Category Archives: Hiring

Tip on being a good manager – Saying the same thing differently #startup #entrepreneur

One of the things I have figured out that I am not good at is being a great manager. I am largely bad at managing people. People that work for me like “hanging out with me” as a friend or a colleague, or even working on projects with me. Most people like working with me, but working for me as a direct report is a pain. I go between the two extremes of being a micro-manager to completely hands-off.

This is an extension of my personality. I am a known control freak, I prefer to be direct and am less of a consensus builder. I really value high intellect and have little patience (that’s is the biggest drawback in India as a manager) for people that dont articulate well or speak up. I do listen, (I am told) but I rarely acknowledge that I have listened.

This works in specific situations (running a sales team) or being a product manager (when the engineers report to another person), but works very little elsewhere.

I realize that most entrepreneurs with a technical and product background face a fairly similar situation. Not have too much experience in being a “manager” hurts your in retaining good people. Here is a rule of thumb if you will that I was taught early in my career at Cisco and then at HP, that have shaped my management “style” Ed. It is a joke I call it management style, when there’s no real style at all.

You have to adapt your communication style to the different people in your team. This was the biggest problem for me. I dont like the effort it takes to change my communication style. I am very direct, brutally honest and dont mince words. That does not work for most people. You cant change as a person much (I think) so you have to work hard at communicating the same thing differently to different people in your team. Let me give you an example.

In 2009, after 4 months of working on our product and getting feedback from customers that the product was not quite there, we knew we had to pivot. Communicating that pivot to the team was a bigger challenge.

One of the folks in my team is very numbers driven and a “give me the facts, so I can form my own opinions” . For her, I had to give the basic facts of our user engagement and customer feedback before I could convince her to pivot.

The tech lead was a young developer (with about 3+ years of experience) and had worked on the product from the start. He was a lot more emotional about the product being “his baby”. Giving him the facts only made him defensive. So the approach I had to take with him was to get him on a trip to meet 13 customers in 5 days to listen to the feedback for himself. More expensive, but worth it.

There was yet another person on our team who tended to be the group’s excitement barometer. When she was in a good mood, everyone’s spirits lifted and when she was cross, most people wont answer even the most basic of questions. It was pretty surprising given that she had no one reporting to her, but she was the team mascot. With her we had to make her feel “involved” with the process and the decision.

For her I had to take a dramatically different approach. I knew if we communicated the pivot incorrectly, there would be a week of unproductive nonsense at the office. Done right, I knew we could get a superhuman effort from the team.

To involve her, we put her in charge gathering feedback from all our customers. She had to put together the survey, let customers know, collate the responses and then come up with her recommendations to communicate to the team. Worked like a charm. She suggested that we “pivot” but did not use that word.

As an entrepreneur, one of the big challenges you will face is hiring people. The next big challenge is to keep them motivated and focused.

Communicating differently to each of your direct reports is one way to do that effectively.

Why do founders split? Performance and Execution

Both A & V met at their company cafeteria a few months before they decided to work together and start their venture. A was a front-end developer and V was a SEO and web analytics consultant. They both worked at the large company separately for 3+ years but did not have the chance to work together at all.

They were both in different teams and their paths did not cross very much. While standing in the cafeteria line, they got chatting about a weekend event and found they had several common interests and similar aspirations.

They decided to spend the next few months, talking about various ideas they had, mostly around starting a new venture in the eCommerce space. Neither had much experience in ecommerce, but they figured they would be able to add an operations person later.

4 months after their meetings they chose to build a online platform (one that held no inventory, but sold multiple products) for computer and mobile accessories of all kinds.

A, built the first version with some help from another friend who was the backend expert who offered some time in exchange for coming on board full-time if the venture got funding.

V focused his efforts on talking to suppliers and also helping A on some of the SEO work. Besides setting up their social media profiles, he also spent time taking to courier, payments and logistics partners to setup relationships.

3 months after starting they did a launch with friends and family. Response was good (relatively speaking), with 3 orders in the first day and over 5 in the next week.

I met them when V sent me their plan and asked for a meeting to discuss their seed funding requirements.

Given that I have had a poor track record with eCommerce companies and I dont like investing in them I declined the meeting.

A few months later, I met V at a startup event, when he mentioned that they both had split. He mentioned that the site kept going down and A was a good front-end engineer but not a strong developer overall, he said that they both had decided to shut down their venture.

I have not met A, but did check out his work and website. While I would not call his work legendary, it was not too shabby either.

The second biggest reason why founders split besides having differing vision is they both dont believe the other person is performing or executing as well as they are.

Rarely do they look in the mirror to see their own shortcomings.

There have been 2 other cases where I saw this similar situation. One person is either not executing at all – for various reasons or a deliverable or two is missed and friction sets in.

In one case a founder had a new born child within a month of the venture getting off the ground and had to spend a lot more time at home, which made the co-founder irritated and angry. They split and eventually closed the company.

I was surprised that they did the venture together knowing that one of them was going to have a baby.

When a pattern of execution and delivery on commitments is not set, then friction sets in very easily.

Its very hard to figure out if someone is executing well based on their “resume”. Most resumes are inflated (I am guilty as well) to “sell” and “position” the candidate in the best light. Even if they have worked at a position where its fairly easy to determine if they deliver and execute or not, it is mighty difficult to discern whether they were good because of the system built around them or because their manager extracted the best from them.

The only way to determine that is working together.

What takeaway do I have from this second reason for founder’s splitting?

I prefer to fund teams that have worked together in their new venture for more than 6 months. That’s an arbitrary number no doubt, but I dont have an alternative.

Teams which have worked together before, need to be working together again before I am sure that they know how to work with each other in a new environment without the support system they had before. There are exceptions, but they are rare.

I am hoping again that this is a demand and supply issue that resolves itself in a few years. Right not there are too many opportunities (thanks to Angel List) for good companies with high performance teams that have worked together for a while for me to even consider teams that have relatively younger working histories.

What constitutes a “Rock star startup team” ?

Here’s another question I have been pondering over the last few weeks.

I am personally not very fond of the word “rock star”, but have heard it from several investors in particular. They all claim to have invested in rock star teams.

So it begs the question – What is a Rockstar startup team?

It would be impossible to list all skills, qualities, attributes and traits of the individuals in that team because the list would be endless.

Let me first write down a set of things I’d like to think that its not, but I am open to be challenged on these.

1. Bunch of guys who have all graduated from the same “top schools and colleges”.

2. A team of people who had CXO title’s at large companies and have never worked together.

3. A set of high IQ mensa-type individual contributors who dont work well in teams.

If I were to put a set of things I believe they should have before with the attempt to put a 1 line definition before it would be:

1. They have spent time together and understand each other well.

2. They have previously solved a similar type of problem before.

3. They have great communication among themselves.

4. They have a very good understanding of the market they are looking to operate in.

5. They execute crisply and meet their deadlines consistently.

If I were to simplify the definition of a rock star team, I’d say a team that’s worked together and solved the same type of problem a startup would face at their current stage before in their career.

Or people that have been there and done that – together.

But this definition does not cover a team of co founders who were fresh out of college.They may have certainly worked together, but not have solved the same type of problem before.

I am open to a more crisp definition.

Here are some others that I reached out to who have defined it in their own words.

Shekhar Kirani from Accel

“Deep insights, exceptional performance in their previous jobs, pedigree as an indicator of competitive spirit, and commitment not to give up.”

Ashish Gupta from Helion,

Customer focused, Iterative, Nimble

Sameer V from Nexus,

Scrappy, Hyper-efficient (multi-taskers) with a solid focus on customer needs

Abhijeet M from BVP,

Somebody who knows the market quality, competition, his product, and its value proposition inside out and backwards.

Kiran B Nag from Saama Capital,

Experienced, Synergestic, Adaptive

Raj Chinai from Kalaari,

Exceptional track record, passionate, creative and execution oriented

Gautam B from Ojas,

Energetic, Honest, Complimentary skills, Go-getters, Though not necessary, would help to have relevant backgrounds, Good understanding between themselves

Ashwin R of India Innovation Fund.

Driven, Make things happen, Visionary, And of course the cliched term X factor comes to mind

Mukul Arora from Saif partners,

Super passionate about the idea, ideally with relevant and complementary skills/expertise, and capable of hiring high quality talent.

Rahul Khanna from Canaaan,

Bejul Somiah from Lightspeed,

Passionate, Force of will, Outliers, Unusual

Shailendra S from Sequoia

Bharati J from SeedFund

Rock star team – that finds unique idea and executes brilliantly

have also been asked to contribute to this definition.

I will update this post as they provide me their answers.

Should I pay my lawyer or advisor in stock?

I had 3 founders who had questions about compensation in Indian startups last week. One founder is building a mobile application for social TV, another a SaaS marketing application and the third a retail loyalty program using mobile phones.

They had multiple variants to the same question:

1. One was trying to figure out what percentage of stock to give an “active” advisor who was promising connections and a deal with a top customer.

2. Another was trying to see if she should pay for legal fees with stock (this is a US entrepreneur). Indian lawyers rarely accept stock as payment.

3. The third had a MySQL consultant who wanted to be paid only in cash.
Startup Compensation FrameworkTo address these questions and more I am sharing a “compensation framework”, that I have used consistently for figuring out “how do I pay” for startups.

On the x-axis I put part-time and full time commitment. On the y-axis I put the payment methods – stock and cash.

For most parts, before getting funded, founders of the company get “paid” only in stock. So if your company is not making money or is making “not sufficient” money to pay the founders full salaries, then stock is the only compensation for founders. Usually most founders will get their stock vested over 4 years, or they may own  the company outright. On funding (institutional or seed), most founders still tend to take a small amount of money (not full opportunity cost salary) since their motivation should be to grow the company and use the investment towards growing the company’s value instead of growing their own bank accounts.

Full time employees get paid mostly in cash (and some stock). The Silicon Valley model is to pay 20-25% less than market rate for key full time hires, and “make them whole” with stock options which will have more value than current cash, if there was an exit in 2-5 years. Most Indian employees however do not like stock options and view them as “gravy”. I agree with their view for most parts, since exits are far and few between in Indian startups. Since key engineers, marketing professionals in India expect full pay or close-to-full-pay (some actually expect a pay hike with a startup because of the perceived risk), I am of the opinion that you dont give everyone stock options until you have proven that the company has market momentum. You can always accelerate their vesting pro-rata based on their tenure with the company when you believe there’s a strong potential for an exit for the company (i.e after 2-3 years).

Consultants of every kind (sales, lawyers, accountants, UI experts, marketing consultants) who work part-time should get paid only in cash is my perspective. They dont add long term value to any startup and while they are valuable in the short-to-medium term, their commitments are rarely with the startup alone. If you cant afford to pay the consultant market rate, I would offer the deferred compensation, or “true up” compensation on growth, but not stock.

Finally advisors and mentors, should only be paid in stock. How much equity you pay the advisor in a startup depends on a) the quality and market-worthiness of the advisors b) the amount of time they spend with the company and c) the expected objective you get them on board as advisors. E.g. If you are getting a mentor to open doors to potential customers, they would be given stock corresponding to the type and number of doors they open for your or the number of customers you close because of their help. Usually advisory positions are awarded stock vesting over a 18 or 24 month period (tenure of their position with the company). I know most entrepreneurs in India use US metrics (0.25-1% of stock in the seed stage, less in follow on stages) for percentage of stock to give advisors, but that’s not going to get you quality advisors in India. Since exits are fairly rare, you have to double the US (Valley) advisor stock options percentages and motivate good, high quality advisors to help you get achieve your goals.

Love to hear if you guys think differently.

P.S. Friend and investor Rohit has some datapoints around active angel investors data points.

 

Advisor stock compensation

 

How to A/B test your job description and hack your way to hiring success

The last post on hiring for startups touched a nerve with many recruiters, many who emailed me on why I was negative about their profession. I did not intend to throw them under the bus, but the post came off reading that way. So, to my recruiter friends, apologies. I could have been more judicious with my choice of words. I assure you though that my words are not worth their weight in gold, so many startup entrepreneurs will still call you to help them with their recruiting. To those that claim spamming is helping, please stop.

Onward and upward.

This post is about hacking your job description. Or in the new age way of putting it – A/B testing it.

I had to hire 3 engineers for our new startup. The first step I took was to send an email to a few good fellow entrepreneurs and friends.

Version 1.0 < or bachelor #1>

I told them:

“Ideal candidate will have 3+ years experience in web or mobile technologies. Should be a hands on developer (PHP, Ruby, MySQL, Java or Python)”.

After 2 weeks and 30+ emails later I got 4 resumes from friends of friends. They were “technically sound” according to my network and within my budget but were mostly out-of-towners.

I phone screened two of them to find them fairly challenged in terms of their communication skills, and the remaining two wanted me to assure them a job before they made the trip to Bangalore (I was willing to pay for their trip, but not assure a job until I met them and interviewed them).

Version 2.0 <or bachelor #2>

I added “Good communication skills required. Position is in Bangalore.” And posted it on my twitter profile, LinkedIn and facebook account.

3 more resumes landed on my inbox, but none of them were even a close fit. One person said in their email, he was a test engineer and wanted to move into development and the second was a ASP/.NET developer who “could learn PHP quickly”, but had been in Windows development for the last 3 years. The third sent me an email, saying ” I am currently 25K salary, looking for 40% hike”, in his 3rd sentence, without any questions about either the job, the company or the technology.

Version 3.0 <or bachelor #3>

I decided the simple useless job description I wrote was just that – useless. I had forgotten the cardinal rule – Sell yourself, sell the job, sell your company.

So I did a ginormous makeover. I posted version 3 on hasgeek – I titled the role “developer in residence” not tech lead.

Worked like a charm. I got 4 very high quality candidates asking for what a “developer in residence” meant. Two were very qualified, professional and very good fit for the role.

I did not stop at version 3, but went to a refined “pitch the value, not the features” version.

Version 4.0 or <bachelor #4>

I added the following and posted version 4 on hasgeek.

“We have a complete 12 quarter hands-on program outline for you to feel ready to start your own company, which we will invest in to get you best prepared for entrepreneurship.

Job perks

  • Catered lunch every friday.
  • Ability to network and meet venture investors and angel investors in special invite-only events each month
  • A working 12-quarter program to give you all the experience necessary to be an entrepreneur”

Worked even better. The posting intrigued enough people to deliver even higher quality resumes. I thought I was overreaching because and got 2-3 over-qualified folks for a “lead developer position” re marketed as “developer in residence”.

What I learned:

1. The most important part of your job description is the Job Title. Its obvious, but I see far too many “PHP developer needed” or “Web hacker wanted” and “Javascript Ninja Hatori” titles, which gets you a certain type of person. Usually that person is not the first 25 developer hires in your company. Be creative, but dont overreach.

2. Your job description is the first impression for 90% of your potential candidates. The next impression is a Google search with your company’s name. You control the first a lot more than you control the next impression. Realize that people will read your job description and decided quickly if its worth Googling your company. What you say and how you word it says a lot about your culture. Does it have many typos? Are you using cliche’s like Ninja, hacker, Superman, etc. because you cant really describe the person with a simple engineer title, etc.

3. Dont say too much, because people dont read too much. Most job seekers I found, only read keywords like PHP and sent me their resume. They did not read anything else. I mentioned “should have worked in a product company (not services company)” before in a branch version of the JD, but I ended up getting many resumes from folks who worked only at services companies.

4. Each version of the JD attracts a different crowd from a different job board. If you are posting on hackerstreet, or hasgeek – think and focus on being a little more creative. If you are looking for technical marketers, pluggd.in is pretty good and for fresh grads, yourstory worked best for me.

5. Describe the perks of the job. If possible please make it human by adding a P.S. at the bottom. People read the P.S. More people read the P.S. than you think. Make the P.S. memorable, or make it sound like a prize given for the one that had the patience to read the entire posting which you spent hours writing (or a few minutes copying and pasting from some other JD).

Next post – how I phone screened and what worked, what did not.

P.S. I do read and reply to every email, and I do like getting email, but I always prefer comments on this blog.