Aww man, you sold your soul
Naww man, mad people was frontin’
Aww man, made something from nothing
—Kanye West, New God Flow
Your startup is going well and as your business expands, you hear the dreaded words from someone on your board: “You need to hire some senior people. Some real ‘been there, done that’ executives to help you get the company to the next level.” Really? Is now the time? If so, where do I begin? And once I get them, what do I do with them? And will I know if they are doing a good job?
The first question you might ask is, “Why do I need senior people at all? Won’t they just ruin the culture with their fancy clothes, political ambitions and need to go home to see their families?” To some extent, the answer to all of those may be “yes” which is why this question must be taken quite seriously. However, bringing in the right kind of experience at the right time can mean the difference between bankruptcy and glory.
Let’s go back to the first part of the question. Why hire a senior person? The short answer is time. As a technology startup, from the day you start until your last breath, you will be in a furious race against time. No technology startup has a long shelf life. Even the best ideas become terrible ideas after a certain age. How would Facebook go if Zuckerberg started it last week? At Netscape, we went public when we were 15 months old. Had we started six months later, we would have been late to a market with 37 other browser companies. Even if nobody beats you to the punch, no matter how beautiful your dream most employees will lose faith after the first five or six years of not achieving it. Hiring someone who has already done what you are trying to do can radically speed up your time to success.
But CEO beware: hiring senior people into a startup is kind of like an athlete taking performance-enhancing drugs. If all goes well, you will achieve incredible new heights. If all goes wrong, you will start degenerating from the inside out.
In order to make all go well, if you are considering hiring a senior person, do not chase an abstract rationale like “adult supervision” or “becoming a real company”. A weak definition of what you are looking for will lead to a bad outcome. The proper reason to hire a senior person is to acquire knowledge and experience in a specific area.
For example, as a technical founder, you probably do not have terrific knowledge of how to build a worldwide sales channel, how to create an invincible brand or how to identify and negotiate ecosystem-altering business development deals. Acquiring a world-class senior person can dramatically accelerate your company’s ability to succeed in these areas.
One good test for determining whether to go with outside experience versus internal promotion is to figure out whether you value inside knowledge or outside knowledge more for the position. For example, for engineering managers the comprehensive knowledge of the code base and engineering team is usually more important and difficult to acquire than knowledge of how to run scalable engineering organizations. As a result, you might very well value the knowledge of your own organization more than that of the outside world.
In hiring someone to sell your product to large enterprises, the opposite is true. Knowing how your target customers think and operate, knowing their cultural tendencies, understanding how to recruit and measure the right people in the right regions of the world to maximize your sales turns out to be far more valuable than knowing your own company’s product and culture. This is why when the head of engineering gets promoted from within, she often succeeds. When the head of sales gets promoted from within, she almost always fails. Asking yourself “Do I value internal or external knowledge more for this position?” will help you determine whether to go for experience or youth.
Once They Arrive
Bringing senior people on board can be fraught with peril as I outlined in Why is it Hard to Bring Big Company Execs into Little Companies? and Hiring Executives: If You’ve Never Done the Job, How Do You Hire Somebody Good?
Equally difficult is managing them effectively once they come on board. Senior people pose several important challenges:
They come with their own culture – they will bring the habits, the communication style and values from the company they grew up in. It’s very unlikely these will match your environment exactly.
They will know how to work the system – because senior people come from larger environments, they usually develop the skills to navigate and be effective in those environments. These skills may seem political and unusual in your environment.
You don’t know the job as well as they do – in fact, you are hiring them precisely because you don’t know how to do the job. So how do you hold them accountable for doing a good job?
In order to prevent the internal degeneration mentioned earlier, it’s important to both be aware of the above issues and then employ appropriate countermeasures to make sure they don’t metastasize.
First, you should demand cultural compliance. It’s fine that people come from other company cultures. It’s true that some of those cultures will have properties that are superior to your own. But this is your company, your culture and your way of doing business. Do not be intimidated by experience on this issue, stick to your guns and stick to your culture. If you want to expand your culture to incorporate some of the new thinking, that’s fine, but do so explicitly—do not drift.
Next, watch for politically motivated tactics and do not tolerate them. I describe this in detail in How to Minimize Politics in Your Company.
Perhaps most importantly, set a high and clear standard for performance. If you want to have a world-class company, you must make sure that the people on your staff—be they young or old—are world-class. It is not nearly enough that someone on your staff can do the job better than you can, because you are incompetent at the job—that’s why you hired them in the first place.
Be careful not to set a low bar because you have not done the work to know what good is. For example, I’ve seen many a young CEOs excited about her company’s competency in marketing and PR because she got a bunch of positive stories on her launch. That’s not a high PR standard. Anybody can get reporters to write nice things about a sweet, cuddly, baby of a company. Only world-class PR people can deal with gangly, pimple ridden, teenage companies. World-class PR people can turn around negative stories. World-class PR people can turn chicken shit into chicken salad. Turning chicken shit into chicken salad requires long-term, trusted relationships, deep know-how and the confidence to make use of both appropriately. PR kids don’t have any of the three.
One excellent way to develop a high standard is to interview people who you see doing a great job in their field. Find out what their standard is and add it to your own. Once you determine a high yet achievable performance bar, hold your executive to that high standard even if you have no idea how they might achieve it. It’s not your job to figure out how to create an incredible brand, tilt the playing field by cutting a transformational deal or achieve a sales goal that nobody thought possible – that’s what you are paying them to do. That’s why you hired them.
Finally, you’ll need your new executive to be more than just a goal achiever. She will need to be well rounded and part of the team. My friend Bill Campbell developed an excellent methodology for measuring executives in a balanced way that will help you achieve this. He breaks performance down into four distinct areas:
1. Results against objectives – Once you’ve set a high standard, it will be straightforward to measure your executive against that standard.
2. Management – Even if an executive does a superb job achieving her goals, that doesn’t mean she is building a strong and loyal team. It’s important to understand how well she is managing, even if she is hitting her goals.
3. Innovation – It’s quite possible for an executive to hit her goal for the quarter by ignoring the future. For example, a great way for an engineering manager to hit her goals for features and dates is by building a horrible architecture, which won’t even support the next release. This is why you must look beyond the black box results and into the sausage factory to see how things get made.
4. Working with peers – This may not be intuitive at first, but executives must be effective at communicating, supporting and getting what they need from the other people on your staff. Evaluate them along this dimension.
Aw Man, You Sold Your Soul
Hiring the first senior people into your company may feel like selling your soul and if you are not careful, you may well end up selling the soul of your company. But if you want to make something from nothing, you have to take risks and you have to win your race against time. This means acquiring the very best talent, knowledge and experience even if it requires dealing with some serious age diversity.