A hiring spree in the crypto industry is being fueled by VCs and tokens

The digital asset realm is growing so fast that crypto firms are finding it hard to attract and retain key people.

“The competition for talent is greater than ever before, so there is a heightened focus on recruiting and retention,” said a spokesperson at Fidelity Digital Assets.

Demand for key talent in the crypto industry is outweighing supply, according to representatives from multiple companies, despite a flood of new entrants from traditional finance industries. This has led to a greater focus on remote work along with token incentives instead of traditional equity shares. 

An influx of new talent

According to crypto exchange Kraken, lending firm Nexo and Fidelity, there has been a big influx of new entrants from the traditional finance world lately.

“A big part of the requests are coming from people who used to work in large multinational corporations and non-crypto fintechs and then decided that a corporate environment was not their cup of tea anymore,” said Antoni Trenchev, co-founder of Nexo.

Fidelity’s spokesperson said that the increase in mainstream coverage of the crypto space has helped bring in a broader set of candidates.

And yet, despite this influx of new human resources, many crypto firms are growing so quickly that they’re still struggling to fill roles and expand their teams fast enough. 

“Even though Kraken has increased its headcount by 50% since the start of the year — and we have plans to hire a further 1,200 in the second half of 2021 — our demand for staff continues to outpace the supply of suitable candidates,” said Kraken COO David Ripley.

According to Rob Paone, founder of crypto-focused recruitment agency Proof of Talent, companies are increasingly offering the option of working remotely — largely spurred on by the pandemic — in order to make their companies more appealing. Finding someone to come into an office is orders of magnitude harder, he said.

Coinbase is one firm that went remote-first, offering employees to work wherever makes the most sense for them. The firm also raised its compensation from the 50th percentile of the industry to the 75th. 

Paone noted that compensation in the crypto space has also risen in general. While it remains lower than at traditional big tech companies, the appeal of working in the crypto space can outweigh the difference in salary.

Using tokens as incentives

Paone added that the recent bullish market activity has made compensation through cryptocurrency tokens much more appealing. 

Some companies issue their own tokens, which they hand out either as salary or as bonuses. One example is crypto exchange Binance, which has 2,000 “team members” (CEO Changpeng Zhao prefers the term as opposed to “employees").

Zhao said that a “decent number” of the exchange’s team members are paid in BNB, Binance's own token that runs on Binance Smart Chain. “There is a saying within Binance that anyone who just held onto the BNBs they received from Binance for their work have reached financial freedom, and there are quite a few of them,” he said.

Zhao added, “Once there is a coin, the incentive structures are different from a traditional company. Subtle, but important.”

Nexo is another company that uses token incentives. Employees receive a portion of their bonus payments in NEXO tokens "as a way to really feel part of the company’s success," Trenchev said.

VC helpers 

Tokens aren't the only bow in crypto firms' quivers. Increasingly, companies are relying on their venture capital investors to help source talent, according to Paone. 

Haseeb Qureshi — a managing partner at leading investment firm Dragonfly — said that helping portfolio companies recruit is one way VC firms are justifying their keep. 

"Crypto is a super competitive talent market," he told The Block in a message. "Many companies quickly find out that just raising money is not enough to be able to attract world-class talent."

Dragonfly is known for backing firms like Celo, Anchorage, and dYdX. Dragonfly recently hired Zack Skelly, former head of recruiting at 0x, to help portfolio companies recruit.

Paradigm — another prominent investor in the crypto space — recently made a similar move, hiring Dan McCarthy as a talent partner for the firm. The headhunting veteran, who previously cut his teeth recruiting engineers for Google, joined earlier this year. 

"He parachutes in and works closely with founders and helps them on executive or engineering searches," said Alana Palmedo, a partner at Paradigm, during an interview earlier this year. 

"To get the best people, you have to be plugged into the right networks and you have to win their trust and sell them on your vision," Qureshi commented.