Ask the Wizard

Good question about organizational behavior in startups and office configuration, a topic about which the FeedBurner cofounders have very definite opinions.

“Oh great Wizard, what is the ideal office space configuration? Cubes with some private offices, combination of open workspace, cubes, and private offices, or some other crazy configuration?”

Yes, we’re all getting cute with the ‘oh great wizard’ stuff….serves me right. My opinion for technology startups is totally open space with some large conference rooms, some very small conference rooms which double as phone rooms for personal/private phone calls, and no private offices, and if that’s not possible (no such rental space in a neighborhood, etc.) then make your existing space as open as possible and turn private offices into rooms with 2-3 desks. When FeedBurner was about 35 people, I was with a collection of CEO’s at one of our investors’ entrepreneur summits, and I stated that this was the winning formula in my book. I was widely disagreed with, mostly on the grounds that you can’t sustain open space with no private offices beyond 40-50 people. Since we were only at about 30 people at the time, I figured maybe that was true, and I certainly couldn’t prove that it wasn’t. My short time at another much larger company with generally open space makes me think my first instincts were correct. I’ve certainly seen that it’s not true that you can’t scale the open space approach beyond 30 people. Let’s talk about why I like this open configuration in startups, and why I hate dislike offices:

1. Speed of communication begets speed of execution. News travels a lot faster in a big open room with no walls than it does in an office with corridors and private offices. When everybody is up to speed on what’s happening in the company in real time, it’s easier for everybody to zig and zag at the same time. True/simple/stacked-deck example: We once were working on a partnership with another small company – fortunately, for the sake of this example, they were in a *very* private office culture, and FeedBurner was totally open floor plan - no offices, everybody has a desk and no walls. Our marketing director received a call from their marketing person about a change their engineering team requested. Our marketing person put down the phone and just said to me “hey dick, they want to do blah instead of bluh”, and I got up to walk across the room to the engineering person on our side and he just said “yeah, that’s fine, no problem” before I even got over there. We’re all up to speed in 10 seconds. Meanwhile, over at private offices company, the marketing director and their lead engineer know about this, but the founder, who is in the office that day, sends me an email three hours later, saying “hey, I just found out our guys wanted to do bluh instead of blah, but I wanted it to be blah because [insert rationale]. So let’s go back to blah.” Then, separately, two hours after that, I get an email from the CEO, who is also in the office that day, and who also has a private office, that says “hey dick, understand we’re now doing bluh, that’s probably even better.” Ok, at this point, their executives aren’t even on the same page on this simple integration. Granted, this is one silly example. Yes, I know that this could have just as easily happened to us if one of us was traveling that day. Yes, I know this could just as easily have happened to us if our marketing director wasn’t at her desk when the phone rang and this became an evening email thread. The point is that all things being equal, our office configuration was far more adept at dealing with instantaneous change (what Newton called “calculus”), and the private offices at the other company prevented what should have been rapid communication given that they were all in the office that day. Private offices create distance when what you require is proximity.

2. Friction begets friction, transparency begets transparency. Can you tell that the key word in this post is “begets”? One function of a very open space work environment is that you get transparency up and down the organization. When the engineering team can hear the support team constantly fighting the same battles on the phone, they have a better appreciation for the product issues. There were many times when just overhearing a phone call would help countless people in the company correct an issue before it occurred (“hey, I heard you tell that guy that XYZ will be ready in a couple weeks. It’s going to be ready but we’re starting to think we want to limit the release initially until we make sure ABC is working well”). You don’t get that serendipity in a private office environment, you get friction. Friction requires a lot more formal communications processes, and processes in small companies have the potential to create more, not less, friction. You obviously have to have a few small conference rooms or phone rooms where people can make private calls. People have personal calls to make and some people don’t particularly care to be negotiating with a major media company out in an open room when the CEO is swearing about something else in the background, you know, just to pick a hypothetical. When all the general business is conducted out in the open, there’s much less likelihood of office gossip because everybody generally knows what’s going on. I would talk to our finance team about quarterly numbers out in the open, right next to engineering. Some people will say that’s stupid, as a new/junior employee might run out to lunch and tell their friend “We only did four dollars in revenue this quarter”. My position was that everybody in the company is a grown up and we’re not going to hide and speak in hushed tones unless there are very specific non-disclosures involved, which of course come up from time to time.

3. Motivation. Look, there are days when everybody comes into work and just thinks “How many times do I have to remind myself that the words ‘more’ and ‘tequila’ do not go together?” The beauty of a big open space is that you’re not going to just sit there and dial it in, or at least if you do, everybody will take notice….when you see your sales director on the phone with a particularly tough customer and really grinding out a long negotiation, it makes you think that you can’t just sit there and suck your thumb. You feel like you have to do your part. You feel more part of a team.

We can all think of a number of startups where you might need private offices, particularly outside the realm of technology startup. Companies where customer/partner confidence is imperative and employees would feel that every phone call had to be taken in a private room. I can imagine some financial services companies, some health care companies, and some consulting companies require that just about everybody have a private office. If every one of your customer calls has to take place in a private phone room, well then, you should probably just have an office, however, I believe this is not the case for 99% of technology startups. I just do not buy that the director of sales or the CEO have to be on private calls more than once or twice a day, at most.

Frankly, whether people will admit it or not, most of the time you end up in an environment with a private office for status reasons, not business reasons, and status is not a particularly compelling argument for a specific office configuration. In fact, status has the downside of causing people in the company to work toward status instead of working toward results.

There is one humorous side effect of this kind of environment, which is that people from traditionally status-oriented industries (say, banking, just to pick on a vertical) don’t take you as seriously when they visit your office. You can’t possibly be doing that well as a company if the CEO is just sitting out here in the middle of the room with the rest of the huddled masses!

Posted by Dick at 09:58 AM | Permalink | Comments (13)

Our kids had spring break a couple months ago, and owing to some tremendous misfortune that befell my wife last year on a trip to visit family, we were the beneficiaries of four free round trip tickets anywhere in the US. Since the flights were free, we decided to splurge on the hotel and ended up staying at one of the more upscale hotel brands. Interestingly, when we left Chicago, our departing flight was 40 minutes late, and when we got to the hotel that evening, our room wasn't ready, and also ended up being about 45 minutes before we could get into the room (which was fine since the weather was fantastic and we were happy to be outside). The difference in customer service between the airline and the hotel is instructive for thinking about customer service as a startup, whether you're enterprise or consumer focused.

The airline's website and official customer service language are all about lines like 'the customer comes first', 'you are [airline name]'s most valuable asset', etc. The hotel's website and official customer service language are non-existent. I couldn't find anything on the site that explicitly mentioned customer service. Of course, the actual customer service experience was first-rate at the hotel and miserable with the airline. You cannot provide or foster phenomenal customer service by saying you have it. You can only provide and foster customer service by embedding the customer in your company. There are two ways to embed the customer in your company:

1. The company only has one constituency, customers. How many times have we heard executives make statements about 'stakeholders' and 'several kinds of customers, including our shareholders, industry partners, blah blah blah'. Companies that think they answer to multiple entities answer to customers last. I think this is probably a contentious point, but you can't have a customer-centric business that feels it serves multiple masters. Companies that serve only the customer provide what the other stakeholders want as an artifact of their focus on the customer. Companies that serve multiple constituencies have "good reasons" why they just can't provide their customers with [insert something the customer values].

2. More information is always always always better than less information, aka Transparency. Businesses that provide outstanding customer-service have employees that all know it's ok to provide the customer with more information. Airlines, for some reason, are absolutely horrible at this. You can be sitting in a gate area for a delayed flight with an unknown departure time and get absolutely no information. I've actually heard gate agents come over the PA system and say "the answer is that there are no answers". Inexcusable behavior that's engendered by employees who are afraid of what might happen to them if they say something. EVEN when the information you provide is of no additional benefit to the customer, letting them know what you know is helpful, comforting, and builds a relationship with the customer. Going back to our airline/hotel example - delayed flight with no information until it was suddenly ready to board resulted in high stress, lots of passenger tension in the boarding area, lots of frustration with the airline. We got to the hotel, the room's not ready. The registration person says "look, the lock on your door is apparently broken, because the key only works 'sometimes'....i don't really know what means since i've never heard of it happening before, but the security team says they think it will be about thirty minutes to an hour. if you could come back here then, we'll either have your room ready or i'll have more information". In both situations, the employee couldn't really do anything for us. In the latter situation, I at least now have a sense of what's going on and that they realize it's a problem, and that they're working on something specific. In the airline case, there is no transparency, leading to anger, frustration and mistrust between the employees of the airline and the customers.

When you're building a business that you feel needs to be customer-centric, the path to success lies not in hanging signs on walls or writing mantras and slogans. It's reinforcing to your team that a) there is only one 'constituency', the customer, and that transparency is a company value.

Is it possible to build a successful business without great customer service? Yes. Absolutely. There are untold numbers of profitable businesses that resent and mistreat their customers and many of these are high on the list of having "the customer comes first!" billboards in their stores, websites, and literature. It's up to you to decide if your company is going to make customer service a competitive advantage. If you do, it has to be embedded in the company from the start, it can't be managed into the company later with messaging and mission statements.

Posted by Dick at 09:34 AM | Permalink | Comments (2)

You are one lucky dude. You have a simple vanilla Series A term sheet from a venture fund that's done a bunch of A round deals. You and your investor get along and are looking forward to working together. The company is brand new. You have an attorney who does divorce deals normally but has done a few incorporations in his day to negotiate the term sheet and handle all the follow-on negotiations on the Articles, which should be no big deal, right? After all, how many Articles of Incorporation variations can there be especially when you're working with a very vanilla straightforward term sheet. You're raising a million bucks, the legal fees on this financing will net out at, what, 5 to 10k at the most, right? You can probably get anybody to represent you because this should be pretty cookie-cutter, right? You poor deluded fool.

There are a bunch of things to think about regarding legal representation and legal fees.

Rule #1: Making mistakes on your legal agreements now will cost you in spades down the road, both financially and otherwise. Do not skimp on representation. Do not focus on hourly rates (more on that below).

Get attorneys who have worked in your general area before (eg. internet consumer software or enterprise IT software) and who have done all kinds of work across this area (eg, financings, corporate creation, contracts - especially contracts, patent/IP work, M&A work, options plans, etc.). Geographic proximity to you is entirely unimportant, so don't worry if you're in an area that doesn't have lots of this expertise. FeedBurner's current counsel is Cooley Godward's office in Broomfield Colorado. We are in Chicago. I'm not sure I could point to Broomfield on a map other than to wave my finger generally over the denver area and say "it's thereabouts".

My cofounders and I were extremely fortunate that one of our spouses worked at the first firm that represented us in a previous company, but not everybody's in the position to have immediate access to a trusted and capable firm. So, what are some of the ways you can go about finding great attorneys? Simple: call or email a bunch of other startups in your general market and ask these people how they like their representation. I'll save you the hassle of emailng or calling me and tell you that we love our representation. Startupping, Mark Fletcher's excellent new resource for entrepreneurs, also has a bunch of helpful suggestions in this area in the forums, and you can always ask questions of a lot of people at once over there.

Rule #2: Financings will cost you a lot more in legal fees than you think they should.

Back to the opening paragraph. You're doing a straight A round financing on a blank slate company with a venture fund that's done loads of these. I would expect to pay up to $30k on all the legal fees associated with an A round financing. Why so much? Because you are paying the legal fees for both your attorney and the VC's attorney when these two attorneys negotiate against each other. "Did I read that correctly?", you say, rubbing your eyes. Yes, you read that correctly. You pay your attorney to negotiate all the docs and you pay the VC's attorney to negotiate against your attorney. Some percentage of the money you are raising will go to pay the attorney of the firm who is negotiating against you on the money you are raising. This is chapter 1 in the "Life's not Fair" manual that comes with running a startup.

Unfortunately, this puts you in a position of thinking "well, i don't want to really negotiate this point, because I'm paying twice to negotiate this point". That's no way to live, so here's how you (try) to deal with this. First of all, up front, get the venture firm's attorney to cap their fees. They will respond to this request with "we will if your guy will", and your guy will respond to this request with something like "we will if they will but our cap will be higher because we also have to do all the paperwork and file the articles and blah blah blah" or they might say "no." or they might say "ok, we'll cap ours at 30, which is fine since we only anticipate spending 20". Take a deep breath and keep at it, you want both sides to cap their fees before you get started here. Helpful investors that are really going to be your partner can put the squeeze on their counsel to cap their fees. Of course, you might reasonably say that a super helpful investor would pay their own legal fees, and I'd agree with you. This is one of the areas that I shake my head at and say "this don't seem right", but I've never been in a situation where the venture firm paid their own fees. In a financing where you have multiple investors, however, you should definitely make sure you're only paying one firm on the other side.

You may be thinking right now that I'm stupid to pay both sides' legal fees in any negotiation. If you can negotiate that you're not paying the other side's fees on the deal, good for you. Go for it. While I have never not paid the other side's fees, I'm sure some companies in huge demand have the leverage to negotiate for this prior to signing term sheets. As always, never take "it's standard, all our deals are like this" as a reason you should just accept the point.

The last point I would make on financing legal fees is that you can use the Wizard's very own patent-pending-financing-legal-fees-negotiation-tactic. Here's how it works. Before the two sides start negotiating, I call both sides and start swearing about how upset I'm going to be if this costs more than some reasonable amount. I'm generally informed that it's going to cost a lot more than that reasonable amount, upon which I call and email both sides again and the investors and swear a lot more about how capital inefficient this is and what a waste it is, and since I actually feel this way and am by now swearing in the office about the cost, it has the added effect of not sounding disingenuous.

Rule #3: Expensive attorneys can be less expensive

Referencing the Wizard's first rule of legal representation, one of the reasons you want people who've worked in this area before is that they can end up costing you a lot less money, even at a much higher hourly rate than other attorneys, to get pieces of business done. In the past, we've seen very expensive attorneys get financings, patent filings, contracts, and other work done for companies at 1/4 the total cost of similar work by another legal team and the resulting work is likely a lot more thorough if the firm's had lots of experience in this area. Our previous company (spyonit) setup costs were a lot less than my first company's setup costs in which I'd used a "cheap" non-researched attorney, even though the spyonit attorneys were lots more expensive and spyonit was a more complex company. Don't skimp on seemingly pricey attorneys as a means of saving money. It can easily backfire. This is to say nothing of the trouble and costs you could incur down the road if you sign a contract with troubling indemnification clauses or the options plan is messed up in some obscure but critical way, etc.

If you can find attorneys who also believe in what you're doing to the extent they feel like this will be a beneficial long-term relationship, that can also help a ton with short term fees. If your counsel feels like building this relationship is more important than getting another 1500 bucks out of you this month, that's obviously a good thing. This is easier said than done, however, and probably even more difficult in the valley at the top firms.

My opinion about legal representation does not cross over to audit representation, in which I think going with one of the cornerstone firms is a good way to ensure you will get raked over the coals on audit fees a few years down the road. Lots of auditors will mark down their fees in the first year or two while you're just getting started, but the really big firms will come back and bonk you on the head with ridiculous fees a couple years down the road, while some of the smaller, hungrier, and no less competent firms will keep their rates aggressive AND will give you more general attention.

Posted by Dick at 09:31 AM | Permalink | Comments (1)

Then, shalt thou count to three. No more. No less. Three shalt be the number thou shalt count, and the number of the counting shall be three. Four shalt thou not count, nor either count thou two, excepting that thou then proceed to three. Five is right out. Once the number three, being the third number, be reached, then, lobbest thou thy Holy Hand Grenade of Antioch toward thy foe - Michael Palin character, The Holy Grail

Successful businesses measure and count things. I think that's a safe assumption on top of which we can drop the following hypothesis: unsuccessful business either measure nothing, the wrong things, too many things, or finally, they measure the right things but they don't communicate the measurements efficiently.

Great lessons about what and how to measure can be found, not surprisingly, within companies whose profitability is entirely built around delivering service X more efficiently than the market. Consider a performance-based marketing company such as LinkShare, Performics or the like. These companies have to religiously measure how well certain kinds of affiliate inventory can convert to sales for certain kinds of marketers so that they can more efficiently deliver lower Cost Per Action results for marketers. Since there are lots of performance-based marketing companies, only the ones that convert at the lowest CPA's will stick around. You will find when you peek inside these companies that they measure trends and exceptions, and have very efficient mechanisms for communicating trends and exceptions throughout the organization in a way that facilitates rapid management decision making.

Of course, every company ultimately needs to execute on product or service X more effectively than the rest of the market in order to be most successful (let's ignore monopolies and oligopolies here), so it will help us to understand how we should deal with measurements and metrics reporting within the company.

Measurements and metrics reports should serve two purposes:

• Speed up, not slow down, communications within the business
  
• Provide leading indicators about the state of the business against which management can make decisions

Metrics reports should NOT:

• be a platform for rationalization
  
• necessarily require meetings to discuss
  
• facilitate the illusion of progress

The first two points about the goals of metrics reports shed some light on how our metrics reports should communicate information.

Trends and Exceptions. A year ago, one of our network operations reports was quite detailed. In order to make sure that we never missed an impending issue regarding server load or infrastructure, we had a weekly report that spit out hundreds of numbers. The so and so database is only 23% utilized, the so and so load balancer is processing N hundred million requests a day, on and on. Yikes. If you looked at this report week to week, you would quickly develop the behavior of "there is nothing interesting in this report against which I need to have additional conversations or make decisions", so it became a report that was created around which we had a weekly meeting to talk about the report. Bad. How do you improve communications between the network operations team and management and improve the delivery of information that can help make decisions about the business? Instead of reporting the same hundred metrics week to week, you report only on "trends and exceptions". When you make the network infrastructure report more of a sparse matrix in which the information showing up today is only there because it's exceptional, it becomes a much better communications and decision tool because you are only seeing things that stick out. Your eyes don't glaze over the numbers. If there aren't any exceptions to highlight, well then you probably don't need to meet about the lack of exceptions.

Green Yellow Red. Keeping in mind that the goal of a metrics report is to make communications more efficient and provide data against which decisions can be made, it is amazing how just adding a simple set of color codes to a detailed metrics report can accomplish both goals. Our most necessarily detailed operations report is color coded with green, yellow, red indicators. Green is "here is a good thing that happened you might want to know about", yellow is "here's an interesting issue, but the team is on top of it, no action required" and red is, as you would expect "issue requires management attention - here's what we've done so far". Something as simple as color coding a report improves your ability to see patterns in the business and react to them more quickly.

But certainly there are some kinds of metrics that can't be described in terms of trends and exceptions and color codes. The classic sales pipeline report, for example, helps the sales team and management understand how well the company is doing against a plan and if done right, they serve as a very clear leading indicator of revenue and a great communications tool between sales and management. My one general suggestion around the pipeline report is to avoid the mistake of creating a mechanism for the illusion of progress. What do I mean by that? Only that by creating very detailed levels of customer engagement reporting, ostensibly for the purpose of getting a better picture of how likely a deal is to close, what you can end up with is a mechanism for potentially meaningless changes in status.

The best sales pipelines I've seen are very simple and only have a couple of different stages that a lead can go through along with a simple green yellow red on pipeline vs. plan that takes into account historical close percentages on qualified leads. Frequently, management wants more detailed visibility on qualified leads, particularly n big enterprise software deals, and therefore the company will add varying stages to qualified leads, which we can just call A-E or 1-5. A potential customer at stage 5 is very likely to close, and stage 1 is perhaps just had first meeting. While I understand that million dollar software license pipelines can't just be "unqualified, qualified, and closed", the pipeline report should provide only enough detail to accurately predict results, otherwise you are just facilitating the illusion of progress. I once worked with a company that had very detailed stages that a qualified lead would go through, but of course, these stages are all abstractions until you've signed on dotted lines. Management then felt these very detailed stages gave it a better handle on "where this customer was in the process", however, what you would start to see happen is that the sales team would "manage status" in order to effect the illusion of progress, not even consciously, but just as a way to show effort week to week. We might be on a monday pipeline call, and two big deals would move from stage 2 to stage 3...."we made a lot of progress last week. I think we can bump GiantCo up from a 33% to a 50% likelihood...." and then we would hear another five minute explanation regarding why this was now 17% more likely to close. There are two problems with this kind of measurement. First, it's not real unless management has some very detailed sense of the historical rate with which stage 3 deals close vs. stage 2 deals by these exact sales people, and second and maybe even more importantly, the business becomes more about managing status and soaking up time in meetings around status instead of running the business.

Much better to have one page pipeline summaries that highlight how the next months and quarter look against plan based on historical close percentages, and then sheets behind that with trends and exceptions that are color coded (eg, we have three deals that came in last week that are 50% larger than our average deal size, the GiantCo deal has been in the pipeline for 200 days and hasn't closed so it's yellow because once a deal is more than 200 days old we tend not to close them, etc.).

The bottom line on metrics is that you want to provide everybody in the company with the best information about the health of the company and create a platform for decision making. By just "measuring everything" you can get into situations in which the business becomes more about the measuring and less about the communications and decision making. The things you DO measure, you should measure religiously and take decisive action when the data speak up.

Posted by Dick at 08:50 PM | Permalink | Comments (8) | TrackBacks (0)

I was asked by a commenter on my Best Available Athlete post if this theory implied that I was a subscriber to the hire fast, fire fast method and what I thought about Joe Kraus' No False Positives hiring philosophy.

Briefly, the "No False Positives" school of hiring says that bad hires are worse than no hire because bad employees infect the company with all sorts of issues. Better to march on with nobody filling an important slot than to bring in a sub-par performer.

The hire fast, fire fast approach basically can be boiled down to "it's really almost impossible to understand whether a person is going to be a killer A+ match before they start working with you day to day, so best to find somebody that seems close enough, and then remove them quickly if they don't work out."

I have a couple general observations I'll make aobut these kinds of hiring philosophies. One of these observations may contradict another, but such is life....hiring is hard and nobody said the wizard was consistent.

I buy the hire fast, fire fast line of thinking for Sales Reps or VP Sales roles but I don't buy it for Engineering, Marketing, Finance, etc. The problem with hire fast, fire fast in the engineering department is quite simple: you don't end up executing on the fire fast part of it and the bad hire infects the organization for an extended period before you figure out how to remove them. Engineering goals are more generally team goals, there can be lots of reasons code can ship late, and performance criteria are more subjective than sales performance criteria. The mediocre hire ends up becoming part of the team and it just ends up taking longer to fire that person on the team, by which point they've added more subpar work to the mix. So, I am a subscriber, outside of sales, to the thesis that you have to interview rigorously and that it's better to leave an urgently needed role empty than to bring in a "false positive" who will infect the organization. You can only try to accomplish this by having multiple people interview the candidate over multiple days with multiple interviewing techniques.

Second observation: You can hire fast, fire fast with sales people. It's very very hard to comprehend a priori who will be able to best sell your service/product in a particular region to a particular customer base. Since this is an area of the company where people generally are responsible for very straightforward, measureable and explicit individual goals (ie, sales targets), it's much easier to communicate and implement a hire fast, fire fast kind of policy with this group. You have to ensure you really stick to it however, and understand when company processes and products are causing the sales ramp challenge(s).

There's one big problem with a pedantic devotion to the "No False Positives" approach, and it's that you can miss out on really high quality people that don't have all the t's crossed and the i's dotted but that can have an assymetric positive impact on your company. In the "Best Available Athlete" post, I was trying to describe a way of bringing these people into the company. You find a person that's just a dynamite all around person who excels in all sorts of ways but maybe they don't answer all the java questions correctly if they're an engineer or they don't have all the requisite experience for a vp operations or they're interviewing for a marketing position but they spent the last 2 years as a bank teller in Toledo Ohio for some reason. I think when you find this kind of person, you try to slot them into a role in the company instead of looking for a more classic fit.

Posted by Dick at 12:18 PM | Permalink | Comments (5) | TrackBacks (0)

"Laugh and the world laughs with you. Take out the garbage, and you walk alone"
- The Wizard

I got an email from a would be entrepreneur asking if there were people or companies you could use to handle the "painful and non business related" parts of starting the company so that this person could focus on the business and product.

There are certainly companies to which you can outsource aspects of company creation cheaply and productively, and particularly if you're a very small one or two person operation that's bootstrapping things, these kinds of services can be very useful. My worry about the email, however, was with the belief that the non-product specific tasks of company formation were "non business related". In reality, the first months/year of the business are about the highest percentage of working on the product you'll get. If you're already thinking there's too much "non fun stuff" involved in starting a company, you might want to consider a) multiple co-founders so you can be product guy and somebody else can run the company or b) not starting a company.

The other benefits to tackling a lot of these non-product pieces of company creation yourself is that you might find it interesting, helpful, and even important down the road to understand the details behind things like why you'd choose an LLC over an S-Corp, what the details of your office lease tell you, why phone systems are so damned expensive, etc. Finally, even if you do bring somebody else in to handle all these "details", if you adopt a posture early on that you don't like to get your hands dirty, I predict trouble down the road including but not limited to general pain and suffering with periods of poverty, acrimony, and finger pointing. It's fine to move into a product specific role when there are more people in the company, but in the early days you're going to have to take out the garbage a lot, and nobody's going to want to hear you talk about how great it was that you just took out the garbage.

Posted by Dick at 08:25 AM | Permalink | Comments (5)

One of our investors, DFJ, has an annual portfolio CEO's meeting in the bay area. Serial entrepreneur and all around great guy Mike Cassidy spoke this year and ran through a very rapid fire presentation on launch and operating strategies. One of the questions Mike posed was something along the lines of "When you're just getting started, would you rather hire experienced veterans or extremely energetic young people who will passionately attack whatever challenge you lay in front of them?" Mike's hypothesis was that in the early days, you need to hire the right experienced people because there's just too much going on and you don't have lots of time to train more junior people how to tackle a particular role. I'm not sure I totally agree with this, although I know where Mike's coming from and obviously, he went into a lot more detail on his rationale so i'm shortchanging it a bit here.

In any case, not everybody is afforded the luxury of being able to find an experienced person for a much needed slot in the early days of the company. Maybe the market is crazy and it's impossible to find or attract the right experienced hire, maybe you're 23 and starting your first company and with only a seed round in the bank and a big vision, there can be fifty reasons you can't find the right person.

One of the things we've done a few times at FeedBurner is hire what our vp advertising Brent Hill refers to as Best Available Athlete. This is a bit of a silly analogy drawn from a term used when pro football teams are drafting college players. Sometimes there's a guy who was a quarterback in college and everybody knows he won't play quarterback in pro football, but he's smart, he's fast, he's strong, he's got a great attitude etc. Some team will select him on the bet that although they know he's not going to be a quarterback, he's the best available overall athelete remaining among the available players, and they know that a person with these qualities will work somewhere on the team.

I think this a good approach to hiring in the very early going even when there are other experienced people who fit the role. Look for somebody who's the best available athlete, ie. has the right kinds of characteristics and skills and personality/attitude for your business and the general role, and bring that person in. The other great thing about hiring the best available athelete is that your organization will shift as you grow, and it's helpful to have a couple people that can slide into somewhat different roles as you the organization shifts. I think this approach applies equally well to all areas of an organization.

It's also important to know when not to hire the experienced person who has all the "on paper" qualifications for the role. Cultural fit in the early days of the company is critical. Don't sacrifice cultural fit for grade point average, industry pedigree or any other resume checkpoints.

Posted by Dick at 08:31 AM | Permalink | Comments (1)