The Do's and Dont's of Space Startup Recruiting

Dropping into your inbox with another issue of SpaceDotBiz. Today's newsletter is probably the most practically useful I've sent yet. I interviewed Seyka Mejeur, founder and CEO of the space recruiting firm AdAstra. She has helped find and recruit top talent for some of the highest-performing companies in the space industry.

Seyka shared really detailed, nuanced, and sometimes contrarian insights into attracting and signing the best-of-the-best to your organization. We also talked about the other side of the process and how individuals looking for roles in the space industry can improve the outcome of that process.

Honestly, this is the kind of information you would usually have to pay a lot of money for. I'd consider it a must-read for anyone in the space industry looking to build great organizations or maximize their career opportunities, which probably includes just about everyone who subscribes to this newsletter. Now let's jump in.

Together with...

What are some of the space companies that you’ve supported in their recruiting efforts and what types of hiring, from new grads to executive positions, do you typically support?

We work exclusively with space and clean technology startups. In terms of who we work with, we don't disclose any partnerships unless we've explicitly asked for permission to share. A couple of those are Varda and Ursa Major. And we work with multiple small launch companies and a variety of others in the new space startup community.

As far as roles that we work with, we do either executive hiring, so that's like C-suite level roles, and often "head of" roles, which is a common term that's used in startups where there's not a lot of differentiation between director and VP. We also work with any roles in the technical vertical. So we might work with entry-level new grads, but that would be a pretty big exception. That's usually when one of our clients explicitly asks for help with that and we recognize that it's not where we're always most focused, but we know we can help. Typically we're filling roles where the demand is for someone at least slightly seasoned.

Anecdotally I hear a lot of discussion around a talent shortage in the space industry. As someone with a lot more data on the topic, does that resonate with you? If so, what would you attribute that labor shortage to?

Great question and there's a lot that goes into that topic. To start, yes there's a shortage. The space startups that we're working with are all going after the top 5% or even 1% of talent. Part of the reason for that is that startups don't have a lot of wiggle room for mistakes. If you're a space startup, your work needs to be high reliability and it's often safety-critical, so there's not a lot of margin for mistakes. Beyond that, at a startup, time is money. Being able to slow your burn rate means you are going to have more opportunities to make your company work. So getting things done very quickly is really important. That's part of why we hear clichés like, "move fast and break things". So there is high pressure in these startup environments to do things well and do things quickly. As a result, we're fighting over the very cream of the crop talent.

In addition, there's a very small number of people in that talent pool. For example, if someone goes the route of working at a legacy space organization like Boeing, Northrop, or Raytheon, the sort of experience that they're going to get, while high-quality and a wonderful experience, is not always applicable to the work that has to be done at a startup. At a legacy organization, the work tends to be very specialized and focused since you have so many people working on projects.

Whereas at startups, you might only have one person who works on a particular part. Individuals have to have more of a breadth and wider span of knowledge, where they have to see something through its entire lifecycle. There aren't 10 people working on each piece of the lifecycle for that part. As a result, people who go the route of a legacy company become less relevant to startups. Beyond that, the pace and the style of legacy versus startups are very different. At a legacy organization, if you have a great idea, you have many stakeholders to win over, so that idea might come to fruition over 12 to 24 months. At a startup, you have a great idea on Wednesday, you might have it implemented by Thursday morning. So the styles and the types of problems are really different. As a result, for people that spend more time at legacy companies, we see them becoming less relevant to the startup world over time.

In addition, pay is a factor as well, and tech pays a lot more. As a result, if individuals are not incredibly passionate about clean tech or space and the kind of engineering rigor that goes along with those industries, they can get pulled into very lucrative work, which can potentially also make them less relevant for these industries or startup cultures. So that's a bit of what I think is going into the challenges around talent shortages.

In the early days of a startup, its typical for founders to hire almost exclusively from within their networks. The risk of that path is in building a homogenous team with similar perspectives and blind spots. Is there a head count number at which you push early teams to look outside their immediate networks?

On one hand, hiring can be a very labor-intensive piece of building a company, especially if you're going outside of your network. That's why as an entrepreneur you're often hiring from within your network, or looking at people you've already worked with. You trust them, you know that you can rely on their work. There's not a lot of guesswork in the interview process. If you've worked with them, you can get enough buy-in that you can make that decision quickly. You have the relationship capital to be able to pull those people in. So there are a lot of benefits to tapping your network early on, which is why so many people do it. And frankly, we advise it when people come to us early on. We ask, "Have you effectively tapped your network?"

However, as soon as you have a homogenous starting team, you start to get yourself into a bit of a pickle with how easy it's going to be to get other people to come in. It can feel a lot like an in-group, outgroup dynamic to people who are trying to contribute to the organization. That dynamic has been well studied in organizational psychology, and it does not turn out well for the outgroup. So there has to be a lot of intentionality in pulling the outgroup into the organization. We tend to say that the first 10 to 20 hires is a really good place to be pushing yourself to pull in diversity of thought and diversity of background. Not just tapping the network that you already are very familiar with.

Hiring is probably a great indicator of the state of the economy and of the space industry in particular. How have you seen the recruiting landscape change over the past year as market conditions have gotten more challenging?

This is another really fun question. It was really interesting when we saw some of the big tech companies hit massive layoffs. I forget when exactly, but that was maybe three, four, or five months ago. Some of the CEOs at the companies we're working with were like, "Oh, this is great. We're going to have an influx of great talent."

At the time I was like "Maybe...it might actually swing the other way." I think that's what we've seen. I'll explain why. First, there are definitely exceptions, but typically the people that we are trying to recruit for our clients are happily employed and haven't been impacted by layoffs. They're not available and we are enticing them for a new opportunity. So the impact is really that, these individuals we're trying to hire just saw a bunch of their peers get laid off and they're more risk averse, saying to themselves, "I know what I've got here and that opportunity over there seems a lot more uncertain. Do I really want to make a big change during a risky time? I think I'm good." So instead of there being an increase in talent, we saw a real tightening up of talent.

Additionally, with inflation we hit a very interesting time where candidates were saying, "Due to inflation, I'm going to need to see my salary somewhat match that inflation rate." As a result, startups are saying "My money just became less valuable. I need to hold onto my capital. So we started seeing more sticking around compensation. So we've seen a lot of tightening in the space industry and in talent recently. However, in Q1 we've actually seen things start to warm up a bit, especially in comparison to Q4 of 2022.

What is something that you think space startups frequently get wrong in the hiring process?

If I can just get up on my soapbox really quick, I would emphasize the value of employer branding. I believe that branding your organization through the hiring process is one of the most powerful marketing branding opportunities that a company has. You have people who are open, who are actively trying to absorb information about your organization, and who are interested in the conversation. Talk about an advertising opportunity. Usually, people are clicking away from ads, but you've got people who are in your industry, who are in the network of other people who are in your industry, who are going to go on to either work with you, work with one of your customers, work with one of your vendors, work with one of your competitors, etc. The opportunity to have a massive influential impact in how you are marketing your organization is just prime for the picking. I think that people miss that opportunity all the time.

Some practical ways that people can grab this opportunity are by being really intentional with the interview process. Have some documents that you put together, some handouts that explain who the organization is, and what candidates can expect from the interview process. That can be very useful for the interview process. It's also an opportunity for your organization to say who you are and share your story.

Another key way to improve the hiring process is to be very thoughtful about how these candidates are interacted with. I like to say that when a candidate enters your interview process, they should always exit with a positive impression. Either they're exiting your interview process into your company and you want them to be excited and motivated and starting off on the right foot, or they're exiting thinking, "It didn't work out but that was a really cool company." We hear all the time from candidates, "I applied and I just never heard back." Or even worse, "I applied and I interviewed, but then nobody ever followed up with me, my emails started going into a black hole." We hear it all the time.

Sometimes startups are like, "I have so many applicants that don't fit anything that I'm trying to hire for." We tell them to send a mass message that's letting those people know that this is not the right time for this position, but here's something about us and we're really appreciative that you applied. Even that is an opportunity to plant a seed and brand your organization. So that's a key one that I could talk about forever.

Another area where I see things go wrong is in interviewing. Somewhere around 10 years ago, Google was in the news for asking questions like, "If you were a tree, what tree would you be?" If it's an exploratory team bonding opportunity where people then get to explain why they'd be that type of tree and what that means to them, then sure. As an interview question where there's a right answer and a wrong answer, it is a terrible interview question that is not going to tell you what you need to know about this individual. There's been a lot of research on questions like this.

Every question really needs to be able to tie to an outcome or a behavior that you want to be able to see in the job. It's not about pressuring people, unless you are interviewing somebody who's going to have to endure that kind of pressure in their actual job. Then that would be relevant, but it's typically not. So it's important to ask yourself, "Am I testing for the skills I actually care about, or am I using this because I think it's like a crafty interview trick." You really want to stay away from the latter.

What are some things you’ve seen done really well in the space startup hiring?

Intentionality and commitment to high-caliber talent, even when its painful. It can get painful to know that you really need to fill a role and nobody is meeting your technical bar. Sticking that out can be very challenging when you really want to just hire someone to get the role filled.

On the other hand, you can take that to an extreme where a company might find someone that's almost perfect, but it's going to take some time to mentor them to be truly perfect, so you pass on that individual because they're not perfect at this moment. But passing can often mean waiting three more months until you get the right person and in that time, the nearly perfect person could have become the perfect person. So there are two sides to that coin. Waiting for the right person in a role, but also being able to identify when someone is worth mentoring and bringing them on so that they can really level up to be perfect.

Another thing that's done really well in space startup hiring is having mission-driven organizations and teammates. So people that are very tied to the mission of the organization. There's no denying that money matters, but it's very rare that people are taking the job just for money. It's just not how these industries work. People are in it for the mission and the vision. They are very passionate and intrinsically motivated for the work that they're doing.

Its no secret that the aerospace industry doesn’t have the most diverse workforce. It seems to me that drawing from a more diverse talent pool would be a solution to some of the industries labor shortages. Are there any efforts that you’ve seen space companies take that have been particularly effective at attracting and maintaining a more diverse talent pool?

Shameless plug, we've got a podcast called AdAstra With, and we're releasing an episode with Janeya Griffin who runs an organization called Equity Space Alliance. One of the things that Janeya talks about is that diversity and inclusion isn't enough. There is an element of equity and ownership that's needed in the space arena, even in small scrappy startups.

So, what does that look like practically? Well, employee resource groups are something that a lot of organizations have, where people of this group can get together and discuss what would work best within our organization. What Janaya emphasizes is 1) if you don't know how to set one of those up, you can contact the Equity Space Alliance and they've got ideas and tools to help you set that up, and 2) once that is set up, it's not just a space for those people to gab or communicate. It's really a space to come up with ideas to improve the organization. Janaya emphasizes that its critical to give those employee resource groups the resources to actually make an impact and have ownership over the changes that they'd like to see. That means giving them a budget, giving them ownership, and giving them the ear of the stakeholders that need to be involved in making those changes. So really having equity be a piece of the conversation and not just inclusion.

In contrast, are there efforts to increase workforce diversity that you have seen companies take that aren’t really impactful or seem to be an ineffective use of resources?

Absolutely. Something common we hear from organizations coming to us is, "We really need to hire for these positions and we're getting a ton of applicants, but none are good." We call that the "post and pray" method. So they're posting roles online, maybe they're even paying to get job postings listed at universities that are historically diverse or historically of one community group or another. But there's got to be more active work to get to those candidates. Having a line on your job description that you care about diversity isn't enough to really get that moving in your organization.

Another place we see organizations fall short is in talking about wanting diversity, but not being willing to fill in gaps that may exist because of generations of societal norms and practices that have made it such that certain groups are not part of our industry. There are a lot of groups in our world where their parents were engineers or their parents were part of the space community and as a result, they see themselves as generationally belonging to this community. On the other hand, there are other groups where previous generations haven't had those opportunities. Being able to include diverse perspectives will sometimes mean taking somebody who is excellent and filling in some gaps that they don't have.

Flipping over to the perspective of the candidate, what questions would you recommend a candidate ask to better understand the value of the equity package they are being offered.

We find that even for people who have been at startups before and received equity packages, equity is a slippery topic to understand. That's especially true because sometimes a lot of the information that you would like to have isn't available to the public. So I recommend asking a lot of great questions and trying to really get insight into what the value and accessibility of the equity are going to be.

As a result, there are a few things you can ask. A key one is to figure out how much of the company you own, which involves asking 1) "What percentage of the company is being offered", or 2) "What is the number of shares" and "How many shares are there" or 3) "What's the value of the shares" and "What's the value of the company?" Sometimes one of those pieces of information isn't available, but if you can get a few of them, you can start to do some calculations and start to wrap your head around how valuable that equity package is going to be. Understanding the vesting schedule is also important. For example, is there a year cliff and then monthly vesting? Is it a four-year schedule? What's the strike price and is it lower than the current value of shares?

Dilution also becomes critical over time. It makes sense to ask how much dilution is expected to determine if your equity will be dramatically less valuable in five years or so. Of course, that's not something that the company can guarantee, but it's a way to give an idea of what is the projected value of the company, how much time until that value can be realized, and what is the probability of success.

There are other things to ask to help you decide if you think the company is going to be successful. For example, is the company solving a problem that's large enough to justify the projected valuation? Are they hiring and are they able to hire awesome people? Are the leaders able to execute the plan to build the company? Does the company have enough money to meet those goals or do you think they can attract the kinds of investors they'll need to get there? So not only having money, but also having access to more money.

There's another great resource by Holloway that describes some standard values around equity packages based on the stage of the company. For example, if it's a seed company, 0.5% to 2% is in a strong zone for an equity offering. For a Series A stage company, 0.1% to 0.5% is pretty strong. For Series B up to 0.1% is pretty strong. Those are kind of the zones that we often see for equity.

How would you recommend a potential hire conduct technical due diligence on a company they are considering joining?

With regards to that form of diligence, there are things you can try to determine around product-market fit and the size of the total addressable market. You would want to understand what this company is looking to solve and how big the market is that they're going after. Does their product solve a key problem in that market? There are a lot of really cool ideas that don't solve an existing problem, and that will even require a ton of market education before getting customers to make a purchase. I'm not saying those are bad ideas, but it's very painful to educate consumers and that's a good thing to be aware of.

There are great ideas that don't plug into the market easily. Or, in the clean tech space, you'll often see really great ideas that are very altruistic. Another shameless plug, we had Josh Geiger on AdAstra With, and that podcast will be released soon, but we talked about how you can't shame people into buying a product.

You also want to try to understand if the company has a solid technical roadmap ahead of them that you believe they can execute on. That is often informed by how they have executed their previous goals. Do they have strong evidence that they can continue to hit milestones? You can also ask the individuals who interview you about what common patterns they have seen in teammates who are successful at the organization. Another great thing to ask individual interviewers is "What are the biggest challenges that the company is facing?" Then, you can see if you're getting similar answers from interviewers or if they contradict each other. Use the interview process to understand the organization at a much deeper level by exploring how people see the organization from the inside.

That wraps up the interview! I hope you got as much out of it as I did. Make sure to subscribe to SpaceDotBiz for more great insights like these!