September 21, 2023 – For the last 15-plus years, people flocked to tech with promises of a faster pace, career growth, the ability to innovate and drive impact, and the overall prospect of wealth and prosperity. But a new report from Hunt Club says that an interesting phenomenon has been happening for the last 12 months: “For the first time since starting Hunt Club seven-plus years ago, we’re seeing top-tier tech talent turning toward more traditional industries that not long ago they would have called sleepy, unimaginative, or boring,” said Nick Cromydas, co-founder and CEO of Hunt Club.
“It’s not just people that have done the start-up shuffle for 10 to 15 years (i.e. bounce from start-up to start-up without ever achieving a liquidity event), it’s also leaders who have had material private exits or significant wealth creation events through accruing restricted stock units (RSUs) YoY that grew in value insanely fast,” he said. “This leads me to believe that the change happening is bigger and much more nuanced than what it seems on the surface. I’ll break it down.”
Where’s the Talent Heading?
Five to 10 years ago, it was rare to see top tech talent consider large public companies outside of tech, mid-market businesses, or PE-backed start-ups across any stage or size. Today, the winds seem to have shifted.
Hunt Club polled 50 tech leaders that fit at least one of the below criteria to learn more about how they’re thinking:
- Achieved or was a part of an exit at a private start-up.
- Had been part of a successful IPO.
- Was a part of a tech company for over five years and saw share price appreciation of more than 200 percent.
- Currently is or was a vice president or higher.
Hunt Club offered these results:
- Over 20 percent no longer wanted to pursue start-ups or “pure technology” companies at all.
- 50 percent would consider joining a larger public company outside of tech for the first time.
- 70 percent were evaluating PE-backed companies or small businesses for the first time.
- 80 percent would forego higher upsides and short-term perks for more secure compensation packages.
- More than 50 percent would sell their private stock at a large discount if offered the opportunity.
Breaking Down the Why
The last decade has been tumultuous in tech with many ups, downs, lefts, and rights, and talent is starting to “vote themselves off the island,” and into new industries. Mr. Cromydas explained why: “Part of this is likely due to the tenure and experience of the executives we spoke to. Many have 10 to five years left in their career and want to spend them in places where they can shuffle priorities and have more work-life balance.”
Technology has always been a major disruptor of business. Historically, innovations like electricity, the telephone, the typewriter, and of course computers have all resulted in work getting done more quickly and efficiently. In recent years, however, technological change has been faster and more expansive than ever before, reaching beyond just the tech giants and impacting all kinds of businesses. It has been so swift, in fact, that many leaders were caught short, only now grasping its significance and what it will mean for the future of their companies. So it is that finding talent in data, artificial intelligence, and software-defined products, among other areas, has become imperative across virtually every sector. And executive search firms that have been quick to capitalize on this need and develop expertise and establish deep relationships have become key players in ushering in this new era and helping determine what businesses will ultimately win the day.
“What’s happened is that there has been a seismic change in industry, but there has not been a seismic change in process,” said Paul Daversa, founder and chief executive officer of Daversa Partners, which helps build leadership teams for growth and venture-backed companies. “The executive search industry was founded in 1926. It’s almost a 100 years old. It’s $12 billion dollars in annual TAM and the parochial processes by what has been evolved for traditional companies has rarely if ever been changed.”
Mr. Cromydas also notes that many are also realizing that it takes a very special company to produce a financial outcome that’s worth the volatility of a start-up. “While there’s some recency bias due to the extreme volatility of the last three years, more are seriously debating the value of tirelessly working towards a potential financial reward, only to likely burn out in the process,” he said. “Many industries are also changing leadership hands for the first time.”
According to a recent Spencer Stuart report, the average age of newly appointed CEOs for S&P 500 companies dropped from 55.9 in 2021 to 52.8 in 2022, the largest YoY dip since 2000. Even small business owners are ready to move on. In fact, 55 percent are ready to retire and appoint a new leader. Each of these trends clear the way for great change, innovation, and work cultures that attract high impact tech talent into their environment.
“The fight for talent is going to be even more complex as a pool of people that traditionally only fished in one pond start opening themselves up to new opportunities,” Mr. Cromydas said. “Ten years ago, you’d never find a start-up/growth-oriented tech executive considering a sharper PE environment due to the operational rigidity and lower outcome potential. That’s changing.
Ten years ago, you wouldn’t see tech executives quit to start searching for funds to buy small businesses and cash flow them. I saw this happen eight times in the last three months.”
“Ten years ago, you wouldn’t see a start-up executive with three-X successful exits go to a large public healthcare company to run innovation. It happened last month,” Mr. Cromydas said. “There is a convergence happening between the talent pool between tech, start-ups, large companies and PE and should make for an interesting next 10 years.”
Hunt Club is a referral recruiting service that leverages technology and a front-end automation process to help land passive candidates. The firm leverages a network of connected influencers, which include executives, entrepreneurs, subject matter experts and connectors, to refer for roles. Notable clients include Dollar Shave Club, Bellhops, Proctor & Gamble, Wilson Sporting Goods, and Trunk Club, among others. Hunt Club also works with high-growth start-ups, unicorns, and companies looking to build teams including gopuff, Typeform, G2, Nerdy, Dollar Shave Club, Terminus, and Oak Street Health.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media