I don’t have all the answers, and I certainly don’t have all the questions, so rather than taking a stab at what was on people’s minds this quarter, I asked many of the Founders and CEOs we work with what was stumping them. A number of questions popped up consistently, so we took a run at them here.
In startup hiring, how do I trade off between drive/raw talent and role-specific experience? (AKA Hiring Athletes)
I’ve always been a fan of hiring athletes (those with drive, motivation and talent) for any role. I’m convinced that you can successfully hire that prototype at all levels successfully, but it takes a specific culture and an open mind to make it work. That said, when it comes to startups – especially in Healthcare – experience with the way things have always been done isn’t necessarily the perspective companies want or need. No matter what, I’d advocate for job descriptions as guideposts, not checklists, because there’s tremendous value in hiring people who have a track record of just figuring out how to get things done. Often times, there’s just no way around it – some criteria to be a CTO or Chief Medical Officer are non-negotiable – but A players who know how to make things happen are invaluable in startup environments where structure is often an illusion.
All of that said, it’s worth noting that hiring for drive and motivation is table stakes, no matter what position you’re filling. I encourage folks not to get too hung up on checking off every bullet point from a job spec – especially when you may be able to fill gaps with other hires you already have planned.
What’s the difference between Sales & Business Development?
These two are actually quite different. The reason people conflate the two, I believe, is because somewhere along the way “sales” co-opted “business development.” Maybe ‘Business Development’ is a more elegant, less threatening title for a Salesperson. I’m not sure why sales turned into a dirty word – it’s literally the lifeblood of any product company. In reality, there’s absolutely nothing wrong with driving sales and growth, but we all know how important optics are when it comes to Sales, and so the Business Development moniker seems to have stuck to sales roles.
In practice, business development is something else entirely – call it a cousin to sales. Typically, companies should think about hiring a Sales Executive when they’re past the product-market fit stage, and they need someone who can build a pipeline, qualify leads, manage deals through the pipeline, conduct resources across an organization at various stages of the sales process to ensure the right people are involved, and generate revenue. Business development in my view is more about strategic partnerships; developing channels and driving sales through those channels. A strong BD person can build those partnerships today, as well as establish and foster relationships that drive exponentially increasing value in the channel afterward. There’s also a strategic approach to channel-building. It’s not about just going out and selling your product, but convincing your partners to sell for you as well. That type of channel-building generates revenue without a commitment from your Sales people.
There are even certain cases where business development execs don’t even generate revenue in a traditional sense today, but instead focus on building value-added relationships between organizations. The benefit here isn’t revenue (in the short term), it’s the fostering of credibility amongst the user base, the growth of user adoption, and the evolution of value drivers for those users. It’s this bigger-picture component that separates business development from sales (that’s not to say that sales isn’t a strategic enterprise, it’s simply that the strategic element of business development requires a slightly different approach). I’d argue there’s also a healthy dose of evangelism required in business development, as you’re often convincing folks that they both have a problem, and that you have the solution.
Lastly, it’s important to keep in mind that business development and sales can and should coexist. An organization can have both – effectively acting as peers – performing very different, yet complementary functions. We’ve completed searches where we actually titled the BD role ‘VP of Partnerships,’ just to make it abundantly clear that the position is not a traditional sales role and won’t be generating revenue, instead achieving other objectives such as user acquisition and creating value for users once they’re embedded in the platform.
How do I expand my funnel of potential candidates across multiple roles?
The key here is having a plan. Start by breaking down the roles you’re hiring for, the priority of those roles, and what success in each role looks like (for more on the importance of planning before hiring, reference this article from our Q1 2018 newsletter).
Once your plan is in place, harness the power of your network to get as many people working on your behalf as possible. That means ensuring that key stakeholders (leadership, investors, board members and other employees) understand your needs clearly, and that you’re holding them accountable when it comes to uncovering potential candidates. And speaking of accountability – success depends on it. Someone on your team has to own the process internally, and be responsible for managing it and reporting on progress
On a typical search, we identify close to 200 potential candidates, proactively. We get, on average, better than 60% engagement rates, which means there’s a good chance we’ll talk to 120 candidates, if not more. We interview a large portion of those, just to get down to a single hire. That doesn’t include all the networking conversations we have with folks we know. And that’s coming from an organization that spends pretty much all day working on this stuff. This obviously won’t be the only thing on your plate. If you’re relying on inbound resumes, the numbers are even more lopsided, as you’ll be sorting through lots of resumes for folks that didn’t even bother to read your spec. So your goal from the outset should be to make the process as efficient and hassle-free as possible. To that end, we always recommend clients utilize an applicant tracking system. None are prohibitively expensive, and the ROI is immediate.
Another way to simplify the process is to have your current team do the heavy lifting for you. I’m a huge fan of internal employee referral programs. Incentivizing employees to recruit on your behalf is the least expensive and most efficient approach to identifying strong talent. Obviously, you won’t be able to fill every single role this way, but if you manage to source a handful of Engineers from your Development team, that leaves you plenty of resources to invest in finding candidates for senior searches that are harder to fill and will likely require outside expertise. An added benefit is that your people already know your culture. That means they’re likely to refer folks who will be a strong fit. Just be careful when it comes to diversity – you don’t want your entire employee base to look and think the same. Cliques form and groupthink ensues. It can be ugly.
The most important takeaway here is that being proactive is key. Don’t sit back and fall into the trap of assuming that because you know how exciting your business is, everyone else can see that from the job description or your website. They can’t. It’s your responsibility to convey the strong foundation you’ve already established, and the boundless opportunity that lies ahead for your business and employees.
When’s the right time to hire XYZ?
Broadly speaking, the right time is always now. If you’ve got the budget and you’re in growth-mode, I’m an advocate of snapping up the best person you can possibly land, any time you can. If you’re not ready to pull the trigger, it’s still worth proactively building relationships with candidates you’re excited about early, so that when the time comes, a quick call gets the job done.
That said, the role you search for is going to be dependent on your current needs. If you’re getting ready to raise a Series B and you don’t have a CFO, it’s probably time to get one. If you have a product that’s already been validated with product/market fit, but no strong pipeline – and no one on your team is particularly sales-oriented – then it’s safe to say that you need a Sales exec. The key is not to wait until the pressure builds before you start your search, that’s when emotional decisions take place. Remember, the process alone can create value, as you build relationships along the way. You might not need that rock star CFO you meet with today, but when the time comes six months from now, you’ll be able to pick up the phone and say, “We’re ready for you.” Most importantly, Founders and CEOs need to know what they are great at, and what they stink at. Hire the people that gap-fill your weaknesses as soon as possible, and get out of their way. Don’t be the hub and spoke CEO.
How often should we be giving feedback to employees on performance?
I’m of the view that performance reviews are a necessary evil, because structure is important. It’s critical that people understand from the outset what success looks like in their role, and what their performance is being measured against (this is especially true if their compensation is tied to performance). As the one giving the review, having a scorecard helps me avoid recency bias, since we do our reviews every 6 months. I strongly believe that no one should walk into a performance review and be surprised by the feedback. That implies feedback should be delivered in real-time. This can be challenging for startups, given that startup-life moves quick; months disappear. As a result, there can be an illusion of strong communication, because you’re all so physically close to one another. Sometimes folks who work shoulder-to-shoulder think they’re communicating, when in fact they’re internalizing certain things.
For example, you might have been meaning to give Sally feedback about a few things you’d like her to do differently or improve on, but the right moment keeps getting away from you. Six months go by, and Sally walks into her performance review assuming she’s been doing a bang-up job. Then you deliver your feedback and it’s not as positive as she expected, perhaps signaling that as a result, she didn’t earn her full bonus. She had no clue that was coming, and now she’s shocked. People tend to be at their worst when they’re caught off-guard by bad news; as such, that kind of feedback can intensify an already bad situation, which could have been corrected long ago had the person been made aware of the problem in a constructive fashion. If the underlying thesis is that most people want to kick ass at what they do, consistent feedback is their oxygen.
The ‘togetherness’ of startups creates an additional, often-overlooked challenge for companies when it comes to delivering real-time feedback. CEOs typically want to deliver positive feedback publicly and negative feedback privately, which is difficult when you’re all in a single room together. One solution here is to frame your constructive feedback in such a way that you aim it at the entire group, as opposed to a single person. You can then take that person aside later on to assess whether they absorbed your key points. That way you avoid delivering a public lashing. This amounts to a balancing act, which requires a certain amount of tact, however it’s vital that CEOs and Managers feel comfortable delivering negative feedback. If the aforementioned approach feels too thinly veiled, just grab the person before the day is over and have a chat.
My goal is always to make sure that anyone who is a part of our team has a good sense for where they stand at any given point in time. There are no absolutes, and short of something unethical, there’s virtually nothing that could lead to someone being shown the door out of the blue. Our job is to invest in smart people, know they’ll make mistakes, celebrate that, and learn from it.