How I made $500k as a part-time tech recruiter

Apr 05, 2021

Intro

From 2017 to 2019, I worked as a full-time engineer and as a part-time recruiter. I made $500k by placing 28 engineers at companies like Snap, Palantir and Betterment.

My average fee was ~$30k with a range of $23k-$40k. My split on commission ranged from 30-100%. My recruiting take home was $500,745.

This post will talk about:

How it started
My recruiting process
What makes a company successful in recruiting
The unexpected benefits of using an external recruiter
Why I stopped

How it started

In 2016, as an Engineering manager, I needed to hire engineers for my team. I spent one afternoon responding to any external recruiters who sent me a reasonable InMail and asked them to work on my open roles.

The recruiters typically charged 20% of 1st year salary for each placement, with a 3-month guarantee (if the hire didn’t work out within 3 months, there would be a refund). A developer making $150k/yr would cost $30k in placement fees.

Most of these recruiters did not work out. There was a lot of variability in quality. Some recruiters would send me multiple irrelevant profiles every day and others would not send me any volume. Some recruiters were great communicators, others did not understand the role at all.

I reached out to my network asking for referrals for “good” external recruiters. I decided to shadow a couple of staffing agencies to see if I could find a problem that I could build a solution for.

As I met different staffing agencies and recruiters, there was a lot of variation in success. Some recruiters were making a few placements a year ($60-120k/yr in billings) and others were making a few placements a month ($1MM+/yr in billings). I commonly heard the phrase “million dollar biller” as a goal.

I always asked every recruiter I met “What’s the biggest problem you have?” The answer for all recruiters was “I need more candidates''.

My big idea: I had a large network of engineers and I was pretty confident I could connect engineers to recruiters. With one recruiter, Chris, I made a deal to collect commissions on any engineering candidates I referred to him.

My plan was to spend a few months learning about the industry's problems and make a bit of money on the side. I did not realize how lucrative recruiting would become.

My recruiting process

A recruiting agency runs a two-sided marketplace. On one side, you have candidates looking for a job. On the other side, you have companies who want to fill roles.

I focused on the candidate side since I got paid every time a candidate got placed. I will touch on company distribution later.

The main distribution channels for candidates are 1) Direct Outbound and 2) WOM (Word of Mouth). A few tech companies/recruiting agencies (think Triplebyte, Hired/Vettery) have unlocked other distribution channels such as ads, content/seo, product (resume generator, interview prep, etc).

Early on, I realized monetizing my own network to find candidates wouldn't work well because

Your network is small - Even though I knew hundreds of engineers, there is a small window of time every few years a potential candidate in your network is looking and is interested in a company you’re working with
Misaligned Incentives - Recruiters, like real estate agents, are incentivized to close deals rather than get the best deal- so there are times your incentives are not aligned w/ the best interest of the candidate
Awkward social dynamics - Switching jobs can be a big deal. It doesn’t feel great if you are partially responsible for a friend switching to a job that doesn’t work out

When my network didn’t pan out as I had hoped, I tried to copy what the best recruiters were doing. I quickly realized recruiting is a sales funnel. It is a numbers game.

Agencies can get paid in multiple ways: contingent, retained, hybrid. Contingent recruiters get paid if there is a placement, attached with some time guarantee (a candidate needs to stay for 90 days). Retained recruiters get paid monthly/quarterly/yearly regardless of their success. There are hybrid models as well that have a mix of both (monthly fee + success fees).

As a contingent recruiter, I cared about the full funnel and was very incentivized to make sure I made the most amount of placements in the least amount of time.

Here is an example funnel similar in numbers to what I would get:

Steps

1) Source - Find candidates primarily using LinkedIn Recruiter & Github. There are a few other sourcing tools out there nowadays that scrape data from various sources. Also, a big part of this is finding email addresses, which there is a whole industry built on top of ContactOut, Lusha, Zoominfo.
2) Reach out - Actually sending inMails / emails / xyz platform mails. InMails got more saturated over time, so I primarily focused on emails and tried to do follow-ups. Eventually, I used services like Yesware/Mixmax/Hubspot before building my own (plug: Trinsly).
I aimed for a 25% response rate. Certain company names/roles boosted this to 40% but got down to as low as 10%. DevOps & Mobile roles were always hard. I’ve analyzed millions of messages and over time this has gotten a lot harder.
Mentioning I was an engineer did not improve my response rate at all. I am working on a separate guide that includes best practices for email outreach geared for people hiring.
3) Intake Call - I spent a lot of time perfecting this call (Link coming soon) to efficiently audit who is willing to make a move, what skills they have, and if they would be a match to a company. A major part of this was establishing trust and expectation management, which I will touch on later. Over time, a lot of these calls ended up being more akin to career coaching with a mix of sales (pitching companies).
4) Interviews - This was sending the resume over to the client and starting the interview process. I aimed for about a 95% submission to interview rate and a 70% submission to offer rate (excluding dropouts). I would try to get a candidate into as many places as possible that matched.
5) Placement - Closing offers was the most important part of the game. Ideally, at this stage, most of my offers were pre-closed meaning by the time the offer was extended, both parties knew exactly what was coming and negotiation was already done.

There are different strategies for different recruiters. Some recruiters went for a high volume, impersonal approach. Others, like me, went for a more targeted high-touch approach because over time, it played to my strengths of being personable and knowledgeable in the field. Both strategies can work in different settings and for different niches.

I had a huge leg up compared to other recruiters because I understood deeply what hiring managers were looking for. I tried to understand motivations, organization structure, technology stack and where it’s used, and work with hiring managers to craft the best story. I saw a lot of recruiters rely heavily on pattern matching rather than understanding.

Also, I tried my best to understand WHY a candidate was looking.

Through the process, I became a subject-matter expert for both sides of the marketplace.

I did very little to no business development, or the process of finding companies to work for. Most of the companies I worked with came through partnerships or through word of mouth. There was a financial incentive to pick up clients on my own because I would be able to take a large part of the full commission.

An interesting natural BD acquisition channel is that engineers you end up placing, end up wanting to work with you to find more engineers. Even today, years since my last placement, I still get asked to help recruit engineers.

What makes a company successful in recruiting

Now that I’ve seen the hiring process for hundreds of companies, this is what I’ve seen works.

Always be selling

Recruiting is a sales process where the company is the product. Every single interaction (interview/call/email/text) should make the candidate want to work there, regardless of their performance. The world is small, and the candidate who happens to perform poorly one day can still be a source of many great referrals within her network.

Distill down your interview process

Besides point #1 of always selling, remove any barriers/objections to the recruiting process. You want to make it generally easy for candidates to go through. Try to be efficient with everyone’s time. It’s helpful here to develop a clear pattern of what you’re going to test during each interview.

Take Homes

If a company provided a take-home, I asked them to replace it or give the candidate the option of a tech screen over a call. Take-homes slow down the process and are against the rule “always be selling”.

Recruiter Screens

Because I did longer intake calls and prepped candidates well, companies generally skipped recruiter screens.

Interview cycle

After developing trust with a high submission to interview rate companies would skip HR & initial tech screens This made a typical interview cycle: on-site → reverse interview/selling. Shorter interview cycles that focused more on selling led to higher close rates.

Be methodical about your distribution channels, and invest in each

Most application tracking systems (think: Greenhouse/Lever) have this data already, but recruiting orgs should dive into where candidates are coming from, what the submission to offer rate % is for each, costs, and invest in getting the channel working (time/money). If it doesn’t work, cut it.

Direct outbound (sourcing & reaching out) works but requires daily persistence. Based on data from my SaaS, recruiters at staffing agencies spend 50x+ the time internal recruiters sourcing. If your recruiting team is not trained on this, teach it or outsource it.

A lot of recruiting teams are not cross-functional enough. Recruiting needs to be a collaborative sales blitz from recruiting & engineering. This is a different skill set than what traditional HR teams hire for.

The unexpected benefits of using an external recruiter

Fewer surprises

A lot of the job was setting expectations for both candidates and companies related to compensation, type of hire, etc. This meant listening and asking questions to find underlying motivations for all parties so no one was surprised and placements went smoothly.

Saying the unsaid

As a neutral 3rd party arbiter, candidates and companies could tell me things they didn’t want to say to each other and I was able to deliver the news. This could be comments about the candidate, company, or compensation.

Example 1

Company: “We can’t see this person being a strong architect b/c of X”

To Candidate: “In the next interview make sure you touch on your experience architecting at Y”

Example 2

Candidate: “Having internal promotions is really important to me”

To Company: “Make sure to highlight internal promotions that you’ve done”

Example 3

Company to Me: My budget ends at 140k

Candidate to Me: 140k is too low. I’d sign at 150k, but nothing under

To all: Let’s get this done at 140k+15k sign-on. Company X send over the offer letter.

A pulse on the job market

As a recruiter, I frequently was asked to work with other companies. I generally had a good pulse on the market and always had a few startups I really liked. As an engineer, it might be good to stay in touch with a few recruiters you trust to keep an ear to the ground of opportunities that match you well.

Why I stopped

I talked to almost a thousand engineers during this process and met some great people. Along the way, I learned a lot about the ins and outs of recruiting in a relatively competitive industry. But, recruiting and building out a recruiting agency did not align with my personal goals and the incentive alignment bothered me.

Recruiting is sales and I stopped selling. Over time, I found I was sending less volume to my clients. Of the 24 month stint, I only recruited for 10 months because of selling fatigue. Any engineer can become a strong technical recruiter. But if you’re not willing to hit the pavement day in and day out, everything will dry up quickly.

In the next few posts, I will talk about:

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