Startup Execution, Startup Talent

Diamonds in the Rough

As I’ve written previously, every startup needs game changing players. You can hire them if you have a good interviewing process, know what to look for, and can offer a strong compensation package (cash + equity). Sadly, even if you have all of these, the ridiculously competitive job market (especially in areas such as the Bay Area, New York, and several other tech hot spots) may frustrate your ability to bring on ready-built veterans. In such cases, your only alternative is to hire candidates with raw talent and potential and then grow them in house.

Every owner of a fantasy football team would love to draft the top quarterback, top two running backs, and top three wide receivers in the league. But the realities of most leagues typically limit any one team to maybe two veterans with a proven history of production over several seasons of gameplay. The rest of the team must be built around role players and younger, unproven athletes.

The Veterans

In order to develop unproven players, founders must build an atmosphere and system that cultivates growth. Veterans who are chartered and able to develop the younger staff serve as the anchor of high-growth teams. These veteran leaders need to buy into the fact that a key part of their success depends on their ability to raise up their teammates. Team leads need to balance the efficiency of doing tasks on their own versus delegating, coaching, training and empowering others to take ownership for key parts of the project or team.

The Rookies

Once you have the veterans in place, you need to find the right rookies to add to the team. Take a moment to review my previous post on building a strong interviewing process. As I’ve previously written, success is usually the combination of preparation and opportunity. Younger-in-career candidates haven’t have many opportunities, so your goal in the interview process is to identify candidates that have great potential because they’ve done the necessary preparation. You should focus on:

  1. Strong technical ability. Front-line staff typically need to demonstrate very strong technical capability in the role they are hired to play. Make sure your interview process goes the extra mile to identify raw technical talent with real-world “show me” demonstrations and tests rather than “tell me” stories.
  2. Executive abilities. Don’t ignore analytical abilities, methodical / structured problem solving, organization skills, communication skills, and attention to detail. These are common requirements on a resume, but rarely assessed in an interview.
  3. Emotional intelligence. Daniel Goleman published a landmark work where he asserted that a person’s Emotional Intelligence can matter more their Intelligence Quotient. Because of the demands of a high-growth team environment, candidates need to have some basic emotional intelligence in order to thrive. Goleman identifies five key components of emotional intelligence: self-awareness, self-regulation, internal motivation, empathy, and social skills. Make sure your interview team evaluates these aspects of every candidate.
  4. Humility. Finally, each member of a fast-paced, growing team needs to be willing to learn from others and not be afraid of owning up to any mistakes. Humility is essential, as individuals with a modest view of their own importance tend to be better learners and less defensive when mistakes are made.

The Farm System

Once you have the veterans and the rookies lined up, you need to create a system that provides a safe environment to grow. Give people challenges that stretch their abilities. Capable, well-prepared team members really need just one successful project to go from a novice to a strong apprentice. Two successful projects will often be enough to forge a journeyman from a strong apprentice.

When you task a team with multiple stretch goals, regular check-ins become very important. Create daily and weekly processes that have your veterans providing regular inspection, direction and coaching of younger team members. Agile development processes are very well-suited to rapidly develop younger team members.

Keep in mind that, as you challenge teams with stretch goals, failure is not just possible, but likely. Mistakes will be made. Bugs will always plague software development. But failure shouldn’t be fatal. When honest mistakes happen, make sure the team knows where they went wrong and are diligent about recovering from the error. Hopefully, your regular check-ins will uncover the mistake before the freight train flies off the rails or the project goes completely sideways. Plan for problems because, with fast moving young teams, mistakes will happen.

On the flip side, when a young team or team member executes the stretch assignment well, be quick to recognize and reward the achievement. Correct mistakes privately, but praise successes publicly. If the young team member strings together a couple of wins in a row over two to three months, find a way to recognize that with a small bonus. If the team member continues the winning streak over two to three quarters, step up the recognition with either a larger bonus or a small bump in compensation (cash or equity). If the team member demonstrates consistent growth for about a year, recognize it with either a job title progression (e.g., Associate 3 to Associate 4), or a promotion (e.g., Associate 4 to Senior Associate 1).

Creating Brilliance

Building a strong team from a pool of raw talent is very difficult. Few people do it well — even fewer can do it at startup speed. But most startups need to learn how to do this as it’s not likely they will be able to always fill their roles with seasoned veterans. You basically need to find diamonds in the rough, then cut and polish the raw stones to brilliance. With a few strong veterans, a pool of promising rookies, and the right farm system, success with younger teams becomes not just possible, but likely.


Startup Lifestyle

Take Care of Your Offensive Line

NFL quarterbacks are key to their teams’ success. And key to the quarterbacks’ success is the offensive line. The offensive line protects the quarterback in the passing game, while opening up running lanes to establish the ground game. The success of ground game activates the passing game by keeping the defense from just pinning their ears back and using the quarterback for target practice. A smart quarterback maintains a great relationship with his offensive line. Quarterbacks often treat their front line to fine dinners each week. Stories also abound of quarterbacks that present their blockers with expensive gifts such as Rolex watches, paid from their own pocketbook.

In the same way, a founder is key to the startup’s success. The founder manages the game, calls an audible at the line based on the defensive set, makes split second decisions, and delivers the ball where only the receiver can catch it. A seasoned founder also knows that his (or her) success is dependent on the surrounding team. Founders who take care of their people end up building strong, loyal teams. Should the startup enjoy an exit, the founders are in a position to ensure that everyone feels victorious.

During the negotiations with a potential investor or acquirer, founders should be careful to evaluate the impact of the terms of the transaction on the team in general. Even though these negotiations are fast-paced and stressful, founders need to make sure to run scenarios on how the transaction will impact the compensation of the employees. I’ve seen transactions go down where the executives preserve a reasonable equity position for themselves, but the rank and file employees get the short end of the stick. Put yourself in the shoes of your team. Would you, as a non-founder, be happy with the outcome of the transaction? Negotiate not just for yourself, but for your team. Where the numbers make it difficult and the broader employee base might get squeezed, can the founders carve out a portion of their own equity to make the employees whole?

In most exit scenarios, founders should have some room to share. Founders have much more equity than the average employee and can afford to be generous. There’s nothing wrong with founders earning a payout that is many times larger than the average employee. There’s nothing wrong with a quarterback getting paid many times more than a special teams player. The roles they play are dramatically different. Founders take the risk, flirt with failure, lead into uncharted territory, and shoulder the burden of making some of the most difficult decisions in the company. But in the same way that NFL quarterbacks take care of their offensive line, founders should remember the players that make success possible and be generous with their team. If you’ve done a good job as a founder, you’ll do just fine financially with the exit. Generosity results in the founders enjoying not just financial wealth, but also great friendships. Your team will appreciate the money, but will remember the loyalty. And as any older, wiser person will tell you, close relationships are more valuable than the size of your bank account, so do good and share.