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Archive for January 27th, 2008

Try On All The Moccasins Before Deciding: Big Co vs Small Co

Posted by Bob Warfield on January 27, 2008

Zoli Erdos wrote an interesting blog post about hiring big company executives into startups.  Dharmesh Shah tarted up Zoli’s already nice linkbait “Beware of Suits” with “Why Your Startup Shouldn’t Hire Seth Godin”.  Dharmesh skirted dangerously close to the “only young people make good entrepreneurs meme.”  What are these guys saying and what does it have to do with Moccasins anyway?

Let’s start with Zoli, after all, he posted first.  He was prompted by that dilemma that startups can find themselves in when they’ve grown to a certain point of whether to bring in “adult supervision” (i.e. people with long track records, the suits as Zoli calls them) or to stick with pure startup folks.  Zoli has evidently had a lot of bad experience hiring people with too much, um, experience.  Now comes the speculation about why it didn’t work out:

– These people had done it already and so would be bored doing it again and couldn’t perform well without challenge.

– Too much success makes it hard to take the pain inherent with any startup.  Highly successful people may be looking for smooth sailing, and so may not be the fighters a startup needs.

–  You can’t hire people who take the job for equity.  You can’t hire people making a lateral move.  You need hungry driven fighters who have to step up to do the job. 

–  You want people who are after passion and lifestyle, not a job.

–  Corporate hotshots are leaders, not doers.  Startups need both in one package.

–  You gotta catch the right wave:  1st wave want to create success from nothing.  2nd wave want to make something popular more successful.  3rd wave want to join a successful environment and preserve the status quo.

Dharmesh adds to this:

–  Even if past success predicts future success, it assumes similar circumstances.  Every startup will be different.

–  More about how prior success leaves people not feeling hungry enough for a startup.  They don’t have a point to prove, they’ve already proven it.

–  Startups are an arbitrage game.  Good startups can hire world class people below market value.  Startups are playing a passion arbitrage game.

–  Executives from big firms are helpless without the giant budgets and resources of big firms.

Okay guys, that’s all very interesting, but way too black and white.  Let’s dig in.  I’ve been in both worlds a lot in my career.  I’ve founded three startups, two of them very successful.  I’ve been at world class big companies like Oracle and Borland (in the Borland heyday I ran their 350 person R&D team).  I’ve worn both pairs of moccasins, in other words.  And as the saying goes, “Walk a mile in the other man’s moccasins before judging him.”  I’ve seen all of these things you mention, but I look at them a lot differently.

Let’s start with passion.  Passion exists at all levels and all company sizes.  Startups do not have a monopoly on passion.  If you’ve never met someone who is completely driven and passionate from a Big Company, it’s your loss.  These are the people that carry on with hard jobs that require passion to sustain them long after they’ve made enough money for multiple mansions, countless Ferraris, and jets.  If you think Steve Jobs, for example, doesn’t have passion, you just haven’t ever watched the man enough.  This kind of Passion takes hold and is not controllable.  If you have the real passion we’re talking about, it can be painful.  Your family and friends look and wonder what your problem is.  Why can’t you settle down and relax a little bit?  You don’t need the money.  Ease up, don’t give yourself an ulcer.  Most of the people I’m talking about have known passion all their lives.  They didn’t just discover it and start a company.  It’s part of their DNA.  People with passion ignore the pain.  Their real pain is not being able to exercise their passion.  It triggers massive impatience and sometimes anger.  Passion is unreasonable.

Take Scoble’s recent post about Facebook’s Zuckerberg.  The Zuck says a lot of his problem with PR is because he is extremely shy.  Yet Scoble felt the passion from this guy in spades.  You can read it in his post.  Shyness just makes it worse.  Here’s a guy exploding with passion but too shy to get it out there.  He’s a steam boiler with the safety valve screwed all the way shut and the pressure building.  So what does he do?  He goes with a vision and creates a place where shy people can expose some passion on the Internet.  Do you think his passion goes away because of money or what he’s already accomplished?  He could likely sell the company for a quarter of that $15B valuation and net more money than he could ever spend.  There’s probably a list of companies that would pony up that cash right now if the deal were offered.  Zuckerberg is already past the stage where he could be hired by the standards of these posts.  Money or past success can’t take this kind of passion away. 

So look for passion in the people you interview at a startup.  Find the people who are obsessed, who can’t sit still, who light both ends of the candle and then set the middle on fire too.   Find a way to measure and test for passion.  And keep in mind, people with passion are unreasonable people at some point.  Drive past the interview face and test for some unreasonability.  If you can’t get them to disagree with you on anything, maybe there is no passion.

Next point is what I call content producers versus managers.  This was definitely brought up, but again, I look at it differently.  It is the leader/doer angle.  This is related to the requirement for a lot of resources to get anything done.  A doer can produce content for their job description of some kind.  A pure leader can only evaluate other people’s content and help push them forward.  Pure leaders are not necessarily inappropriate, but having both leadership and content creation capability is more helpful for a startup.  To many pure leaders and the startup can’t get anything done.  The Big Co has the opposite problem: tons of raw talent that is very hard to marshall, organize, and fire up.  Figure out how you’re going to evaluate whether your new hires are doers.  What can they produce that’s relevant to you.  I like to use working brainstorming sessions to do this.  See how well your candidates can riff on your space and ideas. 

Rather than refute all the rest of the points already brought up against looking at people who’ve done it before or that are in large companies, I want to talk about things those people have going for them that a talented and very impassioned but raw alternative may not.

First is the past success predicting future success.  If you don’t have any past success, what exactly is going to be the predictor?  Why go out of your way to ignore past success because you think it may have tainted a person?  Hopefully I’ve dispelled that notion.  Dig into past successes.  How varied are they?  Does the candidate have an ability to adapt to broadly different situations?  My own resume is a crazy hodgepodge of desktop software, tools, Internet software, and Enterprise application software.  People ask me what I want to do next and whether I’m an Enterprise only guy and I just laugh.  Serial success players have skills, talents, knowledge, and tactics that get them over the hump.  Figure out what those are and whether they apply to your situation.

Second, folks in larger organizations and with many successes have more contacts and credibility.  Both are extremely valuable to a startup.  Startups have to sell up out of a hole.  They have to convince people they’re credible.  As a very talented executive recruiter friend once told me, people like to associate themselves with success.  Startups that don’t have any yet can benefit from the surrogate success of their players.  When people are considering a purchase from a startup, there has to be a reason.  What’s different about this startup?  One of the answers is that someone with credibility is there with a lot of passion for the startup.  Don’t sell that short.  Also don’t sell short the ability of that person to lean on their network to get things done.  To bring more talent into the startup, for example.  To hire the right person or agency because a past relationship lets them know that person or agency will succeed.

Last point is experience matters.  I’m fond of saying that old age and treachery can often overcome youth and enthusiasm.  Get some of that experience on your team.  It doesn’t matter how smart you are, if the other guy already answered the question a long time ago and knows the answer, he will beat you to the punch while you’re figuring it out.  Having experience to draw on is a rich source of data, and startups are data challenged.  Don’t fall into the trap of thinking the startup only has to do everything completely differently from what’s been done to win.  There may be a winning formula there, but there will also be lots of failed startups if you take that to the extreme.  As an entrepreneur and startup, you don’t have the luxury of the VC’s portfolio effect to sort that out. 

If it isn’t obvious by now, I’d hire Seth Godin in a heartbeat.  You’d be silly not to if you’ve read his stuff enough to realize he has the qualities I’ve talked about.  The real question is whether you could get it together to convince him to join you.

Posted in strategy, venture | 3 Comments »

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