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Hiring
Per Jacobsen
Today’s Menu
• Structure and equity• Process • Culture and toxicity
“Identify the key hiring needs for your company, how to recruit key hires like co-founders (even if you can’t offer any salary), and the best practices for equity allocation amongst a startup workforce”
The Hiring Challenge
Factors that matter• You, your story, and your vision• Compensation • Challenges, fun, and fame• The chase after the BIG pay-off• The probability of success• Degree of counter-culture• Timeline• Promotions?
Factors that do not matter• Retirement and benefits• Name recognition• Family opinions• Vacation and working hours• Job stability• PC• Ability to run BIG things?
Hiring for Terminal Compensation and
Culture
Avoiding the Pitfalls of Big
Company Mentality
• Compensation– Salary + bonus + commissions = cash– Equity, promised or current– Benefits
• Competition
The Pro-forma of Compensation
By the Numbers – Venture Hack
• Layering – a function of risk, chaos, and uncertainty– People Timing
• Founders• Early Employees (# 1-25)• Later Employees (# 26-125)
– Funding Timing• Sweat• F&F, aka no more Xmas-joy• Seed ($200K – $2M)• Series ($2M – $15M, $7M - ?, ….)
Series A, 10-15%, 18 months
Golden Rule: n is the fraction of the company you're giving up, breakeven is 1/(1 - n) So: 30% - 1/.7 = 1.43, i.e. 43%
You can do whatever you want!• Setting your compensation approach
– Don’t get confused when people say you can’t, you shouldn’t, or you mustn’t
– Don’t ignore naysayers… seek out the kernel of truth and absorb it
– Don’t feel the need to correct people who give you advice• Best practices – 3 simple rules
– Conserve cash – it’s all about the cash-flow, stupid!– Preserve the culture – but look for differences– Maintain or increase velocity – velocity vs. cash
Culture – it isn’t what you think it is• Hiring is about finding a fit with culture that is, as a minimum,
velocity neutral• Culture comes from the top
– Unique opportunity of start-ups: You can say what you want• If you establish a culture of lies, you will end up working with a
bunch of liars• Organization diagrams and titles are breeding grounds for
toxic cultures– Look for and support center of excellence, ask yourself the vortex question
• Startups are all about velocity and cash-flow management – …. and culture
Key Lessons – Going to SEA• Overarching Principles
– Four executive points of control• Hiring, firing, messaging, and allocation of funds
– Hire slowly and fire quickly– Don’t trust and don’t think that you can verify– The sales paradigm - three in, two out– It’s the honeymoon, darling – if it isn't happening now, it isn't
happening later– Corporations are, by their very nature, sociopathic– Always have a way out – things and people do change
Golden Rule: i is the expected outcome. Value n is such that i = 1/(1 - n). Which means that n = (i - 1)/iSo: addition of one co-founder with value of 20% is a good deal if equity cost is less than 16.7%
Key Lessons – Pinging for Danger• Before
– Profile the heck out of them and trust your instincts– Look for toxicity first, everything else second– Seek advice not advisors– Watch for “What about Cheney” - I pick me!– Let consistency be your guide – Let time be your background check – slowwww dowwwwwnnnn– Nepotism has no place in high-growth organizations– A word on panel interviews – Be very clear – Henry Sward, “A better offer letter”
Key Lessons – Evade the torpedo• After
– You ARE going to make mistakes -- look out for:• replacement hires• confidence at all cost• solicitation of opinion
– Toxicity travels and accelerates– Numbers do not lie… people do– Don’t think that you are a Fortune 500 company – experimenting
is for rich people or people who have nothing to lose – You ain’t got time for coaching, kid!– Clean house quickly and ruthlessly – do it whenever necessary
Key Tenets
• Know this before you begin– It is dead easy to know if someone has done it before
• If you know what the job is– Silence is golden
• During– Confidence does not equal value, vision, or competence– Front-end people are the hardest to hire
• Surprises after hire– He/she is unhappy -- You were not clear– You are unhappy -- You were looking mainly for a quality that was
important to you, not for what was important to him or her
GetYour
TEAM RIGHTand The Rest
willTake careOf itself
Opening Doors for Entrepreneurs!Kathie Callahan Brady 301.874.5291. [email protected]
Teams & Advisors
PLAY FULL OUT?
• Criticality• Different Aspects of Teams• Detection & Building (Tools)
WHY?
14
“If you want to go fast, go alone.If you want to go far, go together.”
WHY?
15
“If you want to go fast, go alone.If you want to go far, go together.”
Score Range Action100-90 Excellent. Ready for investors 89-65 Above average, but is not ready for investors. Something needs to be strengthened.Below 64 Something is seriously amiss
WHY?
16
“If you want to go fast, go alone.If you want to go far, go together.”
Score Range Action100-90 Excellent. Ready for investors 89-65 Above average, but is not ready for investors. Something needs to be strengthened.Below 64 Something is seriously amiss
13, 14 & 15
WHY?
17
“If you want to go fast, go alone.If you want to go far, go together.”
Score Range Action100-90 Excellent. Ready for investors 89-65 Above average, but is not ready for investors. Something needs to be strengthened.Below 64 Something is seriously amiss
13, 14 & 15 - - 2, 3, 5….
WHY?
18
“If you want to go fast, go alone.If you want to go far, go together.”
Score Range Action100-90 Excellent. Ready for investors 89-65 Above average, but is not ready for investors. Something needs to be strengthened.Below 64 Something is seriously amiss
13, 14 & 15 - - 2, 3, 5….
4, 8, 10, 11, 12, 16, 17, 19, 20
WHY?
19
“If you want to go fast, go alone.If you want to go far, go together.”
Score Range Action100-90 Excellent. Ready for investors 89-65 Above average, but is not ready for investors. Something needs to be strengthened.Below 64 Something is seriously amiss
13, 14 & 15 - - 2, 3, 5….
4, 8, 10, 11, 12, 16, 17, 19, 20
FULL SCOPE• Partners - Co-Founders• % (Employee Owned)• Typical Organization Structure• BOA/BOD• Task Forces• Peer Groups• Strategic Alliances/Joint Ventures
Shared Risk & KnowledgeGrowth Opportunities
Speed to MarketShared Costs
Access - Resources/Markets & Economies
Personality Patterns
Personality Patterns
Personality Patterns
Task
Outgoing
Personality Patterns
People
Task
Outgoing
Outgoing
Personality Patterns
Reserved
People
Task
Outgoing
Outgoing
People
Personality Patterns
Reserved
People
Task
Outgoing
Outgoing
People
Reserved Tas
k
Personality Profiles
DOutgoing/Task
-Dominant-Direct
-Demanding-Decisive
-Determined-Doer
Outgoing/Task
-Dominant-Direct
-Demanding-Decisive
-Determined-Doer
Personality Profiles
D IOutgoing/Task
-Dominant-Direct
-Demanding-Decisive
-Determined-Doer
Outgoing/People-Inspiring-Influencing-Impressionable-Interactive-Impressive-Interest in People
Outgoing/Task
-Dominant-Direct
-Demanding-Decisive
-Determined-Doer
Personality Profiles
D I
S
Outgoing/Task-Dominant
-Direct-Demanding
-Decisive-Determined
-Doer
Outgoing/People-Inspiring-Influencing-Impressionable-Interactive-Impressive-Interest in People
Outgoing/Task
-Dominant-Direct
-Demanding-Decisive
-Determined-Doer
Reserved/People-Supportive-Steady-Stable-Sweet-Status Quo-Shy
Personality Profiles
D I
C S
Outgoing/Task-Dominant
-Direct-Demanding
-Decisive-Determined
-Doer
Outgoing/People-Inspiring-Influencing-Impressionable-Interactive-Impressive-Interest in People
Reserved/Task-Cautious
-Calculating-Competent
-Conscientious-Contemplative
-Careful
Outgoing/Task
-Dominant-Direct
-Demanding-Decisive
-Determined-Doer
Reserved/People-Supportive-Steady-Stable-Sweet-Status Quo-Shy
Personality Profiles
D I CSQuick Decisions with limited information
Make Mistakes vs Correct/RightTODO List - Time with People
Speak Quickly with limited detail vs lots of informationInspires & Motivates People
Loves the Numbers
Outgoing/Task
-Dominant-Direct
-Demanding-Decisive
-Determined-Doer
FREDERICK INNOVATIVE TECHNOLOGY CENTER, INC.
