This is part of my ongoing posts on Startup Advice. There are people who tell startups that they should hire the most senior people that they can find. I’m not one of those. I believe that you should always hire people are are looking to “punch above their weight class,” which means to hire people who want to be one league above where they are today.
Don’t confuse this with the quality of the individual. I’m a big believer in only hiring A+ team members. I’ll explain both below. Please don’t also confuse this with whether a VC should invest in a CEO who’s done it before – that’s a given.
I’m talking about what most of you are tempted to do. I know because I have this chat all the time – including this morning. You’re stressed. Everyone in the outside world is talking about how great you are but internally you know that your sales aren’t ramping, your product isn’t shipping on time, you have doubts about the quality of your code, you’re not convinced you’re doing a good job on marketing – whatever.
Your solution? Bring in a heavyweight. My advice: don’t.
Weight Class: Let’s take sales. I see a lot of CEO’s who haven’t gotten the quick ramp in sales that they had hoped for want to reach quickly to bring in a VP Sales who has done it all before. It is tempting because you not only see that they were VP Sales at 3 other startups but also that they have great access (according to their resume) to senior executives at companies you’re trying to target. Bringing in a senior person who’s “done it all before” is often a mistake in a startup.
Why? Well, first let’s be honest. At your stage of development do you really think a shit-hot VP Sales is going to join you to head up sales? It reminds me of the Woody Allen line, “I’d never want to join a club that would accept me as a member.”
More likely this person who wants to work at your fledgling company is a decent performer but not a superstar. But aside from that, the skills that are required to be a VP Sales (e.g. hiring / training / motivating staff, setting up sales compensation programs, implementing and enforcing a sales policy) are not consistent with the skills you need in your company at this stage.
You’re far more likely to find success from an individual contributor. You need the sales executive who aspires to be a VP Sales (e.g. one weight class above where he’s at) but has not yet been given the chance.. He’s got something to prove. He’s joining you because your company offers him/her the hope of the big equity package but likely the step forward in his career that he’s been looking for.
And you can always bring on a senior person as a mentor / coach to help guide you personally to become a better sales leader until you’re ready for somebody more senior on your team. In LA I know that people like Vince Thompson do a great job with this. In NorCal there are zillions of people. One group I talked to in the past and really liked was Sally Duby over at PhoneWorks.
So what if you’re already a mid-stage startup. You’re doing $2-$5 million in sales and looking to take the company to the next level. Shouldn’t you just hire the most senior guy you can out of Oracle, Salesforce.com, Microsoft, EA or whatever your relevant industry is? Not so fast. Hiring the big gun will often still be one weight class above where you want to hire.
Let me tell you my story.
In my first company we had achieved a small bit of scale. In our first year of sales we did $2.1 million. This was a reasonable achievement when you consider that it was 2001-02, one of the worst years to be selling enterprise software and we were selling it SaaS style, which was still evangelical back then. In our second year of sales we did $5.9 million and our third year we hit $7.7 million. So we were starting to become a real business. I worked with the board who encouraged me to bring in heavy weights. I shot as high as I could.
SaaS was hot so I was able to land a very impressive guy. I was able to hire the former European head of sales for the largest document management player in the world. He was 10 years my senior and way more accomplished in terms of big enterprise company experience. I had always been a scrappy entrepreneur. Now was time to bring in some process.
One of the things that I had done to help me gain access to senior people that I didn’t know was to bring on a senior guy from industry as a mentor. He helped set up senior meetings for me based on his personal relationships with people. I had given him a small equity stake in my company. This relationship was invaluable because it got me in front of people who I would have ordinarily struggled to get access to in a timely manner.
One such meeting that he set up was with the CIO of the largest consumer products company in Europe. Think the equivalent of Proctor & Gamble. I couldn’t possibly name the them, but it was a huge company, very senior executive.
I asked my new SVP Sales to take the meeting and he had spent a couple of weeks preparing. I got a call the morning of the meeting from my assistant (who was also shared with this gentleman) that he was planning to cancel the CIO meeting. I called him and asked him why and he said that he had scheduled a meeting with all of his top sales guys (we had about 8 by that point) to talk about sales pricing. He felt that we didn’t price correctly and he didn’t want to see customers until he had a grip on it.
WTF!! ?? !! Needless to say I took the meeting myself. A startup CEO would never pass on that opportunity. It is something that perhaps a big company person could fathom. Maybe our pricing needed work – who knows. But in small companies you have a certain ethos of hustling and taking every opportunity given to you.
Several weeks later we parted ways along with another senior executive brought on by this guy. It was clear that there wasn’t a fit. I don’t believe that this was something unique to me. I believe that taking senior people from industry and assuming that they’ll do well in a startup is a farce. I often tell people that it took 18 months for me to undo all of my Andersen Consulting experience to allow me to become an entrepreneur (although in my youth I had done several entrepreneurial activities)
So when I’m helping people think about whom to hire I given the following guidance:
– It’s OK to find somebody who’s had academy experience (e.g. IBM, Microsoft, Oracle) as long as they’ve done a start-up after that before coming to you.
– It’s far better to hire somebody who’s shit hot but stepping up a role (e.g. director to VP) than to hire somebody who has already held a bigger role and is taking a step back because they’re after an equity play in a start-up.
– Be careful not to hire managers for a job that requires individual contribution. This is oil & water territory (chalk & cheese if you’re a UK reader).
– Never hire somebody who is going to relocate for your job unless they’re young, single and have no attachments. I’ve hired so many people who were going to move after they got my job offer. I can’t tell you how many times I’ve encountered the house that wouldn’t sell, the need for the kids to finish the school year, the wife who can’t find a local job. Life’s too short – find somebody geographically desirable or totally mobile.
A Plus Employees: One other quick note is about the quality of the people you hire. In arguing for people who punch above their weight class I’m not arguing for tell talented individuals. To the contrary. I believe very much in hiring the best people you can possible attract and making compensation (either equity or cash) enough to motivate them to join and stay.
I never believe in hiring B players and then trying to upgrade with more talented people later when the company has more cash, more customers or is performing better. The problem is that A players are only attracted to work at places where they see other A players. They smell B from a mile away. And also B players often don’t hire other B people. In my experience B players hire C people. A begets A, B begets C. Don’t go there.
The advice to not hire too senior should come as no surprise to anybody who read my views that “Startup Founders Should Flip Burgers” or in other words should do many of the detailed jobs themselves.
Appendix: Some recent war stories for anybody still interested –
– very talented young entrepreneur comes to see me pitching a business he just joined as CEO. He is mid 20’s. He brought his president who founded the company, mid 40’s. This guy had previously been CEO and also ran another company. I wrote the young CEO after the meeting and told him to pitch his next company to me. Less than 6 months later he had quit over disagreements in the business. He’s now CEO of his own startup.
– Young talented 22 year old starts company that’s interesting. Brings in early 40’s CEO above him. He’s also talented. Culture clash over direction of the company and work styles. I pass on the investment despite loving both entrepreneurs but not together. Junior guy quits less than 6 months later – on his next startup now.
– Very talented young woman comes in to pitch her business. Her pedigree is phenomenal and she clearly comes across as exceptionally bright. I’m guessing early 30’s (I didn’t ask ). Hires president who is significantly older (I won’t guess age in the off chance she reads this). She has runs businesses in her own right. She is backable herself. In this configuration – never. I pass. Just heard they got funded. When this doesn’t work out I won’t be surprised.
– Promising young CEO of a digital out-of-home-advertising company presents to us. We love his energy, enthusiasm and achievements to date. Hires a very senior sales guy out of New York who has tons of media experience. I whisper to my partner, “He should be CEO. He’s never going to work for these guys for long. Trust me.” One year later founder is let go (along with most of the team).
– Not so young, but not so old (just to show I’m not trying to be ageist here) promising entrepreneur comes in to see me. I tell her she needs a co-founder. She is very gifted and has great ideas but lacks enough experience. She brings in a heavyweight. He’s backable in his own right. He’s been a CEO before and CTO of a very well known company. My gut tells me the configuration is wrong.
Gosh, I could go on forever. The pattern is so recognizable to me. Whatever your age / experience it’s Ok to start a business. But when you go to recruit your team – shoot for the absolute best players you can possibly find who want to punch above their weight class.
Ok, I know it’s controversial. If you want to call BS have at me in the comments