Tag Archives: Impact

Making friends before shaking the tree

I recently asked a very successful executive whose thoughts I respect how one should approach new work environments. Although my question was in the context of new work environments, I believe that his answer is valid for all new environments.

Here’s the succinct answer:

“Make friends and get to know the organization before shaking the tree”

In other words, try to have an impact. But before you do so, recognize that having an impact comes through mobilizing people. And people don’t mobilize for someone they don’t know and respect. So getting to know people and building meaningful relationships is the first step to having an impact.

Investor involvement in moderation

My parents used to tell me that I should do everything in moderation. The reason why they said this is because my tendency is to do things at their extreme or not at all. So the recommendation was correct in light of my starting conditions.

However, over the years, I’ve discovered that the right approach actually depends on what you’re doing and what outcome you hope to achieve. In some contexts, getting the outcome you want requires doing things at their extreme. In others, it requires moderation.

For an investor, getting involved with the startups you invest in is an example of the latter.

If you do it too often, you become a hassle for the entrepreneur rather than a source of help. And because you’re intervening all the time rather than when it matters, the interventions that you attempt to make when it matters become less impactful.

However, if you don’t do it at all, you’re not able to help out when it’s necessary because you don’t know what’s going on at the company and the entrepreneur doesn’t think you care.

Investor involvement in moderation produces the best outcomes.

A startup’s edge in hiring over big companies

When startups compete with big companies for talent, they’re often unable to match the cash salary offers made by the big companies. The reason is that startups have less money than big companies.

However, startups have two big advantages over big companies which they can use to attract talent. The first is equity (or options on the underlying equity; I’m going to use equity to cover both equity and options throughout this post). The second is the offer of responsibility and the ability to have an impact which this responsibility brings.

Big companies rarely offer equity to their employees. In theory, they could, but in practice they don’t. I think this has to do with the fact that most big companies need most of their employees to execute on their existing operations. They don’t see the need for people to come up with and execute on creative new projects. And the former employees don’t demand equity.

And even if big companies did offer their employees equity, this equity doesn’t carry as much upside as that offered by a startup. The equity upside potential of a startup is much greater than that of a big company.

So startups can gain an edge over big companies by offering equity to their employees. As a result, startups need to frame their compensation discussions with employees around the value of the total package they’re offering rather than just the cash component. While they’ll likely fall short on the cash component, the expected value of the total package will be greater if the candidate believes that the startup has the potential to be a great company. And you want to work with employees who believe this.

In addition to emphasizing the value of the total package it’s offering, a startup can give its employees more responsibility than that offered by a role at a big company. And with more responsibility comes the ability to have a greater impact. Not every employee wants this. But, once again, you want to work with employees who do.

So, if you believe you’re a great startup but are having difficulty winning talent over big companies, keep emphasizing the total package you’re offering and the responsibility and ability to have an impact that the role you’re looking to fill provides. It’s a great way to filter out the talent that isn’t a good fit for your startup and attract that which is.