Picking the Right People
Serial entrepreneurs and their investors repeatedly tell me the same story: “I pick the best people and don’t compromise.” The corollary is “Startups cannot afford good people. They make too many mistakes. You have to pick the great ones.” Those are not jokes. Veterans take hiring very seriously. In fact, they take people finding more seriously than raising venture capital.
It is not difficult to interview for skills. That is learned on the job, quickly, in all organizations that grow. But for startups, there is much more to look for in a candidate for hire.
The early seed or chaos stage is where the company’s culture is formed. The core values of the company are those of the first dozen new hires plus those of the core team. If you hire the wrong people the culture will be set with values you do not want in your startup. It will be the right values that motivate your people to do amazing things, especially when the inevitable dark days arrive.
After many tests of core teams, I have concluded that first time entrepreneurs do not have the practiced skills to interview for people who fit a definitive culture. When I ask such core teams for what they are going to interview for, I get the typical lists of skills and experience. Missing are culture values. The reason is that naïve leaders do not yet appreciate the power of startup culture in determining success or failure of new businesses. And they have never tried to build a culture from nothing. They instead have learned to interview in established organizations whose cultures are written in stone. This is one reason to begin years in advance searching for people to join you in your Dream Team core management group. It takes time to get to know people’s values and true character. Character is best seen when watching how a person reacts to life’s cruel blows on the job and at home. That takes years to happen.
Core teams should begin on day one to replace themselves. The core team’s skills will be challenged in successively different ways as the new enterprise passes through each distinct stage of its life. This is discussed in detail in the Stages chapter. Each stage demands special talents, some which will be missing in the core team. At some time the company as a whole will conclude that another person is needed to take over where the core team member is no longer getting the results needed by the rapidly changing startup. Wise core team veterans know they will be replaced, sooner than later. They actually prepare for picking great people to join the company and replace themselves and are open about that inevitability.
Investors will do reference checks on the core team by asking a lot of questions about how well the person recruits outstanding people. It is one of the gates the core team person must pass through if the startup is to be funded by that investor. Investors look in the core team for a primary skill: evidence of a track record of recruiting outstanding people. Picking the right people for the right phase requires special hiring skill. It is not easy for the first timer to do such recruiting well.
EXAMPLE: I always remember my first interview of Peng Ong, a very wise serial entrepreneur and founder of several startups, including Interwoven that went IPO. I asked him to tell me his story about joining and then leading new enterprises. As he told me his tale of startup rides, he began to see a picture in my mind of a man on a bicycle racing over the hills and through the wood, flying up and down and back up, each radical change jolting to emotions and soul. He sounded like the veteran he was reputed to be: Smart. Innovative. A step ahead of the rest of us. A very able startup rider. As he continued his story, I was very intrigued because his dialogue was so often about people. So I should not have been so surprised to hear his description of his hard-earned philosophy about hiring people for his startups. “I learned the hard way not to hire just anybody. What I mean is that I made big, regretful mistakes when I hired people just because I needed a body to fill a slot in the organization. They were not just okay – they made terrible decisions. It cost me and my startups a bundle. Now I wait. It takes guts to say ‘No’ when you have a candidate you could compromise on. But I no longer do that. I wait until I have found the right person. The outstanding one.” After years of interviews of startup CEOs, I now agree with him, and so do many others who have done startups. It is the mantra of the serial entrepreneur: “Hire only outstanding people.” You’ll never regret it. It is worth the pain of saying “No” to ordinary people.
Tomorrow: Dream Team Recruiting