Yes, that’s right, RPO sucks. Especially for startups. It is a core aspect of our business and I have come to the firm belief that RPO is not a good solution for many of the clients that come to us asking for it.
What is RPO?
RPO stands for Recruitment Process Outsourcing. It is a service that companies turn to because they can’t build their recruiting teams fast enough - and without recruiters, they can’t hire engineers, designers, product managers, sales reps, etc. at scale. As it stands right now, data shows that hiring a strong technical recruiter is nearly as hard as hiring a machine learning/AI engineer. Because of this, fast-growing companies turn to companies like RocketPower to provide a “plug and play” recruiting team to make critical hires while also building and implementing branding, training and a cohesive recruiting process tailored to each client which will be the framework to continue to scale after we are done.
Why you might wonder, do I have such strong feelings about an important line of RocketPower’s business? After having run an RPO business in the 2000’s, then been responsible for running all of recruiting for Deem and Mozilla, and all of HR and Recruiting at Instacart, and now having run RocketPower since October 2016, I have come to realize there are several components to why RPO as we know it does not deliver the value its customers desire and its proponents claim, but all of those components add up to one large overarching issue - FVR.
What is FVR? It is actually shorthand for something we have been using for about 6 months - Founder Value Recognition. What Founder Value Recognition is and how you achieve it is something that we have been discovering in our journey over the past 3 years and what has led me to the belief that RPO’s suck.
The terms “RPO sucks” and “Founder Value Recognition” are not actually ours. It was Luke Beseda, Talent Partner at LightSpeed Ventures that coined both of them. (Several other VC Talent Partners also made huge contributions to the subject of this blog, including Mike Mangini at SingalFire, Lem Diaz at Google Ventures, Kristina Graci-deLuna at A16Z, Amy Knapp at Redpoint Ventures, Jen Kodner at Threshold, Ted Maguire at Khosla and Jose Guardado at Y Combinator. I’ll go into more detail on that later.)
The Process of Realization
The process of realization started in late 2018 when we got our key project leads and executives together in a room for a day to do a “post-mortem” on all the RPO’s we had done since RocketPower started in the fall of 2016. The goal was to find ways to improve upon this key service offering by identifying the common threads amongst the RPO’s that were home-runs, the ones that were successful but had issues, and the failures. We spent the entire day talking about the projects, being completely open and honest with each other and at the end of the day, had identified some definite things we felt we needed to stop, some things to continue and some things to dig into further. The problem was that there was something we had completely missed with all that work. While hard to see at the time, it is now easy to see in hindsight - we were starting from the wrong premise. We were looking at all these RPO’s from the lens of whether WE thought they were successful or not. More about that later.
The Case Study
Fast forward to the spring of 2019. We launched a very important client that was around 90 employees pre-launch. They did not want to pay for RPO, they just wanted contract recruiting resources that they would manage with an internal person. We reluctantly agreed to give them the same recruiters they would have received from our RPO team, but without the management, talent branding, process development and training, data management and tracking, dashboarding, etc.
All large engagements have at least one surprise for us on launch week. Day one of this project had them all:
The internal person who was supposed to be managing the team was leaving the company, that day.
That person’s boss was a consultant that was only giving them part-time work.
The scope of the work - originally 67 hires in 6 months, had, by the end of day one, ballooned to 123 hires before the end of 2019, which was only 8 months (over 60% of which were design, product, and engineering).
I raised the alarm that day and continued to raise it throughout the week. My message was clear - the client did not have enough internal management to ensure the success of the recruiting team, there was no realistic prioritization on hires, and not enough recruiters and sourcers dedicated to the project to make the hires in the targeted time frame. My concerns were listened to but ultimately dismissed. “Let’s just see how it goes before we decide on any changes” was the response I received.
After about 4 weeks RocketPower had to make a tough call. It was clear the project was not going to succeed if we let it continue as it was. But we were also not 100% sure we would be able to salvage it if we got more involved. Faced with those two options I made the call to step in and start managing the project like a true RPO, regardless of the way we were getting paid. Happy clients are more important to me than profitability on one specific project.
So, starting week 5, myself, our COO and our GM all flew out to the client and spent a week resetting the project and putting in place our RPO structure. For the next 3 months, one member of our executive team would fly out to New York from SF each week and spend the better part of the week onsite with the client and our team, working on turning things around. The result was that from month 2 to the end month 5 (August 2019), with 4 recruiters, 4 sourcers and 1 RC - we made 63 offers and 58 hires. (Also to note - as of publishing this blog we are still on the project and have made 91 tech hires and 177 non tech hires). In our minds, this was a HUGE success. The team had done an amazing job at crushing the work put in front of them and we had materially impacted the client’s growth and their ability to succeed as a company. However, was there FVR?
At about the end of month 5 with that client we were in talks with another company about providing them RPO. This client was a “friendly” to us as we had already been providing them other services (Outsourcing and RockitLaunch). Because we felt the client referenced above was such a great success, we had dropped the company’s name in conversations as an example of what we are capable of. Our executive sponsor with the new company decided to do a back channel with the Co-Founder of the other company described in detail above to get his feedback. That is where we were blindsided. According to the Co-Founder, we were “just alright” and he felt that he was “paying too much for what he was getting”.
I was blown away. I, for one of the few times in my life, was speechless. I did not understand how we could have done so much for a client and still had that type of feedback. I was starting to think about completely moving away from the RPO business in general. Was it worth it? I was in a place where I was seeking to understand. So I started turning to people whose opinion I trusted, people I could be completely open with and who would give me real feedback and input, people like those mentioned above. My next blog will fill you in on what they had to say - and how we’ve applied it...