A recent post by Y Combinator’s Sam Altman, Exploding Offers Suck, detailed his distaste for accelerators and venture capitalists who pressure entrepreneurs into critical decisions on investment offers before they have a chance to shop. The article outlines Y Combinator’s policy of allowing offer acceptance up until the beginning of the program.
An exploding offer is as any offer that lists a date for the offer to expire, with the allotted time being minimal. Altman’s article is about venture funding, but most in the industry gain exposure to this situation via job offers. This practice is fairly standard for college internships, where acceptance is required months before start date. Exploding offers may be less common for experienced professionals, but are hardly rare.
Many companies use templates for job offers where deadlines are arbitrary or listed only to encourage quick responses, which gives a false appearance of an exploding offer. Other firms have strict policies on enforcement, although strong candidates in a seller’s market will cause exceptions.
Why exploding offers exist?
The employer’s justification for exploding job offers may focus on planning, multiple candidates, and finite needs.
If a company has three vacancies and three candidates, how likely is it that all three receive offers? What is the likelihood they all accept. Companies develop a pipeline of perhaps twenty candidates for those three jobs. If six are found qualified, the company has a dilemma. The numbers and odds become ominous for firms evaluating thousands of college students for 100 internships.
The exploding offer is one method for companies to mitigate the risk of accepted offers outnumbering vacancies. They are also used to ensure that the second or third best candidate will still be available while the hirer awaits response from the first choice. Fast acceptance of exploding offers may be viewed as a measure of a candidate’s interest in the position and company, particularly at smaller and riskier firms.
Job seekers may feel that exploding offers serve to limit their employment options, with a potential side effect being lower salaries due to reduced competition. These offers may also help level the playing field for non-elite companies, as risk-averse candidates may subscribe to the bird in the hand theory.
Since they are not uncommon, it’s important to consider a strategy for how to handle exploding offers, multiple offer scenarios, and how to prevent these problems altogether.
Avoid the situation entirely
The issue with exploding and multiple offers is time constraint, and job seekers need to be proactive about these scenarios. The best strategy is to maximize the possibility that all offers arrive at the same time. If all offers are received simultaneously there is no problem.
Those applying to several firms should anticipate the possibility that offers may arrive over days or weeks. When researching companies of interest, investigate their standard interview process, the number of steps involved, and how long it takes. Current or former employees and recruiters representing the company will have answers, and when in doubt the general rule is that larger companies tend to move slower. Initiate contact with the slower companies first, and apply to the fastest hirers once interviews start with the first group.
Strategies to control timing of multiple offers
Unfortunately, job searches are unpredictable and candidates feel they have little influence on the speed or duration of a hiring process. Stellar candidates have much more control than they might expect, but even average applicants can affect timelines.
If Company A has scheduled a third face-to-face meeting while Company B is just getting around to setting up a phone screen with HR, the candidate needs to slow the process with A while expediting B. What tactics can hasten or extend hiring processes in order to synchronize offers?
- Ask – Asking about the anticipated duration of the interview process and about any ways it can be expedited. This is a relatively benign request so long as it is made respectfully and tactfully.
- Flexibility and availability – Provide prompt interview availability details regularly even they aren’t requested, and (if possible) offer flexibility to meet off-hours or on weekends.
- Pressure – As somewhat of a last resort, some candidates may choose to disclose the existence of other offers and the need for a decision by the employer. This can backfire and should be approached delicately.
- Delay interviews – This is the easiest and most effective method to employ, with the risk being that the position may be offered to someone else in the interim. When multiple rounds are likely, adding a couple days between rounds can extend the process significantly.
- Ask questions – There are many details about a company that influence decisions to accept or reject offers, and the process of gathering that information takes time. At the offer stage, questions about benefits or policies can usually buy a day or two.
- Negotiate – Negotiating an offer will require the company to get approvals and to incorporate new terms into a letter.
- Request additional interviews or meetings – Once an offer is made, candidates feel pressure to accept or reject. Another option is to request additional dialogue and meetings to address any concerns and finalize decisions.
Specifics for exploding offers
The issue with exploding offers is typically the need to respond before other interviews are completed, so the goal is to buy time. Some candidates choose to accept the exploding offer as a backup in case a better offer isn’t made. This tactic isn’t optimal for either party, as the company may be without a replacement and the candidate has burned a bridge.
In an exploding offer situation, first discover if the offer is truly exploding. As was mentioned earlier, many companies want a timely answer but don’t need one. The offer letter may give the appearance of being an exploding offer without actual intent. One response to test the waters is “The offer letter says I have x days to decide. Is that deadline firm or could it be extended a day or two if I am not prepared to make a decision at that point?”. The company’s answer will be telling.
If it is discovered that it is truly an exploding offer, resorting to the tactics listed above could help. HR reps may be uncomfortable asking for a decision if they feel a candidate’s legitimate questions are unanswered. As the deadline approaches, negotiating terms and asking for more detail will provide time. The request for another meeting will require scheduling, and the parties involved might not be available until after the deadline. As a last resort, simply asking for an extension is always an option.