As investors, we’re in a great position to help our founders convince candidates who are on the fence about joining their company.
First, we’ve seen hundreds of candidates being hired across tens of companies. This gives us more data points than those available to most founders about which approaches work and which ones don’t when trying to convince different types of candidates with different motivations and concerns to join a company.
This doesn’t mean that we get every candidate to cross the finish line. However, we improve the odds that they do.
Second, an investor is able to provide a more objective, bird’s-eye view of the company. Although we’re also biased because of our equity stake in the company, we have less skin in the game than founders. This helps us balance the founder’s more subjective view from living in the trenches with a more objective view from thirty thousand feet.
The founder’s view is more important because that’s what will eventually determine the company’s success. It is the founder’s view that the candidate needs to believe. However, an investor can provide a valuable complementary perspective.
Third, having an investor spend time speaking with a candidate prior to their decision shows that the investor cares. And for an investor to care, the founder must have communicated to the investor how much they care about the candidate. This means that the founder also cares. And candidates want to work with founders who care.
Several of our founders regularly ask for our help to convince candidates to join their company. I wish that even more did.
Hiring can be very difficult for a startup. You’re competing for talent with established companies that have a stronger brand name and the resources to offer better financial terms than you. You can compensate for offering a lower base salary with an attractive equity package but whether that equity package will eventually amount to something is a question mark. The truth is that most startups fail.
You may be the rare exception to this. You may have achieved product market fit and may be experiencing breakout growth with a group of all star investors that make hiring easy for you. You may be the next Facebook (back in 2006) or Uber (back in 2011). If this is the case, you’ll have a good shot at hiring the exact candidates you want.
For most startups, this isn’t the case. You need to compromise on hiring the best person for the role because you don’t have the brand name and financial resources to do so. In these cases, I recommend hiring for the next year.
This means that you should hire people who will be able to properly fill their roles based on where you believe the company will be next year. Ideally you’d like to hire for 3-5 years out, but as discussed earlier, you’re unlikely to have this luxury. And hiring for right now is too shortsighted. If you don’t think that the hire is good enough to meet the demands which the role will require of them next year, this will be a costly hire. The up-front costs of hiring, integration, training, and eventual replacement are unlikely to justify the less than year long contribution that they make to the business.
Steve Newcomb was the founder of PowerSet, the developer of a natural language search engine which was acquired by Microsoft for ~$100M and is now part of Microsoft’s search engine Bing.
In his 29 page write-up entitled “Cult Creation“, Steve summarizes some of his unconventional hiring and team management insights. These include his suggestions to:
- Try before you buy when hiring
- Treat all candidates including those that you won’t be hiring like gold
- Develop and communicate a worst case scenario for your startup that’s better than the middle or even best case scenario of most other startups
- Set the salaries and equity awards corresponding to different competency levels for each talent type (engineering, marketing, product, …) and don’t allow for negotiations within a specific competency level
- Incentivize employees to live close to the office
You can read the full piece here.
Whenever a startup says that they’ve found a hero hire, a red flag goes up in my mind. There are two reasons for this.
The first is that the need for a hero implies a big problem. If you feel like you need a hero, it’s likely that things aren’t going well. Otherwise you wouldn’t be looking to a single person to save your startup.
The second reason is that a single hero doesn’t exist in real life. It’s just a romantic ideal. In reality, success calls for a team consisting of many heroes who excel in their respective roles. But when you’ve built such a team, since there’s no single individual who stands out, they’re no longer heroes but a collection of great people. They’re no longer the romantic ideal but the reality.