What our new Cloud Challengers report revealed about founders, talent and teams.

‍Insights into the evolution of the 'Start' phase of building and growing a team with Michelle Cheng

What our new Cloud Challengers report revealed about founders, talent and teams.

One of the most striking elements of our latest Cloud Challengers report is looking at how the co-founding teams and their organisations change every year. Each company, selected for their outsized ambition and potential, is a bellwether for trends in hiring practices and attitudes at early stage companies. 

For this article, I did some additional digging into the talent-related findings. Let’s get into it: 

1. The good: Founders are more empathetic than ever about company culture

Our survey found that culture was the top people-related concern for founders, even above GTM hiring and compensation. This was in contrast to previous years, where priorities were far more tactical, like accessing top talent. 

Most of the 2024 Cloud Challenger companies were born during the pandemic, which had an overall negative effect on trust between people and employers. Work for many people started to feel transactional, which has only worsened with the recent spate of tech layoffs. Coming off the back of that uneasiness is perhaps more of an awareness that culture really does matter. 

So what can founders do about it? 

In the Start phase of building a business, teams are sowing the seeds that will become the DNA of the company. By the time they’re thirty people, a company will be a full-fledged organism with its own personality. Team sizes of 30-50 people are within the science-backed magic range for friendship and community groups, which propels people to accomplish amazing things together. My advice to founders is that it’s far easier during this early phase to be intentional about articulating your values and behaviours -  manage minor inconsistencies proactively because it’s easier to unpick things at 30 people than it is at 300. 

2. The bad: Gender representation across founding teams in our cohort fell

According to Female Foundry, 11% of total venture capital in Europe in 2023 went to startups with female co-founders. This finding was also reflected in our data: the number of female co-founders in our cohort declined from 18 to 12, and the number of gender-diverse teams fell from 13 to 11. 

This is the third year we’ve published the report and the needle hasn’t moved meaningfully year over year. I won’t belabour the well-established barriers facing female founders, but it’s worth reinforcing that this is a systems issue that requires tackling from every angle. Female founders shouldn’t bear the burden of educating the market on why they are bankable. This is where the role of sponsors, over mentors, can play a massive role in building representation. More than just guidance, sponsors have the power to open doors, create opportunities, and unlock funding.

3. The new: AI is beginning to influence hiring, but not in the way you think

The question of the hour is the extent to which AI will impact, and possibly replace, jobs. The answer to that won’t be clear for some time, but I did notice that productivity and automation companies had the lowest average headcount of the sectors we evaluated:

It’s obviously not a clear indication of AI replacing jobs, but, I was curious about how companies who leverage AI heavily are thinking about talent. I asked one of the founders from the cohort, Rolf Risnes, Co-founder and CEO of We Are Learning for his point of view: 

“It's not about hiring less - in fact I think it will be hiring more, since we need the experts (deep AI-competence) and that's not something an ordinary developer has at this point. So we’ll need AI-experts side-by-side with our devs.  AI based productivity tools will only change how fast we can get things done - not how many people we need. The availability of AI/productivity tools really sparked both how we developed (and are developing) the product but also how we build our team. We were super quick on hiring a real AI-expert with extensive experience onto our team.”

The takeaway here for Start phase companies is that, when it comes to hiring AI won’t have as much of an impact on the number of hires , but rather on the nature of it. Founders need to be cognisant, and as always, of accessing critical talent. Particularly for AI skills, startups are in direct competition with corporate giants. Founders need to craft a sharp employer value proposition that sets them apart. 

In Summary

Our Cloud Challengers report is an annual barometer on early stage founders and how they are thinking about People & Talent. This year, a clear theme emerged: success hinges on intentionality. Whether it's building co-founding teams, fostering a robust company culture, or proactively addressing future talent needs, deliberate strategies are going to be what sets the best companies apart. Equally, the absence of deliberate action and sponsorship may exacerbate challenges for gender-diverse teams in accessing funding.

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