Thursday, August 25, 2016
When Karma Gaming announced a $4-million fundraising round in June, it also said it would double its employees, from about 10 to 20, as part of its growth strategy. The Halifax-based company, which raised an additional $1 million from Vanedge Capital in September, has become one of the hot start-ups in Atlantic Canada over the past two years as its video games for regulated lotteries have met with overwhelming demand from lottery corporations in several companies. As it has grown, it has had to add qualified people in a measured, disciplined way. “Our method is never to go on a hiring frenzy for human resources,” says CEO Paul Leblanc. “But we did have to fill critical gaps.”
This past summer, Karma Gaming began hiring staff for its headquarters in the historic brewery building on the Halifax waterfront, but as is often the case with start-ups, it found it difficult to find the best people in any one place. So it added staff in New Brunswick who will work for Karma remotely from that province as they prepare for a satellite office expansion. Company executives have also interviewed candidates in London, England, and the United States, and they have hired a contract worker in New York. “We’re making sure that when we scale up, we do so with talent first and geography second,” says LeBlanc.
A lot of regional start-ups are working hard to find the right talent to meet their needs and coming up with creative ways to get them. These young companies will need capital to grow, but just as importantly they’ll need talented executives and staff. In fact, talent is one of the five focus areas that the 4Front Atlantic conference identified as an issue the Atlantic provinces must address (the others are access to capital, government, going global, and innovation/productivity).
The 4Front report noted that Atlantic Canada produces one of the richest talent pools in the world, due largely to its superb universities and community colleges, which are magnets for bright young minds. “Yet the region bleeds talented young people in staggering numbers, as they search for meaningful employment elsewhere—often despite a passion to remain in the region, ” revealed the report.
Talent is a major topic of conversation in the start-up world, because all of the seed companies need to flesh out their organizations and develop into bona fide corporations. Some in the start-up community have noted that five years ago, the first thing company founders were after was equity capital; once they got that, they would work on staffing and developing product. Now that the market has matured, founders are finding ways to secure financing without surrendering equity and to get a minimum viable product to market quickly and cheaply to get revenue flowing in. But the need for good staff is more pronounced than ever.
On its surface, the solutions for the challenges of attracting talent should be a simple case of bringing in supply to meet demand. Businesses need workers, so the region should train or recruit to fill the job vacancies. Problem solved. If only it were that simple. Unfortunately, the market is rife with niches and specific demands for employers and employees. “What we’re finding is a lot of the companies that aren’t quite start-ups, the ones four or five years along, are having trouble finding people,” says Jeff Stockhausen, an industrial technology advisor at the National Research Council’s Industrial Research Assistance Program (IRAP). “A lot of people who want to work in the start-up space want to be founders and build up their own companies.” Stockhausen adds that the start-up space is attractive to people with technological expertise because it’s exciting and there’s always the possibility of fabulous wealth created by an exit.
But many of those interested in start-ups either want to work on their own idea or get into a company early enough to have a substantial ownership stake. For some of them, a more mature company that is headed for great things is less attractive than a new venture because they would only have options rather than founders’ shares, so their upside would be limited. And they wouldn’t have the thrill of being with a company from the inception and watching it grow.
That removes part of the talent pool from the more mature companies. Another swath is removed by competition from big established multinational companies, often in unexpected ways. For example, the region has several innovative gaming companies such as HB Studios Multimedia in Lunenburg, N.S., and Celsius Game Studios in St. John’s. But defence and aerospace companies are learning that the skill set developed by the gaming industry is ideal for all of the automated-training programs required for their clients. So the gaming companies now have to compete with big defence contractors for their animators.
Then there’s the problem of specialization. To say that a company needs a programmer is as vague as saying a hospital needs a doctor. There’s so much specialization in the tech and biotech spaces that companies need to focus on the sort of programmer they require, whether it’s someone who works in back end or front end, mobile or desktop, specific forms of coding, and so on. Conversely, the company has to offer precisely what the staff member wants in terms of money, equity, culture, and duration.
If you walk through Volta, all of the
offices look the same, says Stockhausen, but each company has a different culture, and employees want to find a company whose culture will suit them. “I know of a few companies that have gone through four to six employees before they found someone who worked out,” he says. Stockhausen points out that programmers often look for temporary projects rather than long-term commitments, so companies can more easily find people to work on a project for a year or so than those who want to become full-time employees.
The broader problem with talent is that these companies will need lots of non-technical expertise as they grow, in finance, human resources, business development, and so on. Gerry Pond, one of the founders of Saint John-based East Valley Ventures, has repeatedly noted that Atlantic Canada needs experts in international tech sales. Pond says this is a Canadian problem, but one that is acute in Atlantic Canada.
Despite these challenges, young companies in the region are managing to hire and retain good people. As entrepreneurship courses and culture develop at universities, these companies are launching with part of the staffing requirement already in place. Of course, they’ll all need to bring on more people as they grow. They’re also attracting their friends from college and university to the start-up community, which is helping solve staffing problems.
There are signs of one more development that could help ease the demand for talent. Some of the start-ups formed in the last few years have found that for one reason or another, their chances of succeeding have been slim. So they’re disbanding their businesses, but their staff members want to stay in the start-up field in the Atlantic region. As a result, some of the stronger start-ups have been able to attract staff from those that have fallen by the wayside.
In fact, some perceive Atlantic Canada to have an advantage over larger economies because of the loyalty people will show to the start-ups they join. When Mark Hemphill, the founder and CEO of Charlottetown-based ScreenScape Networks Inc., was asked about any problems he has had in attracting talent in a small city, his
response was that they’re counterbalanced by his ability to retain employees.
Karma is doubling its staff. ConquerPro of Moncton is increasing its workforce from four to 10. Support companies are adding people. And Onboardly Media Inc., the Moncton-based public relations agency that targets tech start-ups, recently increased its head count to seven.
Robert Niven, the CEO of Halifax cleantech company CarbonCure Technologies, believes the best way to attract top talent is to clearly demonstrate your company’s excellence within the region and the industry. He also says that working with consultants and contractors is a great way to get to know potential staff and to evaluate their ability before hiring them full-time.
Niven’s company, which has found national and international markets for its green process of making concrete products, has hired three MBA graduates from Dalhousie University since 2010, with the last two key hires hailing from Washington, D.C., and Pennsylvania, and the next one coming from Boston. “Our people are 99% of our success,” he says. “As a lean innovation company, they are by far our greatest asset. You can’t buy great ideas and growth.”