Fractional Hires Let Tech Startups Play Big, Navigate Uncertain Business Conditions

The downturn is gathering speed.

Thus far in 2022, there have been more than 300 companies that have laid off, cumulatively, more than 48,000 employees.

The headlines swirl with layoffs done poorly, with 30-second firings done, en masse, over Zoom, with little fanfare and even less explanation. Better.com reigns as the poster child here, renowned for a tone-deaf approach that sent layoff checks before the layoffs were announced, and where computers were reportedly shut down while employees were still working.

Nolan Church, co-founder and CEO of talent marketplace Continuum, said that companies — especially tech startups — can use a little help in making layoffs a bit more … employee-centric and palatable — and fair, too.

“You can do these layoffs over Zoom,” he told Webster, “and still be human.”

The conversation came against the backdrop where Continuum said this week that it has launched a product to help companies navigate layoffs amidst the current downturn.

The Fractional Approach

In terms of the overall business model, companies utilizing the Continuum platform can access expert insight and guidance from executives, who in turn must have, or have had, director-level experience at a venture capital (VC)-backed company.

The executives are “matched” with companies at the platform within 48 hours of onboarding — and these executives help the firms solve a range of problems. The “buyers” are the founders, and the sellers are the executives offering advice and insight.

Church said the platform model, which is based on referrals, handles the back-office activities spanning invoicing and payments. The executives set an hourly rate and Continuum charges a 15% fee on top of that.

The company — and fractional employee approach — traces its genesis to Church’s time as head of talent at DoorDash and as chief people officer at Carta. At those firms, executive recruiting proved expensive — as much as $150,000 just to engage a recruiting firm.

Factor in that an executive’s salary and perks and the total cost of a new, executive-level hire runs into the hundreds of thousands of dollars. Larger, more established companies have the deep pockets to abide by a somewhat paradoxical maxim: They want talent as fast as possible, but will wait as long as it takes.

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“A successful search is considered 12 to 18 months — and 18 months later, the executive leaves, we’re now doing this again. It just doesn’t make a whole lot of sense when you think about it,” Church said.

Certainly not for the smaller companies in hyper growth mode who must look to conserve operating cash flow. A Series B or Series C startup, with 150 employees but a “gap” at the top of the executive hierarchy, can feel the pinch of missing expertise each and every day.

Fractional executives, he noted, wind up being more cost-effective, especially in financial positions. He told Webster that the biggest areas of demand from client firms include general and administrative help, marketing and sales.

On the supply side of the equation, the Continuum platform has been seeing a wide range of executive “personas” — including what Church termed the “curious” executive who already has a full-time job, who joins the platform to coach and advise for a few hours each week or month, typically three to five hours.

Only a bit tongue-in-cheek, he likened the initial interactions on the platform as a “gateway drug” that leads to more work (and perhaps even an eventual embrace of full-time fractional work). There are also the executives who are already entrenched in fractional work who want access to more clients.

Helping With Layoffs

In reference to the layoff-centered-product announcement, Continuum is offering one free hour of advising with a human resources (HR) executive who has run them before. For leadership teams needing more support, Continuum offers an HR executive for layoff help for sessions as long as 10hrs.

He noted that “a bunch of our executives were actually doing this work before coming to us and stating that layoffs were going to be something that companies need help with.”

Perhaps no surprise, the target customer for what might be termed the “layoff offering” lies with tech startups.

“That is who is being hit the hardest by these layoffs,” he said.

The urgency is there, he said, as many of these smaller companies do not have HR departments, most of their workforces are remote and they have to orient their layoffs around effective communication strategies. They also need to focus on employees and put together severance packages that are fair, equitable and have diversity, equity and inclusion impact analyses in place.

See also: CFOs and Engineering Teams Tap Tech, APIs to Bridge ‘Communications Gap’

Looking ahead, the fractional approach is likely to gather steam, as there is pressure on companies to respond to changes in the marketplace and to grow their businesses. Smaller companies that have received venture capital in the last several months are under particular pressure to do more with less, and to prove to their investors that profitability is on the horizon.

Looking ahead, Continuum, which also has announced $12 million in Series A funding led by Pelion Ventures, will look to build out an executive storefront, where firms can just click on a button and book time with them.

“We want to be the home page for executives as they think about driving more business and gaining more fractional business,” he told Webster. “And then the executive’s entire back office will be run through our financial pipes.”