PODCAST
Startup Recruitment Failures
AUGUST 3, 2022

Episode 6: When Hiring Juniors Just Doesn't Cut It

When you are a young bootstrapped startup, you cannot afford a C-level manager for sales. So you hire juniors and expect them to grow. CoinGate Co-Founder Dmitrijus reflects on how this strategy backfired and shares valuable insights from this experience.
Dmitrijus Borisenka, Co-Founder @CoinGate

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Transcript

INDRE
Hello! Welcome to the podcast Startup Recruitment Failures. I'm Indre, Founder, and CEO of jobRely. We're building outbound recruitment SaaS and automating Linkedin. Today my guest is Dmitrijus Borisenka from CoinGate. Dmitrijus, could you please introduce yourself and your startup?
DMITRIJUS
Hello Indre. Hello listeners. My name is Dmitrijus Borisenka; I'm the Co-Founder of CoinGate.com. This is a website that I've been building for the past eight years, and this is a fintech company. We focus on allowing businesses to accept cryptocurrencies as a means of payment. So basically, a Paypal for crypto.
INDRE
How is it going nowadays? We all hear many rumors about the crypto industry.
DMITRIJUS
Well, honestly, I can start from the first insight when it comes to cryptocurrencies that it's our second bear market that we live in for our company. We started the company in 2014. What we see, the difference right now and 4 years ago, is that customers today, even though the prices crashed dramatically, they're still making payments online. So our quantity didn't fell. The average cards fell for our merchants for our businesses. But at the end of the day, we're still processing the same amount of customer orders, and even increasing. We are not trading. We are mostly focusing on building infrastructure because we believe in a cross-border payment nature for crypto, and we follow that. So independently of whether prices go up or down, we see that the market players are seeing the value behind accepting cryptocurrency payments. It's a roller coaster for price. But for payments, we're still on the right path.
INDRE
Glad to hear. Dmitrijus, could you please share your lessons you learned when it comes to recruitment.
DMITRIJUS
Well, yeah, this is a very interesting topic, and I think that all startup founders should follow this podcast. There are very valuable lessons here to be learned. When it comes to my own experience, obviously, I'm building this company for 8 years, and maybe my lesson and my story is that we went into the transition period. We were a startup in the very beginning, which was basically like a garage idea. You know, we came up with a few friends, and we decided to build a future for cryptocurrencies, for allowing businesses to accept crypto. It was a lean approach, right? So we were 3 co-founders, and we were building our product while we were doing a daytime job at that time. But when we started to grow and expand, obviously we started to hire people, and at first, it was like a family approach. I think that most of the startup founders will be relevant with blitzscaling vocabulary. In the first line, there is a so-called family-size company. When you are in family size, you see people every day; you interact with them every day. Then you are as a fist. You're able to build a product very fast. You're able to challenge ideas and challenging problems. I love this moment when you're building something new, and everyone is enthusiastic about it. But when you move from family to tribe, and it's still quite easy for co-founders to manage, you're around 15 to 20 people. You already expanded into a few cabinets, like two free cabinets. This is a time, pre-Covid time. We were not restricted by any restrictions. Everyone was focused on building the product. You hired all the people, and you were responsible for them, and they were responsible to drive results. So at that point, it was still an easy approach. So we were building a product very fast, and we were trying to scale into other departments: how to do customer support, how to do compliance, sales, and marketing. Sometimes this worked, sometimes this doesn't work. But every time you were interacting with people, you were also learning with them. But at some point, when the company started to grow, kind of exponentially, in my point of view, you start to lose that. You start to lose the connection with the people, and then it's either the culture that holds everything together, or it's the leaders that you grow together with the company. I think there is a mistake or a lesson, let's say, and there is an award-winning that we did in this journey all together. Because while we were still in the family and tribe, and In the family and tribe stage, we were able to grow a few leaders who came here as junior developers for business or for a product; still to this day, they work for 5 or 4 years in the company. They managed to get to the medium level or to senior level management, and they are able to delegate all the work and all the importance of mentorship, allowing junior colleagues to grow. This is important because if you are still trying to do everything on your own, most likely, you would lose focus because you didn't do the entire job; you didn't go for the entire journey. You helped the people to grow, and then those people also have the knowledge on what they can expect and what they can demand from their junior colleagues. So this is the good part, and the bad part is that, unfortunately, historically, things happened: Covid brought us isolation, and then war brought us fear, and then everything is mixed up, and, unfortunately, culture suffered a little bit as well. The sentiment for the market, for crypto, also fell off a bit at some point. For us, the culture part is something that is an ongoing process. You cannot build it and say that it's all fixed, and it's all done. It's an ongoing process, and you always need to improve, and you always need to include yourself as a founder in that area. What I mean by culture is raising young leaders and giving them proper feedback. If they are delivering well, give them a raise, give them a more difficult task. If they are failing, you need to tell them that as well. But when the company comes to size as we are right now, 40-50 people, it's important to do not only things that are pleasant to you but also to do things that are important. So feedback is valuable. Sometimes people maybe they are a little bit afraid of what you're going to say. But if you are transparent and if you are just stating things that are obvious, I think at the end of the day, it will provide value for the person to grow as a professional and as well to tighten up the entire company. So you build a culture of ownership and deliverability rather than just, hey, let's grow, let's scale. But at the end of the day, if your product is stagging, and if your sales are stagging, that will backfire pretty soon. So yeah, this is our lesson: culture and also, in the scale, don't forget to give good proper feedback to your colleagues.
INDRE
How did you notice that there are some like bad consequences happening from Covid and all the war situation? What was the moment that you realized that your company's culture is not as strong and people are not feeling as good as they used to before?
DMITRIJUS
Basically, the communication. Obviously, when you are in a family stage when you have up to 20 people, and you don't have Covid outside, and people are in the office, they interact with each other and start to solve questions faster. Because they are always interacting with each other. When Covid hit and when the isolation also allowed - not allowed, but work from home became a normal aspect of life. You are, as a company, always building a product and always delivering that product for your customers because they are relying on you. Communication becomes vital, and this is what we noticed from our experience. Communication got stagnated, and then some parts of the company couldn't take ownership. Therefore, if you start to work from home or if you have a hybrid approach, then you need to have procedures in place, and then you need to gets people to talk to each other. Sometimes some alignment, methodology works. We started to implement OKRs, so-called objectives, and key results, and this helped us to understand what is important and what departments need to speak between each other. But also, as a Co-Founder, you also see that there is a big gap between a product team and, for example, a marketing or compliance team. Because they have their own agenda. Times change, and we need to adapt. The co-founder's role is just to understand where the wind is blowing so that you can take the sail out and sail in that direction together.
INDRE
You have increased your team during Covid significantly. So I assume you hired quite a lot of people during this time.
DMITRIJUS
Yeah, that's true. If you remember, in 2021, we had a price increase for cryptocurrencies, and then those NFTs started to pop up.  It was a good moment for us to also have our services offered for our customers. So we onboarded a pretty big number of prominent names. We had to maintain the infrastructure, and we had to also increase our team.
INDRE
Did you notice and do you see the difference between Covid times and before in terms of recruiting people? How different was it in terms of results? Were they successful?
DMITRIJUS
I don't think that this can be related to Covid alone. I think what Covid did is that because of it, tons of money were injected into the economy. Many VCs and many funds, and many people started to invest in startups. Those startups raised money, and then they had a necessity to spend that money on their product, and for a product, you need people, so you would build that, and you need sales and marketing. I think the dark side of Covid was there are two: one is isolation, but another one is that, at least in Lithuania, it became more difficult to hire people. Because everyone was spitting out money and taking all the marketing, salespeople, and product people, hiring them, and providing them an opportunity to work in the startups. Even though maybe not all of them are sustainable enough. For us hiring process before Covid was much easier than through the Covid, and even until now. I think Lithuania becomes a very difficult place to find talent and acquire that talent. That's related to Covid but not directly.
INDRE
Okay, and in terms of onboarding when you hire? Because previously everyone had to come to office, during Covid everyone started working from home. Did you see, and did you notice any difference there?
DMITRIJUS
Well, obviously, people are having virtual calls right now more often, and, of course, on the flip side of what I just said previously, right now, hiring a person from another city is not a problem, even hiring from another country; it wasn't a problem for us before Covid. But right now, it's even more, easier because you can organize all the conversations online, and you can monitor whether the guy is delivering, whether the person is delivering his results, or not. Therefore, maybe this is on the flip side. This is what became more open. When it was in the past, it was okay you're from another city, then we need to understand how often you would come to the office. Right now, it's not an option. It would be fine if the person comes to the office. But right now, the aftermath of Covid is that it's becoming more difficult to demand people to come to the office. It's not that we demanded that in pass. But right now, it just became a status quo. It's a hybrid approach. People come to the office once or twice per week, and then everything else is based on the results that they provide rather than hours that they spend in the office.
INDRE
Could you emphasize one situation you had when you hired, and you just failed?
DMITRIJUS
Well, I think, as most startups, we had a mistake thinking that we can onboard the person, and he can learn while we learn together with him. Sometimes you are in desperate need of a specialist and you see that someone is more or less related to that topic, and you think that people are more plastic in the way that they can adopt. Sometimes you fail with that because you need to speak with people and very precisely to understand what are the expectations. I think, in general, not only when it comes to recruiting, our business, our life, it's all about expectations. For me, the mistakes that I made in the past is not having the expectation straight on a job interview. You cannot fit a] person if you have a need, you need to discuss this with a person: whether he has enough competence, whether he has enough knowledge and interest moving to the steps to this similar topic. That's on a general sense. When it comes to more specific, we are lagging a lot with sales positions as well. This is something that me being a product guy and my co-founders being product guys. We still act to this day opportunity to build a stable and scalable sales approach to our product. This comes to the fact that in the past we were a bootstrapped company, and we still are a bootstrapped company. We don't have any external investors. We always were in this stage where we couldn't hire senior managers to do the job or to build the entire team. We thought that we can raise them from juniors and that we can give them a better salary once they start to deliver more results. Unfortunately, it doesn't work this way. That's why previously I mentioned that it's very important that junior people have mentors in the company who help them grow. It's very rare occasion that a junior, developer or sales guy, or any position which comes to junior, it's a very rare occasion that he is talented enough to do everything on his own and to find information. Usually, you need to have a mentor that already did the job and he knows what are the standards, and he can help you to grow there. This is our mistake for the sales department. We put all eggs into one basket thinking that the junior, okay, junior to medium guy, can build the entire team and the entire department. It didn't work out for us. Everything was lost once he decided to move somewhere else. Which makes sense, right? I mean, the person came to the company, went for all stages and then at certain point we put too much responsability on him. Then he said: "Okay, maybe I'm not ready for that, A, and B, I need to also check what other companies have to offer. Not for the salary sake, but also for the procedures sake, for the knowledge sake, and etc. Right now we made a decision, especially for those departments that are difficult for us to grasp personally, we want to have seniors that can be accountable and that could take all the ownership. This is our main lesson. We no longer hire juniors to do the difficult work, even though they're super talented. We still try to put them in a such stage that they would be supervised by someone who already knows what is the department that they are working in and how to deliver results.
INDRE
Right. How long did this take for your employee to understand that this is not working? For how long were they working and trying to become the one you were expected them to be?
DMITRIJUS
I would say that it's not a mistake. It's just, things could be done in my journey, things could have been done more efficiently in certain departments. As a Co-founder, I need to reflect on that. We spent 2 years building that sales approach and that sales team. Then the guy left and we had to start all over again. Obviously, all the procedures were being held by that person, so you have to find the same guy, the same person who could take over immediately and to understand how this whole concept works. With sales approach, it doesn't work like this. If it is a C-level person, he usually has his own agenda, how he interacts with his own team: with you know SDRs and key account managers. Every time you have a new Head of Sales, not every time, but sometimes you need to start all over again. You use the same database, you use the same pipeline, but the procedures can be changed, especially for the product as ours which is fintech; and it's a little bit more difficult to sell, I think. Especially, when it comes to cryptocurrencies.
INDRE
But I'm just thinking. What could you have done differently? Because it's very natural. You are a bootstrapping Startup. You cannot afford to hire a C-level manager. Therefore, you expect that mid-level person will grow into this role. Then you notice that it's not happening, right? Maybe it's because of you, as mentors. Maybe it's because of that person, themselves. When you think about the situation now, do you think you could have done something differently? Do you regret that it took so long and you could have noticed this earlier? What are your thoughts on this?
DMITRIJUS
It's a very good question. I think that as a Startup Founder you need to strategically think about the future of the company, and if we know that we don't have enough competence to build sales or to supervise building the sales department on our own, then strategically you need to know that you would need a bigger stash of money, so you need to look for financing or something like that, in order to have enough resources to allow yourselves to build that department for someone who can lead it. I think if I would be able to do things differently, I would still focus on hiring a senior manager that has already worked with a similar project, that knows how everything is working, rather than things that he knows, and just allow our company to pay a higher wage for a more competent person. I think that especially for a bootstrapped company, maybe we were just too idealistic. We thought that we need to build everything on our own, and we need to raise people from their junior level. Right now I start to see things differently. I start to focus more on medium and senior level developers, and sales, and marketing people.
INDRE
But still, you are a very successful startup and you managed to do this by bootstrapping. Maybe if you were going to look for investment, you wouldn't have been able to grow so fast? Because you would have wasted a lot of time, because you're not working. You cannot look for investors and develop at the same speed, to do two things at once. Maybe it's not such a bad situation you were in. You could just have noticed this earlier, right? Because it's a perfect, it's a very great path.
DMITRIJUS
Look, this is just one way how you can strategically think about the company. If it's an external investment, so you have more money to spend on people that you want to build the company further. Which makes sense. But there are other ways. What I'm fond of is the so-called advisory board which allows you to have people that are not investing in a company, but you can give them stock option, you can give them equity, you can give them salary. You want to have them from different aspects, from different industries, with different competencies, and to give you an insight on how things should be done in your company. It doesn't have to be an external investment. It just needs to be someone who is capable of the topic. If you have a person on your board of advisors who is a sales practitioner in another company and he has enough competence to explain to junior guys what they need to do and how they need to do that, then it's solved. You have the structure that allows people to have a positive feedback from a market leader, from an opinion maker for sales. Then it works as well, and then you can build that trustful system that can deliver results to you. So this is another way of how to build the company so that people get enough feedback and are accountable enough. So feedback again. We came back to the same thing we started this conversation with. It's all about the feedback, and the bigger company gets, the more difficult it becomes.
INDRE
Right. I really love this. It's a perfect solution. You could hire advisors for some stock options.You don't need to hire C-level managers from the very beginning. Then you already have a mentor and you can grow a younger person into a C-level manager. I think it's a perfect combination, if you're not in need of the investment, right? if you can bootstrap and grow into 60 people team. Great! Thank you so much, Dmitrijus, for your time and for sharing your story. Thank you for all the listeners. For more podcast, please visit http://jobrely.com.

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