a16z Podcast - a16z Podcast: Hiring is Hard -- Here’s How to Do it Right

Episode Date: May 21, 2015

LinkedIn may seem like a gift both for job seekers and hirers, but it's not enough. When (and how) should your company develop a process to attract -- and close -- the best people? In this segment of the a16z Podcast, Caroline Horn and Matt Oberhardt from a16z’s Executive Talent team break down the steps of a great hiring process: best timing; how to launch a search; when a CEO should and shouldn’t exercise their veto power; and when to turn to outside recruiting help. The goal is not only to make your hiring process more efficient, but to make your company more attractive to the best people. “Before LinkedIn and other social networks, access to candidates wasn’t ubiquitous, which it is now. That’s not the game anymore.” Here's how to play that game now.

Welcome to the A16Z podcast. I'm Michael Copeland. And today we are here with two people from our executive talent team, Caroline Horn and Matt Oberhardt. Welcome, guys. You guys are all about finding the right executives, helping people put that process in place. So what I want to do today, we're going to talk about recruiting. And I should say we live in a world that includes LinkedIn, and I thought all our recruiting problems and witches and dreams had been solved. Is that not true? Well, I think LinkedIn has definitely changed the way recruiting works. It's certainly having learned recruiting at a time when LinkedIn didn't exist yet.

It has changed things for recruiters in general, but it's very useful in some cases and not in others. Yeah, I'd say, you know, LinkedIn is still no substitute for having a really strong internal process to manage candidates and really create a great employer brand out in the marketplace. You know, if you've sourced, let's say, 15 or 20 candidates for a position on your own and you've had difficulty, you know, bringing them through a process effectively, all LinkedIn is going to do is create 150 or 200 potential profiles and it's going to choke the process you already have if it's not well set up. we obviously invest in startup companies and you guys work with a lot of startup companies but also big companies too i mean both of you caroline you came from google matt you've been in the recruiting world for a long time so working with big companies and small companies but you you say process do most startups have much of a process or what do you often observe when you go into a young company and they're trying to sort of recruit their first big time executive so i think it depends on

founders, right? And what their experience is. Like, if they're experienced and they've come from other big companies, they probably have worked with processes before and they'll bring some of that with them. If it's a, you know, an entrepreneur who hasn't done this before, they may need a little bit of coaching and guidance to build a process. And that's where we come in to help them learn how to do that and really set up a process that will allow them to both attract and evaluate talent and bring them into their company very well. So I'd say like the two biggest areas of weakness that we often see in the process is, you know, first off, the, there's an interview team that doesn't necessarily really know

what they're interviewing for. And like the best entrepreneurs out there sit down with their team and say, okay, I want you to focus on this piece. I want, you know, the second interview to focus in this area. So that almost each interviewer is focused on a different area of the candidate's background. And then the other issue that's often broken to is the feedback loop. right where you know you're not as an entrepreneur getting the feedback from the interview team quickly

and processing it quickly and then being able to make a decision and get the feedback to the candidate too well so let's use an example of a CFO for example right so I'm I've never hired a CFO I want to bring one in how might you break down that kind of process between different groups within a startup well I mean there's a lot of the work that we do just up front to even understand okay what is it that you even one in a CFO because there are all sorts of different types of CFOs out there, everything from you know, more of a gross stage type of CFO to someone who can take you public and be a public company CFO. So there's really, first of all, just scoping and level setting the role with the team and then also bringing individuals from the outside before the search even starts, not as

candidates, but as individuals to help you learn further about how to interview and evaluate CFO candidates. So there's all that pre-work that helps honestly set the state. for a successful process once the search starts. And, you know, if you've done that right, you know, you'll have a much smoother search, whether you're doing it on your own or with a search firm. If I can't get the candidates that I want, I mean, I'm a new company. How am I going to attract people to come talk to me in the first place, do you think?

Well, I do think that, you know, knowing what you want and going through that early work that Matt just talked about is really important because once you, you know, are able to connect, whether it's through a warm introduction or reaching out yourself or connecting through some sort of context with the people that you want to meet, like really knowing what you want will differentiate your company from other early stage companies that I think one of the things that turns great candidates off very quickly is if they feel like the company they're talking to or the CEO they're talking to really doesn't know what they want in a particular role.

So I'm competing for, I mean, we know that the competition for good people is hard enough, and I'm competing with a lot of other good companies for that matter. So, again, one of the things that you guys are highlighting, though, is that if my process kind of rises above everyone else's, I have stand a better chance of bringing people in. Do people recognize often that their process isn't what it should be? I mean, again, if I haven't done it before, how do I know? I mean, I think there are definitely benchmarks that you're able to work with entrepreneurs to help them understand.

I mean, many entrepreneurs out there are, of course, you know, talking with their peer group and, you know, they're asking, we had an example recently where one portfolio company couldn't really figure out, it's like, hey, you know, we're not able to really get, you know, our executive searches done in a way that, number one, we're not even able to close candidates right now. And so, you know, he went and talked to one of the other portfolio company founders and started to realize, hang on a second, here's all the things that I could be doing differently that, you know, now that I've looked outside for those external benchmarks, I realize there's a lot of things that we're just doing. and wrong. Right. Can you put some more detail on it? Are there certain things that you guys see all the time that actually work well as opposed to not working so well? You know, the thing that comes to mind, you know, first of all, is really the CEO, and at least for an executive search, CEO of founder being really the first point of contact with the company so that the executive has an opportunity to start developing that personal rapport and relationship with the CEO right out of the gate. And if you're able to start with that foundation, in a lot of cases, it's a lot more

successful than, you know, really having someone else in the organization start the process. Following on from that, I think that next set of conversations is incredibly important for the CEO to really help the other key stakeholders or people in the interview process that make sure that they're all in alignment and that they know exactly what they should be focusing on in those interviews. And, you know, what are the concerns of the candidate and what are the areas that you want to drill into and that that's all very choreographed and organized when it's not organized and people are asking the same sort of questions

or, you know, asking very low-level questions, then those are the types of scenarios that really turn candidates off. Yeah, and I think the other piece towards the end, too, is the founder has to own the decision. You know, you can't have a situation where, you know, you're trying to make a decision based on consensus. Yeah, I was going to ask you about that. So it's not some Quakerly approach to finding your next executive.

And the founders need to be coached on that too, right? And there are certain cases where you want to give the candidate exposure to the team, for example, that they may be managing, but those people shouldn't have veto power over who their next boss is going to be. So let's say the founder and the person, with veto power has, you know, falls in love with the candidate and the rest of the team kind of rubs them the wrong way. And maybe it was a different day, a different interview somehow, just things didn't sync up. How far do you push it? And what do you advise CEOs and founders

to do in terms of like wielding their veto power and authority? I mean, we definitely suggest that, you know, they get as many data points as possible in that situation. So, you know, it's something where if there are specific individuals on the management team that are having an allergic reaction of sorts to an individual is to have them sit down again and have a second conversation. We also encourage teams to kind of pull people out of the actual interview process and get into a game planning discussion. And what we kind of mean by that is you basically put the person as if they're in the role. So you ask them to kind of put together, hey, over the first three to six months, kind of what would your plan be in the job? And then discuss that

with the CEO and the management team. So it pulls people out of an interview process and you start to see how the team would really work together and either it'll work or it won't work. We've had a number of situations where candidates who've performed very well during the interview process have then gone into that game planning discussion

and just falling flat. Right. So you try and put them in the actual work flow and like it might be going forward, I see. A working session makes a huge difference. The other thing you can do is references, right? And so if there's a concern that has come up, you know, particularly if it's come up more than once with different

interviewers, then I would say doing references can help figure out, you know, people who've actually worked with this person in the past, like what's their opinion of that and what was their experience working with that individual regarding those concerns? Well, let's say I have done my LinkedIn searches. I have sort of shaken all the bushes I have and gone to my network, etc. And I still can't get the right people to come through my door to interview for a position. When do I think about, I mean, is that a situation to bring in recruiters? I mean, people who do this day and day out. Why do I need a recruiter? And then how do I go about finding the right recruiter for my company? Yeah, I think working with recruiters is a great situation, you know,

a great option if you're in that situation where you haven't found people on your own. And I think the value of working with an executive search firm is that they're going to take you through a process, which will ensure quality in the end, right? You want it to be an expedient process, but they're going to look through all of the relevant companies. They're going to make sure that that role is defined well, that that process of the assessment is followed to a T and hopefully ensure that the quality of the executive that you hire is going to be very high.

Yeah, I think what happens sometimes is that you fall into a trap, you know, where you think you have to do things in a serial way rather than in parallel. And, you know, if you do things serial, it's like, okay, I'll go through my network. And then if that doesn't work, I'll go bring a search firm. It's like the best way to do it is just to do it in parallel. Right. Where, you know, you bring in a search firm who's going to be able to process candy, coming from all the different sources, your network, maybe your investors, the search firms

network. So you have to think about the search firm as not simply being a source of candidates. They're going to be a set of individuals that are going to help you reduce your own opportunity cost because if you're doing the search yourself, you know, that means there's some other part of the business that maybe isn't getting the attention that it needs that only you can provide versus the search firm can run a process. There's one way to think about recruiting and search firms versus my network. But if I'm, let's say, running a machine learning company, I think probably would have this belief that I know everybody that I need to know in the world of machine learning and therefore I'm the most qualified person to go out and find the people

to fit my team. But is that a trap? Is that not necessarily true? Or do we just sort of fool ourselves into thinking that? I mean, I think we do, to some degree, fool ourselves into thinking that. There's always going to be more people out there. You know, you never have a hundred percent penetration of a particular space with your knowledge. And it's also not simply about what a person knows domain-wise or what they may know functionally as a VP of engineering or a CFO. It's also, you know, the intangibles, especially at the executive level around, you know, cultural fit and leadership and management style and things that are in, in most cases, far more critical than how much they know about machine learning in this case.

And so a recruiter can help me kind of, again, sort of broaden my perspective and get a wider angle on the people out there in the world. Is there a trick to finding the right recruiting firm? Or do I imagine you work with one at a time, not multiple firms at a time? For executive all roles, yes. Like you'd want to work with a retained search firm, then that'll be working on this role exclusively with you. So they're really your partner in working through finding the right person and going through this process with you. But I don't think there's necessarily a trick to finding them.

I think you have to do your homework and know what does a search firm specialize in and how many searches have they done that are similar to what you're looking for, how well do they know the talent in the space, and really know what their expertise is. Because even if they're generalist firms, they, either the partners will specialize in particular functional areas or even, you know, different sizes or stages of companies. So there's some search firms that, you know, don't work with early stage companies all that often.

And those would not be great for, you know, our portfolio companies, but they would be great for larger companies. So you need to just do your homework and know what you're getting. Yeah, I mean, before LinkedIn and, you know, other social networks that were out there, I mean, access, you know, it wasn't ubiquitous. access is ubiquitous now. So that's not the game anymore. You used to hire a search firm back of the day because they had a database.

Right, which LinkedIn has, right? Yeah, the database is that's now irrelevant. Right. What matters more, you know, as Caroline was saying, is, you know, I want to see that you've been actively touching this particular segment of the network for the last, you know, 12, 18 months. Tell me the searches you've done in that area. So I know that you know the first 20 people to call. You know them intimately.

And because that person or that first 20 people are probably getting hit with, you know, a whole ton of emails and a whole ton of phone calls about opportunities that because you're contacting them, you know, they're going to respond to you and no one else. Right. You guys do this day in and day out, and I just want to know, you know, coming from a big company to a startup is, for some people, a very dramatic and kind of frightening thing and also exciting thing. What is there that you see consistently that convinces people to go from perhaps, you know,

a much larger organization to a startup. I mean, I think, you know, for the individual who's coming from a bigger company to a smaller company, there is the desire for, you know, more quick action, you know, the desire for faster movement, you know, on decisions, the desire for them to actually be able to see the impact of what they do on a day-to-day basis. But, you know, the flip side on it is that there's definite risk for the entrepreneur that if this person hasn't been in a small company before, are they going to be agile enough?

Are they adaptable? Do they need an army of people underneath them or can they be the army of one, basically? So those can be risky situations if the person hasn't been in that environment before. I think the startup world is attractive also to bigger company executives where they feel like they could own something completely

or that they, you know, will be the leader of whatever function they, you know, they work within versus one of many in a larger organization. But as Matt says, it's like, do they really have the capability to step into a smaller company and work in that environment? And, you know, they may need to be much more scrappy, much more hands-on. and some executives can make that leap easily and others have a really hard time with it. So some of it is the executive needing to know themselves well

enough to know whether that's really a good fit for them. Yeah, we often ask the question, you know, when there's an executive who's making that type of transition or wants to make that transition, it's like, okay, think back to what you were doing seven or ten years ago. Are you comfortable doing that on a database kind of in addition to what you're doing now?

Right, right. And it's not to say that you're not doing sort of, high-level strategic, all kinds of interesting things, but you're doing everything else too, right? Exactly. Yeah. We certainly do a lot of that around here, I have to say. How do you know when a candidate, maybe it's easier to know when a candidate is not working? You've hired someone and how much time does it usually take to know that, you know what, this is actually going to work out? Or vice versa that it's not working out. I think it depends in part on how well, you know, the entrepreneur and the team kind of set the expectations for the individual coming in.

Because anyone can walk into a startup and easily fill their day with everything that needs to get done. But the question is, are those the priority things that need to get done? And so I think a lot of cases where we see, you know, failure happen is because an individual is coming in and they think they're doing the right thing. But the expectations haven't been set clearly on what the entrepreneur or the CEO. thinks are the right things. So that gets back to process. What do you want? What are you looking for?

And then again, it's always somewhat fluid, I suppose. We're talking about people in growing companies and fast growing companies. I think some of these working sessions before someone gets hired makes a huge difference too, that if the candidate actually puts together a plan of like what are they going to do in their first hundred days and then they accept the job and come in with everyone having agreed on those things for more or less that they know what they need to get done and then it's actually quite actionable

for them to both do those things and be measured against them, right? So it doesn't have to take, you know, a year to determine that someone isn't working out if they're, you know, three months in and they're not hitting some of those goals that they expected to, then it's pretty apparent. And if they are, that's apparent too

and then you're off to the races, I guess. Yeah, because, I mean, a lot of times what happens is someone, you know, makes, if they have a misstep early on, you know, those first couple months are so critical to establishing that trust and credibility in the relationship between the entrepreneur and the new hire at the executive level. And if missteps happen, regardless of why they happen, that trust and credibility might be damaged to the point it's not repairable in the matter what else the individual who's the new hire does to try to, you know, make up for that. Right. To sum up a little bit, have a process. I love this idea of game planning where people are actually doing the work. And then if that goes really well, you've got your plan walking in. Let's say you get the job, and then you're off to the races.

I've hired my person. My work is done, right? Like I can now just focus on getting this company to the next billion dollars in revenue, right? Or is that not right? Well, you're always recruiting. You know, regardless of, you know, where you are stage of company or where you think your team is right now, the situation is always fluid. So you should always have a talent pipeline available, and that should be a fresh pipeline

where you've had recent contact because the job is honestly never done. Right. And so Caroline, always be recruiting, ABR? I think always be networking, right? Like, always be open to meeting people who are, you know, experts in their field and learning from them. And whether you're, you know, an executive or an entrepreneur looking to build out your team, just extending your network is always a useful thing.

Well, Caroline, Matt, thank you guys so much. Thank you.