Thursday
May172012

hiring: think backwards



Suspend Disbelief, then Think Backwards - from Bill Keating.


Suspend all disbelief, imagine that you are successful, and then work backwards.  One of the things I always do with my companies is outline what core skill areas I need and then what "imaginary" people I would want in each position.  I kind of treat it like a "fantasy football league" way of creating what the org chart would look like if we already were a successful company.  

It's a good process to follow, because as you are adding key people on board you can compare them to your imaginary best case person.  The reason why this is important is because you don't want to get caught in what I call relative positioning.  

In all of the mayhem that exists during the early stages of a company, many founders end up only comparing different candidates against each other and forget to remember a constant.  The problem is that if you only have B+ level people in your pool, but one is an A-minus, then the A-minus candidate will appear to be the one you want to hire - which would be a mistake.  The proper comparison would be to a consistent benchmark of the A+ person you need.  Although it’s easy to say that you would never hire an A-minus person in any role, it’s easier than you think to accidentally do it.  If you put a process in place to ensure that you always compare against an absolute constant imaginary best case scenario, you won’t make this mistake.

Thursday
May172012

hiring: transparency



Be Transparent - me.  


I have always been ultra-transparent and I have never been bitten by it.  I really don't see why founders aren't more transparent about simple things, like what their founders’ equity ownership is, and what their salary is in the company.  

I often go much further than this and share the entire salary plan and equity plan for all employees with everyone in the company.  It does something incredibly important.  It will convince engineers, who are generally mistrusting, conservative and logical people, that you thought through the salary plan and equity logically and the fact that you shared it with everyone will help them trust you.  

Whenever I do stuff like this, it gets a lot of attention, but I really don't understand it, I just think this is normal and a no-brainer. It also heads off at the pass that drunken disclosure scenario that always gets someone pissed off or quietly erased.

Thursday
May172012

hiring: treat candidates like gold



Make Sure Every Single Candidate is Treated Like Gold - so many startups I know don't do this one, but it's actually pretty big.


Here is the concept.  No matter what, every single person that ever interviews, or for that matter touches your company in any way, should have a great experience, regardless of the outcome of the interview.  

Here's why.  

People talk, text, twitter and update their status on FB and word about how you treat people WILL get around.

Once I know from other people in the company that it is going to be a "no" for someone, I switch gears from hiring to “successful exiting of the candidate.”  The goal is speeding up the process of getting that person out of the building so it prevents wasting the time of the engineers while making sure that person is respected and treated just as well as anyone who a “yes.”  

I always pinch myself to remind me that it is critical that even when we want to end the interview immediately (which happens) we do so in a way that is honest, respectful and mindful that we want that person to go away feeling like maybe they are bummed the interview didn't work out, but that the company rocked.  

If you do this, believe me it will get around and it will benefit you in many ways.  If you don't do this and you act like a pompous ass in the interview, it will get around even faster and it will cripple your ability to hire good people.

I bet right now, off the top of your head, you could name at least one company that has a reputation for treating candidates or its people like shit.  That news travels fast and far.

I know that I have jokingly said that C-level candidates should be killed, but in all seriousness, when any candidate comes into your office, make sure your shit is together, you're organized and you take extra time to give respect to the people you say “no” to.   If you do say “no,” tell them exactly why you are saying “no.”  Don't bullshit them and don't simply blow them off... it will come back to bite you.  One of your key evaluation metrics for your HR person is what percentage of people come away from the interviewing process loving the company.  A second one is verifying that every single applicant and interview candidate has been responded to.

Thursday
May172012

hiring: try before you buy



Try Before You Buy (TBYB) - (principles: interviews don't work and hire slowly and fire quickly)  


After building so many companies, I now advise that, for as many people as possible, candidates are never hired after being interviewed.  

I urge founders to offer people a one-month, auto-terminating, consulting contract that pays the person the exact amount of cash and equity (but in NSOs instead of ISOs) that the  person would get if they were an employee.  

During the month, the team, including people that didn't get to interview with them, would be able to interact with that person.  After a full month, everyone in the company would at least have a strong opinion on whether or not the person was a cultural fit and the team that directly interacted with the person would have a strong opinion on the competency of the person.  

At the end of the month, I had three options:

  1. Let the contract expire without giving them an employment offer. 

Notice, in this case I set myself and the candidate up so that the default was they were terminated, so the candidate who doesn't get an offer doesn't have to go through any embarrassing situation - they could simply claim they let the contract expire, minimizing the impact on the team and them. In reality you are firing this person, but this way there are no worries of getting into a lawsuit for wrongful termination or anything like that - really only employees can sue for that kind of stuff, and believe me... it is a real risk when you are firing someone these days.  
  2. I may simply offer to hire the person and then offer to convert their NSOs earned as a signing bonus of ISO or RSPA 83b'd stock.
  3. I may make adjustments to their offer.  It is not uncommon to love a candidate, think they are competent, but either under-assess or over-assess their skill level.  In many cases, I have seen a person come into their try-before-you-buy contract assessed at a Junior 1 level, but after one month, their team tells me the person is really a Junior 3.  Only one time have I had it go the other way... but in all cases the candidate accepted the changed assessment.  

TBYB is perhaps one of my most powerful tools.  It lets you slow down the hiring process, speed up the firing process (or rather the termination process) and it let's you use interviews not as a hiring decision, but rather as one gate in a multi-gating process of a candidate getting an offer letter.

Thursday
May172012

hiring: try new shit



Try New Shit All the Time - trial and error.  


I have found that there is some sort of weird assumption that certain things can't be changed once a decision is made.  I guess it has to do with looking bad, or some weird reverence to not trying something new.  

I've learned over the years to challenge that type of thinking when I come across it.  For example, I have had several, but not many, cases where a specific employee was so talented that I was constantly unable to put them in a competency level, which is what we used to determine salary and equity. They were such fast learners that within months they had gone from a junior employee in my mind to an "I can't live without them" employee.  

What do you do?  

The answer is simple.  Pay them more and let everyone know that you are doing so.  Don't shy away from it.  If you discover a rock star, pay them.  Your employees, your board and your conscience will support you.  

Further, if you put someone too high and you realize your mistake, tell them and move them down.  I've done that too and the employees, including the one I moved down, agreed with me and applauded my bravery for admitting that I screwed up.  

Thursday
May172012

hiring: using if then statements



IF THEN Statements Work - developed during the process of me convincing the first 8 employees of Powerset to join.  


For many founders, hiring the initial team is one big chicken and egg problem.  Investors want to see a group of super talented people committed to your idea before you have any money.  Employees, who are much more risk averse than founders, want to see that you already have money, or that your money is nearly assured before joining.  It's a common challenge.  

So who wins this chicken and egg? 

Well I’m a big believer that the best ideas are those where you can convince people to join even when there is no money.  Following the talent is an easy way to see where the best startups are forming. 

So how do you do this?  

OK.  So here is what I have learned:

  1. Write down the names of your founding employee targets - the initial people you are trying to convince to join.  
  2. Write down any dependencies that exist between those people.  i.e. if that guy joins then I'll join.  
  3. Write down the dependencies for each person that are independent of the other candidates.
  4. Highlight dependencies from #3 that are common among the candidates.  
  5. Write down those dependencies from #4 that are necessary to solve before your next conversation with each candidate
  6. Write down those dependencies from #4 that you need to solve before they would be willing to sign an offer letter
  7. Write down those dependencies from #4 that you need to solve before each candidate is willing to quit their current job and join - notice I differentiated between signing an offer letter and quitting their existing job and working full time.  

 Once you’re done this exercise, you should end up with a long, but understandable IF THEN statement. 

You should now know the order in which you need to land your team and the order of the dependencies you need to solve.  This gives you your “to do” list and what should be the top priorities of the company.  

By doing this exercise, you’ll also know what dependencies will exist at the time you want them to sign an offer letter.  That’s critical.  Most first time founders think you have to have all dependencies met before you can ask a person to sign an offer letter.  You don’t - put those dependencies inside the offer letter as a condition of starting employment instead of a start date.  In other words, the day those dependencies are solved, they agree to give notice to their existing company and begin at yours within 2-3 weeks or so.  

Once you have signed offer letters, even if you have dependencies in them, investors, partners and other candidates will see this as a sign of strength.  This is often called “lookin like a duck and quackin like a duck” - it shows momentum and that’s always critical.  It helps you maintain your cadence and always gives you and those that have joined something to celebrate.

Note: getting a full salary is generally not a good dependency - if it is, you've got bigger problems with that candidate.  Either they really don't believe in your idea, or they are so risk averse you should actually target them in the second or third wave of employee hires and not the first.

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