PODCAST
Startup Recruitment Failures
JULY 20, 2022

Episode 4: Sailing Through a Storm

BitDegree recently raised a $1M investment led by Taizo Son, the younger brother of Masayoshi Son of Softbank. Danielius shares stories about the loss of a good CTO candidate, friction when working in an international team, and challenges facing an exodus of 10 people after changing the company’s direction.
Danielius Stasiulis, Co-Founder & CEO @BitDegree

Listen on:

Transcript

INDRE
Hello! Welcome to the podcast of Startup recruitment failures. I'm Indre, Founder, and CEO of jobRely. We are building outbound recruitment SaaS. And today my guest is Danielius Stasiulis, Co-founder and CEO at BitDegree. Hi, Danielius!
DANIELIUS
Hello, pleased to be here.
INDRE
Thank you. First of all, I would like to congratulate BitDegree on the $1000000 investment. The investment is led by Taizo Son - the younger brother of Masayoshi Son of SoftBank, right?
DANIELIUS
Yes, indeed. But he's not only a younger brother, but he became an independently wealthy billionaire from a gaming company that he founded. So those brothers can do a lot.
INDRE
Awesome! Are you planning to expand to Asia?
DANIELIUS
Yes, indeed. With such backing from prominent business figures from Japan and the wider region, it is really logical for us to try to enter those markets. So we are actively investigating what we need to do in order to enter those markets and there are really huge differences sometimes in how the web is working there.
INDRE
That's amazing. I'm very glad to hear about this. And since this is a "Startup Recruitment Failures" podcast, could you share your recruitment failures with us?
DANIELIUS
Sure! I have quite a few. And I'm still learning because I have done a lot of hiring myself. So quite a baggage on my side.
INDRE
Okay, so what would be the most memorable one?
DANIELIUS
I would consider the most painful one. I was recruiting for a senior technical lead and I was actually even on paternity leave when I was doing that or approaching paternity leave. So the time was really pressuring me, it was difficult. And I think I found the candidate and we have agreed with the candidate that he would be employed. He was really happy and essentially I was waiting for him to come and then when the date came closer to him coming to the office already, I started wondering why the contract is not signed yet and I was pushing him and I was getting some weird excuses and eventually agreed to meet with the guy. And the guy did not arrive at the meeting, sent me a message saying that he and his wife decided that we are a bad fit. So this is how I wasted two or three months in recruitment and discarded other potential candidates. So that wasn't pleasant.
INDRE
Well, I can imagine. So you say two-free months, looking back to the whole situation, could you have noticed this earlier and don't waste your time? Could you have done something differently or maybe even hired that person if you would have done something differently?
DANIELIUS
I think I was trying to be lucky and spend less time in the recruitment and I felt that something isn't clear to me with the candidate, I felt it viscerally, but did not spend time to investigate that. Also, I think it is really important to send a contract immediately after you get the verbal approval and that the person is coming.
Actually, that guy left his job. So that's why I was excited that he was coming, but then he did not come to us and he chose a bigger company, more reputable, and ditched the young startup.
INDRE
Okay, that's really sad, sorry to hear that. But I believe this really happens to most small startups. So that the competition is huge in the market.
DANIELIUS
Yeah, indeed. Over the last year that wasn't the only case. I would say maybe even one out of 5 people do not come eventually even if they accepted the offer.
INDRE
Wow, that's a lot. That's a huge percentage. Do you have any situation when you were hired and failed by making this decision?
DANIELIUS
We had a few people with wrong fits for the job. One was in marketing and we had a foreigner and there's always a risk with foreigners because there are cultural differences and we ended up miscommunicating and although in conversations it seemed that we agreed on things and that the person understands. But eventually, he would underdeliver constantly. And we could not understand why and you don't want to let the person go if you don't understand why they're failing, but eventually, we understood that it's just a cultural difference and we had to say 'Goodbye' at the end.
INDRE
But by cultural difference - what do you mean? What was that so different in your communication and making the agreement?
DANIELIUS
Well, even when you mention 'agreement', this could be a different process and outcome in different cultures. In some cultures you cannot lose face, so you always say 'yes'. And in other cultures, they're really direct. For example the Dutch - straight to your face. There are such differences and when you're communicating with people who do not have vetted rich international work experience you're bound to have such situations that may be due to how the person was brought up in general in his society, might affect how he's communicating with you and what is normal and maybe sometimes not saying that you don't understand what you're doing is normal because you can not show your weakness, but that costs a company at the end.
INDRE
But when you noticed that, I believe that you tried to solve the situation somehow. Did you try to do something about it?
DANIELIUS
Indeed. We had a couple of months that we try to rectify the situation, but eventually, it just became an anecdote. That all the office understood what is happening, although we had all the best intentions. But if working with that person becomes an anecdote to everyone, you cannot live with that.
INDRE
Of course, I can imagine that it's sometimes you can not solve and if the person especially is not motivated to do that, you just have to let the person go. When talking about letting people go, do you have some procedures? Do you have experience with that? How do you deal with that? Because this is, well, if you're a small team it's a pretty unfavorable situation to be at.
DANIELIUS
I must confess that we don't even have an HR person and we rather do all the hiring and firing by founders or team leads. We believe that the team leads should be able to find the people that could help them. Of course, there's a huge time cost involved in that. But I believe that in this way we can find faster people that match of a skill set, that the team lead or the founder is searching for. In terms of firing, we have had quite a few unpleasant ones, we had some very pleasant ones. And from pleasant ones, the worst case is when a person doesn't understand what is happening. You're trying to let the person go and they're just shocked. They don't understand how this has happened, why it's happening, and sometimes they were warned that they're underperforming, etc. But they still do not grasp it. My heart is breaking every time. And when we have to do that, because maybe they are good people but in a different context, in a different company. So the firing procedure is usually quick and direct. And based on my experience, it's better to say goodbye faster than later. Because sometimes when you agree that the person will leave in twenty days which is normal now, their motivation goes down a lot and they also impact other employees quite heavily and we've even got ourselves into a similar death spiral in our team quite recently. When a lot of people who do not believe in cryptocurrencies, blockchain, web 3.0 were leaving and every time that a person was leaving, we were throwing out some drinks and 'bye bye' speeches, etc. But it became a ritual almost every Friday. For a while, we were saying those speeches, and people were depressed. A bit. But once all the people who do not believe in that have left. The mood started improving. So my take takeaway from that is that those people who wanted to leave, they knew that we want to leave and we should have spotted that early and maybe have done a mass saying goodbye.
INDRE
So it was like one person said that 'I don't believe in crypto, you're changing this and I'm not feeling I'm a team member anymore' and more people follow that person and only because of crypto or where there are some other matters?
DANIELIUS
Well, in general disagreement with the direction that the company was taking, and in general as a company leader I have to assess what resources we have, what strengths we have, you know? What opportunities are in front of us and make the best decision on where to go. And we made the decision that we are going for crypto education and some people dislike that because they might have something against crypto. And, by the way, it's strange. Blockchain is a technology, crypto is just a market and somehow people can have negative feelings towards technology or a market. So that's the human psyche. So once those people started to disagree with the company's direction, slowly they were raising dissent in the team and then leaving one by one and actually influencing others to make a similar decision. So we had quite a few people leave our team. It's really a shame because they were good people, but fundamentally we could not agree that their dissent against the direction that we had taken and sadly we had to say goodbye.
INDRE
Were those people from the same department or from different departments and different kinds of spheres?
DANIELIUS
Yes, they were working together more or less. So they were closely working together. So the entire team has more or less left. Slowly. Which was painful.
INDRE
Ok, this is interesting. Why so slow? Why not stand up and all together, if you're a team, to say that, well as a team, we're against that, maybe you could impact some, I don't know, to motivate them somehow or at least to say to all of them 'goodbye' at once. Then it's way easier. So it's pretty strange why to wait.
DANIELIUS
I think it's a mistake both on my side and those people's side because neither of us have realized how serious the situation is and then it just spread. It's what ideas do. Once we plan, then this starts growing and spreading, and eventually, it's all covered.
INDRE
I totally agree and I totally agree that if you notice that you're really not a match, so as faster you say goodbye as easier it's for both of you and for other people surrounding you. So it's a pretty terrible situation. So how many people did leave?
DANIELIUS
I think it was close to 10 eventually.
INDRE
And how many people are in total at Bitdegree?
DANIELIUS
So now it's around 40 again.
INDRE
And do you feel, like do you regret this? If you know that this would happen, would you still change the company's direction to crypto education?
DANIELIUS
Yes, I would and I would do it sooner rather than later. And faster. I think in today's startup culture we have a pretty flat company culture and in that company culture, everyone has a say and people wanted more soft things, more clear direction, etc. And as the management, we took initiative to deliver those things to the people. However, it seems to us that this wasn't what they wanted or needed and simply because now, when we see where those people went, they actually went to quite rigid institutions in some cases, where there is no flat company culture. There is a very clear structure of responsibility and KPI's and your voice is not heard often in such organizations. So to me, it's shocking. It seems that we try to please the employees given that we had this flat company culture and they wanted a strong hand instead. And I guess this is also my mistake because an average employee cannot have a saying in the company's direction, they do not have all the details, they do not understand all the pressures and opportunities. So when you open up and give the power to employees, sometimes they do not know what to do with this power, because it's overwhelming to them and they start making wrong decisions. And in this case, we might have had a situation where they have disagreed with companies direction, but it wasn't up to them to decide where the company was going, although we included them in the decision-making process. We even launched additional direction but that didn't help with the dissent in general against the company's direction. So essentially they became powerful as well and if their views on the company's direction clashed, they felt that they need to leave. In a traditional company where there's tough control from the top, there wouldn't be such a discussion at all. They would accept it may be easier. So flat culture - not for all the companies. That's my conclusion. I guess you can have a flat culture with people that you work with for quite a few years together and they are senior, you understand each other. But with others, I would say, you have to earn your right to have a say, and giving a say to everyone is a bad idea from my experience.
INDRE
Are you changing your company's culture now?
DANIELIUS
I think it has naturally changed. But not in a way that now we are more strict. It's still a flat culture but we have a very clear direction and we are actually hiring people based on that direction. So if you're against web 3.0, blockchain, crypto, you cannot work in our company. You have to be at least interested in it. And at best excited and really a power user of it, because then everything that we do actually helps you learn and you're excited on your journey. Both, as a professional in mastering your skills and also exploring the field that we are in. So I think that has changed, but also we are increasing the control, I would say, and we are trying to increase the management level.
INDRE
Okay, but did that team that left eventually against in the very beginning and were saying that they are against crypto and you just didn't listen to them and still move in that direction and they left. Or they didn't know about it? Because you said that they had a saying, but it seems that they said that you just didn't listen, right?
DANIELIUS
It was both. They said some things and didn't say other things and then they discussed something between themselves as well. So that is the worst situation and a few of those people were quite senior in our company. They spent a lot of time and they have earned the right to have a say and they really have listened to them and tried to accommodate their vision of what the company should do and foster their ideas. However, this total refutal of the direction and going towards crypto was not the thing that you wanted to hear from them and we could not live with that.
INDRE
Yeah, cause I'm just thinking because it's you know 10 people leave because they are against crypto. This is pretty strange. There should be something else. Maybe some of them felt not listened and actually they never needed that, but as they saw that they were not being listened to, they just felt somehow differently and of course, it was not the way they wanted it to be. But again, I'm just wondering whether it was the only crypto matter?
DANIELIUS
I think not. There were quite a few other things. First of all, we are just out from 2 years of lockdowns during Covid. Covid really affected people and many of those people were working before in the company and then you lost touch with your colleagues, you're alone in your apartment, it's dark and rainy and snowy and I think that affected that mental well-being as well. People also took less vacation. That's another factor. And then the war started. And I think I saw some unprecedented things that people are doing with their careers, choosing to discontinue their career, resigning from a career. There was a case with one programmer who decided that he doesn't want to be a programmer anymore. There was a person who decided that he wants to be a programmer as well. Radical changes, people are doing radical changes and I'm talking over the span of the last eight months this change has happened. So it wasn't in one month or quickly but it was happening gradually. I think people got tired, we didn't have as much time together in the office. I think that has really influenced a lot.
INDRE
I noticed that too and but for me, it's still very interesting because of one thing - Covid, yes, of course. Maybe you got bored and you think that you have to make radical changes to get interested again. But when you think about the war situation, then I assume that people will be willing to stay at their current jobs because everyone is so afraid about everything - about the war, about the economic situation, and so on. And they still don't bother to leave their job. The revenues they used to get, to gain all the time and it's a safe way to stay. So for me, it's very interesting. Why do you think this is happening, like, it's so unsafe and you choose to be in an even more difficult situation without any job?
DANIELIUS
I think people were pushed towards fatalism. they're going into the fire and they don't care anymore. Because over the last couple of years we had so many scarce - Covid, etc. It has not only desensitized people, it has really moved them out of their control zones, and now they don't care anymore. And if you look at the job leave rates in the US as well, there's this thing that we call the great resignation. People just leave and we are also standing on some good 13 years of growth. So people have built up fortunes, even small ones. And maybe they feel comfortable and also there are still plenty of good job opportunities. There's a lack of talent in the market. So maybe they feel more comfortable. But in general, I think, this is like a sign of greater resignation. People want to change their life. They want to look for the meaning and the safety and does not matter for them anymore because they're feeling completely unsafe due to Covid and other things.
INDRE
But don't you think this is only an illusion to look for a better meaning? It's just like, I think it's a more like psychological state of mind instead of actually looking for better opportunities somewhere outside and so radically changing your job. It's not real, right?
DANIELIUS
I agree with you. I think that is a mental well-being problem and these decisions are irrational at other times.
INDRE
So what to do? How to deal with your current employees? And for other startup founders who still have some people and you see that the well-being is really decreasing and people started getting, more and more people having some psychological problems. What to do?
DANIELIUS
Well, there are two ways of solving that problem - one is to desensitize yourself from that in your organization and be more strict and, I would call it, going more professional. And if you do not meet the professional standards that our organization operates with, that's it. It's done. No hard feelings. We just can't work anymore together. And secondly - it's of course to go all in and to embrace those people and help them to find meaning in their jobs, but that's much more difficult.
INDRE
And maybe even impossible because you can not change people's minds, right? You can maybe somehow motivate them to invest a lot of time and energy and they still behave as they decide to behave and don't even think about you because you're only the employer.
DANIELIUS
Indeed. And we do not have that many senior people to do that kind of coaching for all the people. So we naturally must recognize that we can only do this for certain people. And not everyone can be saved. Actually, I remember from ten years ago, because I was working in management consulting and I think it was from Mckinsey, that only one out of 4 of such cases can be saved based on their data. You must accept that you won't save many.
INDRE
So what is that key takeaway? How to accept all these unfavorable, let's say, situations? You're hiring and you didn't manage to hire because the person at the very end changed their mind. Then people are starting to behave very strangely and you can not influence them at all. So how do you stay strong and still be optimistic? How to continue?
DANIELIUS
I can't say that it's easy on the management. And now I understand why it's hard to be a founder. Because I previously worked with excellent people on projects but I didn't have the ultimate responsibility to do anything. Now I understand that for example, if I do not step up and do something - it's done. The company - it's done. I have no other option myself which also creates pressure on me. And my mental well-being. But for me, it is important to achieve what I have set out to achieve. I want to see Bitdegree succeed. I want to see Learnoverse succeed. And that is my core driver. And then I have to do whatever I have to do in order to make this happen and even if more people leave I will just come back and try to fix it. Of course, I'd like to have a bigger team, a bigger management team to help me cope with that. But here's the constraints - the budgets that you have. You can not afford the luxury. So I think it's up to the founders to be founders in the difficult times that we are facing right now and if you are not committed to do what they say, you have to do as a founder - work 24/7, commit everything. Then likely discontinue that stuff early because it really will challenge you a lot. And on my side, I'm also an ultra runner in my recent test. So I think the same mindset applies. It really matters to see the end goal and then know that you're progressing towards it. But it won't be easy, you just have to accept that.
INDRE
I actually love hearing that because, of course, it's a hard truth but this is the only truth. To be a founder, it's a hard path and if you're keen on achieving something, so you have to don't care about most of the things and don't take it personally. And just don't forget your aim and continue achieving it. And that's it. There are no other ways basically. So thank you so much Danielius for your time and for sharing your stories and insights. And thank you to all the listeners. For more podcasts please visit http://jobrely.com.
DANIELIUS
Thank you.

Have a Story?

All Episodes