Why Startups Will Soon Start Failing

Something is going to cause many, many startups to fail and it isn’t lack of capital. More companies have more money than any time in recent history. More entrepreneurs are setting up shop in New York City than ever before. Yet there is a missing ingredient. And that ingredient is human capital, software developers.

Every week I send out an email to thousands of people for Inside Startups. We list 5 great startup jobs and have signed up over 220 Internet startups to post in the newsletter. We just sent out our 75th job listing and watching what people click on, respond to and who does well has been illuminating. Three quick thoughts below:

1) There are not enough developers in New York City to support all of these companies. Some of these folks with great ideas and capital will fail because they can not find anyone to build their product. It is a serious race for technical talent, and even with thousands of subscribers it is a challenge to produce applicants for every single job. In other words, your company will miss out on a life changing feature because you can not find anyone to build it.

2) Most companies do not get number 1. They think that they can put an ad in Inside Startups or elsewhere and the resumes will come rolling in. When they hear that it’s a couple of hundred dollars, they hold off. There is no doubt in my mind that they will get crushed. Other companies understand. They advertise and spend relentlessly. They have full time recruiters. And smaller companies if they don’t start to think the same way, will lose out

3) The hiring mindset has not adapted to number 1 or number 2. Every job posting you see is designed to tell you how great the company and the job is and that you had better be some kind of ninja Einstein to even apply. Having been immersed in this for the last few months I can tell you, that this approach does not work. Your job needs to be to lure these folks into your office and win them over, not to prevent them from ever applying.

So expect to spend more money than you ever have to recruit technical talent. Ask your investors what they can do for you. And build the brand for your startup. Advertise a lot even if you don’t always get results because as I tell the posting companies in Inside Startups, even if you don’t get that many applicants, you have to put your company on the radar of developers and unless you are Facebook, you should assume they have never heard of you. Otherwise the people who get it, not to mention the big companies with big salaries, will get the software developers and you will not. And if you are a developer, get on Inside Startups, polish up that Linked In profile. The opportunities are boundless.