At the recent MIT Sloan CFO Summit near Boston, what was ostensibly a session about building deal teams in advance of tech-sector M&A transactions veered into a gripe-fest about the severe shortage of high-quality professionals of many different types.
Given the extreme and accelerating proliferation of technology companies, the hiring of developers, engineers, and even support staff like finance professionals with tech experience has become a frustrating, almost desperate endeavor for tech CFOs. That’s true not only for startups, but also for more mature firms.
“For literally every job we have out there, it’s very hard to find people,” said John Kinzer, CFO of Hubspot, an 11-year-old, publicly held developer of marketing and sales software. “And hiring engineers is a nightmare.”
In fact, for companies like Hubspot, whose revenue was almost $4.5 billion in 2016, the hiring challenge may be even tougher than it is for the fledglings. “A lot of people want to be in the startup world,” Kinzer said. “We’re no longer a startup; we’re a ‘scale-up,’ so we try to position that as interesting too, because you’re trying to take the company to something bigger.”
Still, Kinzer is particular about who the company hires. “I love lateral thinkers — people who can relate what they’re doing to other things across finance and the other functions,” he said. “Obviously, the bigger we get, the less I’m going to be able to see everything.”
For Chris Malone, finance chief at application-testing firm Applause, the talent shortage means that the company’s “head of people and culture” is at least as important to him as his vice president of finance and controller. In part, he noted, that’s because the former complements his skills.
“My leadership skills are very different from someone who is going to hug folks and give them pats on the back,” Malone said. “But that’s obviously important, so you need to have that attribute on your leadership team. You don’t need individuals [on the team] to be well-rounded, but you need a well-rounded team.”
That doesn’t just apply to the leadership team. When in hiring mode, Applause looks for people who complement one another as a path to having a cohesive organization. But, he acknowledged, trying to “marry that with the challenges in hiring developers in today’s Boston labor market is certainly difficult.”
Malone said he finds himself interviewing a lot of people but making few offers. “I hate firing people,” he said. That’s why he spends “a lot of time understanding who Applause is as an organization and the gaps [we] may have,” which eases the process.
Also particularly challenged on the hiring front are software companies with subscription-based business models, given that most startups today select the subscription model and many vendors of licensed, on-premises software are transitioning to it.
One company currently executing the transition is Ipswitch, a maker of network performance monitoring software. Panelist Kevin Bisson, its CFO, said he’s facing a “significant issue” in hiring people for his finance and accounting team. People who have worked at on-premises software firms “think you’re speaking another language” when you talk to them about the software-as-a-service (SaaS) subscription model, he noted.
Understanding such key concepts as annual recurring revenue and monthly recurring revenue, and such metrics as customer churn and lifetime contract value, is foreign to such staffers. “That’s a very substantial change, not only in how you run your business but also in the people you need to monitor performance and execute against it,” said Bisson.
Hiring is also a clear priority for Cognex, a publicly held manufacturer of machine vision systems. The company is on a 40% growth pace this year, after finishing 2016 with revenue of about $520 million. Surprisingly, a skill that CFO John Curran is finding it very difficult to acquire is cost accounting, a function historically performed by relatively junior staff. The shortage reflects the steep decline in U.S. manufacturing volume, he noted.