Finding An Entrepreneurial Gem

entrepreneurial gem“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man."
- George Bernard Shaw

In the early stages of your adVenture, everyone you hire must be unreasonable.

Entrepreneurs Are Unreasonable

As noted in Inventors vs. Innovators, your early-stage hires do not have to be wide-eyed inventors. In fact, a company filled with Inventors would be a dysfunctional mess. However, such early hires should be Bank Robbers with the innate qualities that will allow them to resolve challenges with minimal resources, while never losing sight of your adVenture’s ultimate strategic goals. Reasonable people will attempt to make the best of the status quo – unreasonable entrepreneurs will change the status quo and make it complimentary to your adVenture’s ultimate success.

In order to be successful at a Big Dumb Company (“BDC”), the ability to execute in a repeatable fashion is of paramount importance. As such, when you interview at a BDC, be prepared to discuss what you have done.

What is important to a BDC, because most tasks performed at mature entities are repeatable, highly defined and have been done many times before. The relative degree of ambiguity confronted in such positions is small. Thus, knowing what tasks the candidate has previously performed is important because this information can be readily applied against the known demands of the open position.

When you are interviewing candidates at your startup, who is far more important than what because the tasks the candidate previously performed may only be partially applicable to the role they will play at your adVenture. In addition, the tasks of their new position will likely be ill defined, multi-disciplinary and ambiguous.

Emphasizing who over what will help you anticipate what it will be like to share a hotel room, spend a late night in an airport terminal or get lost in a strange city with the applicant. It will also alert you regarding how the candidate will perform in the hectic, stressful world of a startup and the manner in which they will address the non-stop onslaught of challenges they will face.

In addition to understanding who they are, you must also determine what the candidate wants to contribute to your adVenture – in this way you can tap into the candidate’s passions. Once you understand what motivates the candidate, you can place them in a position which will maximize their impact.

Balancing what a candidate wants to do with the company’s needs requires insight, flexibility and creativity. At a BDC, the hiring process is far more straightforward. A defined position exists, candidates who have previously performed the defined tasks are interviewed and one of them is hired to fill the open position. At a startup, your primary objective is to hire motivated people with talent. The specific tasks they will initially perform are of secondary importance.

What a Long, Strange Trip It’s Been

Most entrepreneurs’ experiences are not linear, just like the random path taken by many ventures. Many entrepreneurs will come to you with fractured, seemingly random careers. Look past the strange pit stops and extended detours and seek to understand who the candidate is and how you can leverage their disparate experiences to achieve your startup’s goals.

You may inadvertently dismiss a talented contributor if you solely rely on what a candidate has previously done. At one enterprise software startup, I hired salespeople with seemingly random experiences, including: rock drummer, customer service agent, venture capitalist, financial analyst, county employee and a technician from a Kinko’s-like store. On paper, none of these individuals had any business selling sophisticated software to technically proficient and highly professional buyers. Even so, all but one of them was consistently successful over a number of years.

Can you guess which of these folks did not make it?

It was the drummer. Although his performance was acceptable, he never excelled and he was obviously not happy. After he departed our venture, he went into acting…thus he continued to sell, but without a financial quota.

In order to find out who the candidate is, not just what they have done, consider the following issues:

  • How did they accomplish the tasks outlined on their resume? Did they build a team, did they go solo, did they dive into the task with relish or did they take on the mantle of a martyr?
  • Why did they make some of their major life choices? Are they willing to admit when they may have made a mistake? Is their explanation reasonable and thoughtful, given their stage in life and the other choices available to them? Here you are attempting to determine if they have a healthy dose of self awareness.
  • What did they learn from their life choices? Do not focus simply on the degree to which these life choices were successful. If the applicant cannot articulate lessons learned from their prior experiences, they may not have the on-the-job flexibility and astuteness to succeed at a startup.

Three’s Not Charming

Never hire someone who has been involved in three failed ventures. Great people can turn chicken poop into chicken salad. Adequate people can turn lemons into lemonade. Losers can turn angel food cake into devil’s food.

One or two failures spread over the course of an extensive career are not a big deal. In fact, failures teach entrepreneurs many important lessons that are painful but impossible to gain by only partaking in the journeys of successful companies. However, some people either: (i) have poor judgment which leads them to join into one failed venture after another or, (ii) are so inept that they contribute to the failure of everything they touch. In either case, you should usher such unfortunate Wantrepreneurs on their way.

The only exception to the Three’s Not Charming rule is with respect to successful serial entrepreneurs who have pulled together a string of highly successful ventures that far outweighs the few which have failed. Gather as many successful serial entrepreneurs on your team as possible, even those with a few failures under their belts.

Hiring Is Like Comedy

In comedy, one of the most important elements is timing. The same is true in hiring. A person who would be a great fit for a company in the early stages may not be an effective hire during a company’s expansion stage.

As shown in the graph below, there are general periods in a venture’s life in which certain types of employees are best suited. Common sense, right? Interpreting a static graph is easy. However, properly deploying this theory in the real world is extremely challenging.

Several factors contribute to the difficulty of hiring the right person at the right time. For one thing, it is difficult to determine which category a candidate falls into. People are complex and two rational, intelligent people could reasonably differ regarding the proper categorization of a particular job candidate.

Another factor that complicates the hiring process is that adVentures mature in an incremental, non-linear, organic fashion. From your proximity at the company’s helm, your company’s maturation is so granular and gradual that it is often difficult for you to recognize when your company evolves from one stage to the next. With hindsight, you can generally identify your company’s prior stages with relative ease. However, the transitions between the various maturation stages are the most difficult times to properly match the right people with the right time, as the definition of the right person is a moving target during these transitional periods.

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Recruiting is one of the most important and challenging tasks entrepreneurs face, yet it is often overlooked because the payoff is not immediate. Recruiting is an investment in the future and you simply cannot afford to be pennywise when it comes to making this investment. The cost of a bad hire to your startup is nearly incalculable. Not only does your company morale suffer, but you also incur a significant opportunity cost by not having the right person(s) in place to take full advantage of your adVenture’s market opportunities.

Force yourself to make recruiting a priority. Until it becomes impractical (i.e., once your startup exceeds 75-to-100 employees), interview all new hires, as each one, irrespective of their official role, will have a huge impact on your culture and your company’s ultimate success. This does not mean you must speak with every candidate who applies for a job with your company. However, you should be a part of the recruitment process for every finalist who is offered a position at your startup. If you are not able to be involved in the recruiting process, someone on your Core Team (see, The Tribe) must continuously ensure the company’s maturation stage is properly matched with each new hires’ skills and proclivities.

Just like the entrepreneurs you seek to hire during the early stages of your adVenture, be unreasonable when you recruit. Do not be satisfied with talented people who have outstanding track records but are only looking for a job. Adapt the world to your reality by drawing together a team of talented winners, including those with unconventional track records, who share the passion to join your adVenture and help you create something from nothing.

Happy hiring.

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John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.


Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.





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