
Dan Finnegan (03:00):
When I interviewed for that job, I didn’t put on my resume that I understood English.
William Tincup (03:10):
Funny story, last weekend I was going over to my mom’s, she was giving some us depression glass and so I needed to buy a newspaper. I had to go to six different locations to find someone selling a newspaper. I mean literally, I’m literally going from 7-Eleven to 7-Eleven going, “Please, somebody sell a newspaper. I need something to wrap this stuff in.”
Dan Finnegan (03:34):
Did the people behind the counter know what-
William Tincup (03:39):
A couple of them did kind of look at me sideways. I did get that kind of a, “Huh? What? No, dude, seriously? The internet?” No, I’m not. I just-
Dan Finnegan (03:47):
Oh, you’re going to make me cry.
William Tincup (03:49):
I just need to wrap this glass. That’s all I need to do. So let’s talk about, because you and I are about same age, we’ve been through kind of the ups and downs and we’ve seen things happen with the economy, both good and bad. Let’s talk about the relationship, what you see with either what we perceive, because I think we talk ourselves into recessions. I’ve always been one of these guys that just, I know there’s a correction, I mean at least historically financially over every eight to 10 years or some type of correction, I get it. But most of that time I think that we talk ourselves into it. We talk ourselves in like, “Oh, it seems like it’s going to be a recession.” And all of a sudden people stop spending and then it’s like, “Well, we’re in a recession.” It’s like, well, yeah, if you tell everybody you’re in a recession, turns out everyone stops spending money. But anyhow, what are you seeing right now with tech talent in particular and in the economy that we’re dealing with right now?
Dan Finnegan (04:51):
Well, first of all, I agree with you. We do talk ourselves into recession. I would argue we budget and plan ourselves into recession. And I think as we speak, the time spent in between Thanksgiving and Christmas is when most of that recession planning takes place. And so I would say what I’m observing now is in a weird way, kind of two recessions in one. As you said, you and I remember the last four, four or so.
William Tincup (05:32):
Yeah. Oh yeah.
Dan Finnegan (05:33):
This one feels like two. One, it’s a bubble burst in tech and what happened, as has happened in the past with technology and new technology and in the 2000s with real estate financing, is that assets can become overvalued. Speculation kicks in and at some point you know that the speculation is going to stop, you don’t know who’s going to be the last person standing when the music stops playing. And it’s hard to predict.
I think overvaluations of technology companies, that was really triggered by the pandemic. The pandemic led to a rapid increase in work from home and reliance on cloud-based tools. And everyone said, “Oh my God, Zoom is the future.” And tech stocks just went up and you knew it was effortless for startups to raise money, all they had to do was raise their hand and they got three term sheets. One recession that we clearly are now in, I think also except the bubble burst, maybe crypto is a cause of it, who knows? So therefore, we’re seeing a lot of tech companies who had super high valuations and therefore had access to capital and therefore could burn a lot of money suddenly realize, “My valuation is now one-tenth that, I can’t get easy access to capital, therefore I can’t burn a lot of money, therefore I’m going to start laying people off.”
But then you have a different thing going on and it feels more like a traditional economic cycle recession that was maybe also triggered by the pandemic, but triggered by inflation. And the pandemic led to disruptions and supply chains and-
William Tincup (07:37):
Right. Russia and Ukraine.
Dan Finnegan (07:39):
Russia’s invasion of Ukraine led to the increase in energy prices, which also led to inflation. And then to curtail that, the Fed starts raising interest rates, which by definition is a man-made creative recession. So in a weird way, I think that we’re seeing in non… Well actually, I’m going to take this back. I was about to say non-tech companies. So my view is every company in every industry is now a technology company and [inaudible 00:08:12]. But I guess what I would say is when I mean venture funded tech companies, they’re kind of the suppliers of the technology that traditional industry is using to transform themselves to the cloud digitally.
And I think what I’m observing in larger companies, you can call it the airline industry or manufacturing or agriculture. There, they are right now working on their budgets for next year saying, “Gee, I don’t really see a decline yet, but clearly one’s coming, therefore we should really cut back our budgets by 5% or 10%. But we still got to hire those engineers because we’re transforming our company to be competitive in a global world.”
So therefore, I actually think that just like, I think you’ll remember this, in 2008 when the real estate bubble burst and there was a flight from early stage, money-losing tech companies to more safe, larger companies, a kind of flight to safety. So I think we’re going to observe in 2023 larger, more traditional companies who are still trying to invest in digital transformation hiring engineers, data scientists, digital marketing people, people they couldn’t hire five months ago who wouldn’t pay any attention to them. They’re now going to be able to upskill on the digital side, on the engineering side while they at the same time probably tighten their belt on their more traditional staff in GNA or sales and marketing.
William Tincup (10:13):
So a couple things, what I observed through COVID was it’s an arms race or it feels like an arms race with tech talent. It’s like, okay, Facebook’s hiring a thousand engineers, well Google’s going to go out and try and hire 2,000 engineers, and it just kind of feels like they’re hoarding talent. I mean they’re obviously putting them to use and doing things, I get it, but it’s also scarcity. There’s not enough talent out there to fulfill the needs that we have today, much less tomorrow. So people are just on a hiring spree. So I kind of felt like that was going on because I did an entire event, two events on hiring tech talent, sourcing tech talent, and they were super well attended because people were just having so much difficulty finding the talent, much less recruiting them and going on from there.
But I agree with you on the VCs that I’m so jaded and I think that Wall Street, PEs, VCs, put all of them in a similar category, that they look forward to basically realigning these valuations. They get caught, everyone gets caught up, like they did, they get caught up and all of a sudden they look down, they’re like, “Hey, we’re putting in $7 million on a $30 million pre-revenue valuation.” It’s like, “This is insane. This company might not be here.” And they do it anyway because they want to be in. And now this is a time, now you can retrench as a VC or a PE, you can kind of move backwards and really punish those valuations.
So absolutely, I see that. We saw that in the dotcom, we’ve seen that several times and it’s going to make those companies, especially if they were really overvalued, it’s going to make their next raise really, really difficult. And the valuation is not, it’s not going to get back up to 10x or 12x or 20x overnight. They’re going to have to actually create a lot of value. So that’s going to be really interesting.
But I wanted to get your take on these traditional companies, which I love this kind of return to safety idea. How is remote? Because a lot of those firms you see in the news, a lot of those firms are kind of work in the office four or five days a week-type offices. Now, that might just be for other people, not engineering talent, so we’ll see, but I wanted to get your take on if remote is going to play a factor in that.
Dan Finnegan (12:52):
That’s funny. Yesterday I had two meetings with two Fortune 500, two different Fortune 500 companies who are involved in the hiring of tech talent. And both meetings, the people were remote, they were not in the office.
William Tincup (13:16):
Dan Finnegan (13:18):
I think that the pandemic’s accelerated what was going to happen slowly over time. But for engineering talent especially, but I would argue for most digital professionals who spend all their time in the cloud, through their laptops, and for almost two years in the pandemic at home, I do not see people getting up early, showering, jumping in the car, driving an hour, 45 minutes into the office. I think that will become the exception. I do think there will be flexible schedules where you come into the office sometimes. So next week I’m flying to Boston to meet with the Filtered team in an office that we have a lease on, but we’re going to get rid of that office because we don’t need it.
And I think large companies are holding on to commercial real estate that they’re never going to fill. I can’t exaggerate enough, if you drive up and down the 101, you can see building after building after building after building, now again, obviously in the Bay Area here, it’s tech companies. I mean huge building after building built in the last five years by Facebook, by Google, they’re never going to be filled with tech workers. And I think in Cincinnati and Chicago and in Indianapolis, they too have, at least with regard to their digital professionals and their engineering and their tech team, they’ve been allowing them to work from home, requiring them to work from home for a year.
And so I don’t see us going back to that and I think these larger companies who are profitable, who are easily going to survive this recession, they just have to tighten their belts a little bit, again between November and Christmas while they come up with their budgets for next year, I think they’re going to use this opportunity to upskill their engineering talent and recruit candidates away from tech companies that now feel very scary. Because by the way, I think a lot of the tech companies who are overvalued or were overvalued and now sitting on a dysfunctional cap table, they’re going to make their companies cut back dramatically before they accept new rounds of funding at a very low value.
William Tincup (16:16):
They have to, yeah.
Dan Finnegan (16:16):
Existing investors really resist down rounds as much as possible. And so they’re going to cut back. And I think the engineers that they were bidding on and competing with over the last three years or so are going to say, “Wow, okay, I did a startup. I’m now more attracted to larger companies who like entrepreneurial, advanced, smart, quick, move-fast engineers. I’m going to go work for some of those companies.” And these companies told me, both of them yesterday told me, “We feel like this is an opportunity. We’re already seeing applications grow from engineering talent and we see it as an opportunity to upskill our engineering talent.” And I do not hear from them, “But we’re going to move them to Cincinnati. We’re going to make them come to Cincinnati.” I think they still realize that’s not possible.
William Tincup (17:14):
And so a couple questions. A hundred years ago, a friend of mine that was in the Bay Area told me, “Listen, you can tell the economy of really the country, but the Bay Area by traffic. If you fly in and it’s easy for me to get to the airport into downtown, it’s super easy, it’s not a great economy. And vice versa.” And I’m like, “No man, that’s not true.” And over the years it’s like, yeah, it is kind of true. It’s weird.
I love the reskilling and upskilling. I love that because this is okay, you have six weeks, basically you were going so fast before you didn’t have enough time to actually teach and train and move people into different projects or things like that. So I think Michael Dell refers it to changing the tire as the car is running or moving, and so I think a lot of firms felt that with tech talent in particular. And so now it’s a great opportunity, wonderful opportunity if you think of it like that, now they can actually do that and it can be a retention tool to then take that talent and then say, “Okay, what else do you want to learn? We have a moment to breathe. What can you learn? What would you like to learn?” And that can actually be great in reinvigorating for tech talent.
Dan Finnegan (18:40):
That’s right. And I think large companies offer more diverse career paths for high-end engineering and technology talent. That’s one of the benefits of moving away from a small startup to a larger company. I think there’s also something else going on, by the way, I meant to mention, and that is because of what’s happened with China and with Russia and the like, I do believe that large companies who’ve been kind of unable to attract at scale engineers here in the United States who therefore have fueled the big outsourcing of jobs or offshoring of jobs in India and around the world, and most recently even in Argentina, Brazil, Mexico. I sense that there’s a desire to try to move some of that work back
And so that they alleviate the risks of globalization, this whole supply chain risk. And I do think that therefore the competition for engineering talent in the United States is going to remain quite high. I’m hearing from folks that the volume of hiring in places like India, especially in the contingent labor space, has slowed down really quickly. And that’s not surprising because you offshore on the margins of your hiring. So I do think that large companies therefore are really going to have to work hard to recruit and retain high-end engineering talent. Because the reality is, as you and I have observed, the VC world’s going to get its act together, valuations are going to drop, and then new startup opportunities are going to emerge again and they’re going to turn around and try to attract all the best data scientists.
William Tincup (20:48):
Oh, 100%. 100%.
Dan Finnegan (20:50):
So I think that one of the things that large companies have to differentiate from startups, and while you may not be working on the cutting edge of technology here at our company, not only do you have maybe better benefits and a little bit of a safer career path, but to the point you just made, we can offer you a broader array of skill acquisition, experiences. It’s like the benefits of going to a large university versus a tiny liberal arts school. You might want to change your major once you get there, and I do think that, especially young people today say the pandemic hurt their ability to learn from mentors. And I think that’s what they’re going to be looking for.
William Tincup (21:41):
Yeah. I don’t know if you feel this way, but it feels like what people describe being in the eye of a hurricane where it’s calm, but you know it’s not going to be calm for long. I don’t know how long it, but you know you’re going to get caught up again and it’s going to be-
Dan Finnegan (21:59):
We’re in it right now, I think, because everyone’s quietly planning their job cuts.
William Tincup (22:05):
So what do you think comebacks first in terms of tech talent? Do you think it’s front end, back end? Do you think it’s more strategic tech talent or developers? Do you have a finger on an idea of what do you think comes back quicker than some of the other things?
Dan Finnegan (22:26):
Wow, what a great question. I haven’t thought about that. I mean for example, data scientists, I don’t even, when I say data scientists, I also include that software programmers in AI and machine learning. I actually don’t see that slowing down.
William Tincup (22:47):
Dan Finnegan (22:48):
I don’t see any of that slowing down. But when you mentioned front end, back end. Look, I think young people who learn new technologies are always in demand. And older people who’ve seen the movie before are always in demand. So I’m talking out loud here given I think this was such a great question, so when an economy starts coming back, yeah, I think that usually it comes back because they’ve decided things are better now, we’ve bottomed out, I want to hire both younger folks who can learn on the job in expanding our existing operations, and more experienced folks who can build a new team to go into new areas. So-
William Tincup (23:50):
Yeah. I get that sense as well. That, and some of the digital transformation projects that were already in the works, those folks, [inaudible 00:24:00] like data analysts like you were talking about, I think those folks are going to be in demand because those projects, those are multi-year projects for a lot of folks, but for large companies, they’re going to need that talent. And so if that talent is more available now, they’re going to be more on a hiring spree and an acquisition spree than not.
Dan Finnegan (24:19):
That’s right. When I was at Knight Ridder in 1999, 2000, 2001, Knight Ridder, for those who don’t know, was the second largest newspaper company in the world. And I ran all the internet operations. And as you recall, in ’99, the bubble burst, tech companies had been overinflated, venture-funded ones. And so we had major, major capital investment projects throughout the organization on the digital side, as well as on the newspaper side modernizing the print facilities, as well as if you remember Y2K.
William Tincup (24:58):
Oh, yeah. Oh yeah.
Dan Finnegan (25:01):
And so we definitely used the downturn in the budgeting process, again taking place right now, we were cutting back on marketing and sales and reporters and the ongoing business, but in that same budget process, we were doubling down on, let’s accelerate our capital investment projects and get them done faster and upskill the talent. And that’s what I think is going on right now.
William Tincup (25:29):
So what do you think, last question, what do you think tech recruiters and sourcers should be doing in this moment? Again, if we’ve kind of described it as the eye of the hurricane, et cetera, and it’s calm and like, okay, they’re not carrying 40 recs, that’s fantastic, what should they be doing during this calmness?
Dan Finnegan (25:48):
My biggest lesson on what happens in the world for recruiters in a recession was in 2008, Jobvite was a tiny startup, we only had 20 customers. Lehman Brothers melted down almost immediately, started laying off hundreds of thousands of people, it got up to over a million a month in the United States. And so I called all 20 customers. I was worried, having been through a recession at Career Builder and HotJobs that we’re going to see our little tiny amount of revenue at the time fall away. And I had a phone call with a customer, TiVo, and the Head of Recruiting said, “Oh my God, no, I need Jobvite more than ever. We laid off our recruiting team. We went from 12 people to one and it’s just me and one other person. So now I need the hiring managers to do their job using Jobvite.”
William Tincup (26:51):
Dan Finnegan (26:52):
And I realized, oh my God, okay, so maybe this isn’t like sourcing and advertising, but he said, “We’re going to replace the engineers who leave. We just don’t have the team now to hire them.” And so what I think, if I was a recruiter, especially in a large company, I mean in a venture-funded tech company, they’ve already been fired. In a large company where maybe they have fewer recs, it is without a doubt the time to, I think, do two things.
One, start an initiative of what is the opportunity to improve and upskill the existing talent in the company? And can we attract talented people that we were never able to get to pay any attention to us who have been at venture-funded tech companies to consider our roles and jobs. That’s project number one. And project number two is, is there a way we can automate the recruiting process so that we can do that work with fewer people? And the only way to do that is through technology tools, through a more streamlined process, and involving hiring managers more. And that’s what my recommendation to the recruiting function is, to know what are the jobs that are important that are driving the CEO and the C-suite’s digital transformation goals and objectives post recession, figure out a plan to upskill the talent there and figure out a way to streamline and automate the process.
William Tincup (28:42):
Yeah, it’s a wonderful time to kind of reinvent your entire hiring process. Go back and look at all the tools that you use. Go back and look at the processes, even the way that the team collaborates and go, “Okay, if we weren’t doing it this way, how would we do it?”
Dan Finnegan (28:59):
Yeah, exactly. Exactly.
William Tincup (29:00):
Well, Dan, this has been fantastic. Thank you so much for your time and your energy and your wisdom.
Dan Finnegan (29:06):
Oh, it’s been a whole lot of fun. I always love talking to you and thank you for inviting me.
William Tincup (29:11):
Absolutely. And thanks for everyone listening to the RecruitingDaily Podcast. Until next time.
You’ve been listening to The Recruiting Live podcast by RecruitingDaily. Check out the latest industry podcast, webinars, articles, and news at Recruit…
William is the President & Editor-at-Large of RecruitingDaily. At the intersection of HR and technology, he’s a writer, speaker, advisor, consultant, investor, storyteller & teacher. He's been writing about HR and Recruiting related issues for longer than he cares to disclose. William serves on the Board of Advisors / Board of Directors for 20+ HR technology startups. William is a graduate of the University of Alabama at Birmingham with a BA in Art History. He also earned an MA in American Indian Studies from the University of Arizona and an MBA from Case Western Reserve University.