Raw Entrepreneurship – The Ingredients of Acquiring and Retaining Key Employees from Ground Zero

Space-O Article

Introducing Rakesh & Space-O

Back in 2010, Rakesh Patel founded his software company in Ahmedabad, India, with just $1,000, an empty office, and a few plastic chairs. Today, Space-O Technologies manages over 3,000 mobile applications with more than 20 million downloads, has powered 25+ successful startups, and incubated eleven additional businesses.

In just seven years, Space-O Technologies has grown to over 250 employees, with offices in Ahmedabad, Siberia, Saint Petersburg, Silicon Valley, and now Canada. This remarkable growth story sparked my interest in learning more about how Rakesh achieved such success. In this piece, I’ll explore two key aspects: how Rakesh acquired top talent from the ground up and how he retains his key employees now that the company is established.


Building a Talented Team from Ground Zero

Going back to the beginning, Space-O was just an empty office. Rakesh acquired clients found on elance.com and obtained enough work to support a small team. He was good at selling his services. Really good. In fact, so good that he couldn’t keep up. He had to expand his operations and start hiring.

Facing reality, having an empty office with no staff makes qualified candidates feel insecure about pursuing a career at your company and talented engineers in Ahmedabad have other options. The most qualified people of Ahmedabad either fly away to the US or go to other parts of India like Bangalore. What’s left is a small pool of talent who could easily work for established companies down the street. For Rakesh, it took five weeks and going through virtually all of his contacts to acquire his first employee — a recent college graduate with a design degree. It was frustrating.

The challenge was presenting a warm impression of the company. How do you present a secure company to work for — a place where a skilled person can build their career — when all you have is an empty office? Having to fill an empty void, Rakesh tries something different.

Immediately after his first hire, he found ten low-level data entry staff and rented ten PCs to fill up his office. He didn’t really need a data entry staff, Rakesh just needed to fill the room with people and basic infrastructure to make his business appear like a successful place to work. Immediately thereafter, he started inviting more candidates for interviews. And sure enough, within a week, he was able to hire five more talented people, switching out the low-level staff or having them repurposed.

A talented team was born and today Space-O employs 60+ people in Ahmedabad. He later went on to employ 250+ people world-wide.

Space-O team at HQ in Ahmedabad, India.

Retaining Key Employees

We’re living in a world where more people are seeking to become entrepreneurs, this is also very true in Ahmadabad. Your key employees — top engineers and managers — could easily open up their own app shop right next door to your business. What can be done to keep them working with Space-O? Another idea emerges…

To instill a sense of loyalty and drive in his workplace, Rakesh started an incubation program within the company that offers managers the option to receive funding and work on their own startup idea. He funds the idea and provides mentoring to build the employee’s new company.

Here’s how it works… When you become a manager at Space-O, and you work for four years as a manager, on the fifth year, Rakesh and his partners offer the option to personally train the employee to build a business. On the sixth year, Space-O invests in their dream project.

They invest in the employee’s idea, they fund the idea with 75,000 US dollars (spread over three years) and continue to provide the employee’s salary in addition. The employee (now startup founder) gets access to the pool of Space-O talent who are then recruited under the new business in which they start building their new team.

The new founder is given a 28% equity stake in the new business and as the company operates successfully for nine years, the new founder is offered to buy back up to 90% equity of the business. Space-O keeps a perpetual 10% ongoing.

These actions produce an encouraging phenomenon within the company culture. It’s motivating, everyone feels like they’re working for an organization that cares about their dreams and the staff cares for the organization in return. Today, Space-O has incubated eleven such companies from within its business. Every company is profitable and Space-O has retained virtually all of its key employees.


Final Thoughts

“You have to deal with the reality of the local culture up front. It’s an ingredient to connecting with the reality of your staff.”

Rakesh Patel

Every geolocation has its own unique culture, and embracing this reality is key to building a successful team. In Ahmedabad, Space-O Technologies launched an incubator program that significantly reduced the risk of losing key employees. This program fosters a driven culture, showing staff that their organization cares about their career growth. But before attracting employees, creating an appealing workplace was essential.

I first met Rakesh in Mountain View back in 2015, and since then, he has become a great friend and collaborator. Last summer, my wife and I visited Rakesh and his family in Ahmedabad, the heart of Space-O. I had the privilege of meeting the executive team and witnessing firsthand the “Get Shit Done” mindset Rakesh has instilled in his teams (check out the video). It’s inspiring to see good people doing amazing things in this world.

Keep up the great work, my friend.


About the Editor: Jason Weber is a Director at Wiseflow Ventures. He’s built several profitable companies in SaaS, IT Consulting, and Corporate Housing, and has worked at top tech firms including Amazon, Hewlett-Packard, and Intel. He holds four issued patents and is passionate about practical Zen, the Flow State, high-tech, and the hustle.