Toronto tech startup Halogen Mobile lands LG and Microsoft, but rapid growth hurts HR

Halogen Mobile has no company website, marketing staff or business development plan — but it still sells to Fortune 500 companies.

Sounds like a business model worth bragging about, but those missing elements reflect a plan that focused on business development at the expense of human resources, leading to problems that could derail the Toronto tech start-up’s progress.

The nine-month-old agency offers software strategy, design and development services to businesses attempting to operate on smartphones and tablets. Driven by co-founders Jason McFadden and Gary Fung, two experienced mobile tech entrepreneurs, and their talented team — of mostly designers and programmers — the company has been scoring one major project after another, developing a variety of mobile applications for small, medium, and even multinational businesses.

But McFadden and Fung have never had a strategy to grow and manage their workforce — and that’s causing problems. Potential hires are spurning the company, talent is getting poached by the competition, staff are concerned about growing workloads and, quite possibly, the company is missing out on sales.

“What keeps me up at night is the potential loss of opportunities,” says McFadden, who has held leadership roles at mobile companies such as Jump Ideas — his first start-up — and AIC Wireless Inc., which provides mobile products to corporate clients.

Still, Business took off with a bang.

Leveraging their professional networks, McFadden and Fung landed two major corporate gigs: designing a mobile video platform for LG’s new smartphone, and creating an app to demo Microsoft’s new Windows smartphone. To manage its burgeoning workload, the company has expanded from the two founders to a group of 10, which includes four developers, two designers and one vice-president of mobile strategy. Two design interns are also on the team, which works in a loft-style office space in Toronto’s Liberty Village neighbourhood.

But while business has been booming, the company’s hiring and retention efforts aren’t working well. Several prospective developers have already turned down job offers — in part because Halogen still has no website.

“They were unsure of the company’s ability,” Fung says. “Not having a public image hurts recruitment efforts.”

One of the company’s programmers also suddenly left early this year — before he even finished his three-month probation period — for a better offer from a business just a few streets away. With an already lean workforce, Halogen was left in the lurch, having to outsource some tasks and ask clients to shift deadlines.

These kinds of staffing problems can cripple a new tech company. The industry is simply too cutthroat, especially when it comes to recruiting talent, for start-ups to get away with many mistakes, says Nina Cole, chair of human resources management at Ryerson University’s Ted Rogers School of Management.

“We have an IT talent shortage that is only getting worse, so these companies need some sort of HR expertise to get the best people and plan for their future growth,” she says.

The lack of a human capital strategy has also affected Halogen’s capacity to promote itself and generate more business. The company has yet to hire dedicated sales, marketing or business development staff. In the beginning, this was partly due to limited funds, but also because the founders felt compelled to focus on creating solid software to feature in their marketing.

Now, the company has projects to show off, and enough cash to make the hires. But as technical people, the founders lack the expertise to assess qualified marketing professionals, and they’re hard to find anyway — most experienced marketers are employed by larger companies. Plus, the pair is hesitant to hire someone who may not fit their office culture.

Cole says that while this fear is common, allowing it to paralyse a business will harm its professional reputation — and sales.

“Without people promoting their company, no one will take them seriously. Competitors will gain an edge and the market will disappear right from under them,” she says.

No sales and marketing personnel has meant no launch event, no company blog, no active Twitter account and, of course, no website — a source of major frustration McFadden and Fung.

But solving the problem won’t happen without the right staff. The owners are trying to handle all the marketing and HR work themselves — McFadden does the prospecting, deal making and client management, while Fung facilitates payroll, manages vacation schedules and interviews potential employees. But both concede these tasks are becoming increasingly hard to manage on top of growing client work. They’ve tried enlisting the help of staff, asking them to dedicate 20 per cent of their time to building the company’s brand. But they’ve complained that the work goes beyond their original job descriptions, and they’re all far too  busy anyway.

In a way though, that’s the good news for Halogen — despite HR missteps, it has enough industry connections and raw technical talent to generate ongoing work. For now anyway. Without a public image, that demand may not last for much longer.