In episode 18, the first of our trilogy on recruiting, we start by sharing our core principles in this space. We delve into high-level principles, recruiting organization and compensation. In episodes 19 and 20, we will share detailed advice for recruiters and candidates, respectively. On the recruiter side, we share core principles that have worked for us, as well as hacks: anything from good and difficult interview questions to some of our “pet peeves”. On the candidate side, we will share ideas and processes from how to best be visible to recruiters, to how to get the job of your dreams.

Navigation:

  • Introduction (01:24)
  • Section 1 – Core principles (04:59)
  • Section 2 – Recruiting organization (18:34)
  • Section 3 – Compensation (26:13)
  • Conclusion (31:05)
Our co-hosts:
  • Bertrand Schmitt, Tech Entrepreneur, co-founder and Chairman at App Annie, @bschmitt
  • Nuno Goncalves Pedro, Investor, co-Founder and Managing Partner of Strive Capital, @ngpedro
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Intro (01:24)

Nuno: So in this episode, 18, we focus on recruiting. We will discuss on the recruiter side, our core principles that have worked for us along the years, as well as some hacks and some advice for recruiters. On the candidate side, we share ideas and processes from how to best be visible to recruiters, all the way to how to get the job of your dreams. Looking forward to this episode.

Bertrand: Yes, and actually we have so much content on Recruiting, that we will have 3 episodes focused on this topic: this episode 18, as well as episode 19 and 20. 

Bertrand: I’m very excited that we talk about recruiting, probably not much is more important than recruiting when you’re starting a company, running a business, running a startup. And it’s recruiting of everyone from your co-founders, to your execs, to your developers, to your sales people. So recruiting is literally the lifeblood of your organization and obviously not just recruiting but keeping people and having people happy and successful at your organization. But it starts at the end of the day with recruiting. So it’s exciting to talk about this topic in this episode.

Nuno: Indeed. And let’s start with framing our experience as recruiters, to give a little bit of credibility to whatever advice we give during this episode. I’ll start with my side, I’ve recruited or help recruit hundreds of people, all the way from recruiting for my own teams as either a line manager, CEO, managing partner, helping recruit peers to myself in different organizations. Helping some of my clients as a consultant recruit their own people. That was also a lot of fun. And I participated in everything from, one-on-one interviews to panel interviews, to group interviews and everything under the sun. I would also add as a candidate, that my experience is still relatively fresh. A lot of people would look at my background and say, you haven’t been a candidate for a long time. You did your own venture firm, et cetera. But in all honesty, I’ve joined boards of directors, both for profit companies and nonprofit companies. And that goes through its own recruiting process.

I’ve tried to be recruited by a bunch of companies in the industry along the years. And funnily enough, because I’m a bit of a nerd. I actually sometimes go into these processes, even though I’m not necessarily thinking of moving on. And I’ve had some really interesting processes with some of the best known companies in the industry. And hopefully we’ll also share some of my lessons learned around it. Last but not the least, I’ve been very close to the recruiting space, through a bunch of people in my own network that are very close to me. And so I’ve seen the hazards of recruiting very up and very up close and personal.

Bertrand: On my side I’ve stopped counting how many people I’ve recruited directly or indirectly. App Annie that I built over eight years directly as CEO, we have, four hundred people today, so over the years  we probably have recruited a  1000  people. Unfortunately, people leave, directly, indirectly we’ve recruited a lot of people from execs to direct team members at different level of the organization. And of course, other experiences. At App Annie  I’ve recruited also people all over the place, from China, to Japan to Europe to US. So I also have some good perspective to share on a global basis. And there are obviously some pretty big differences on one side and and at the same time there are some principles that stays the same across region and even across levels.

Section 1 – Core principles (04:59)

Nuno: There’s obviously been a cost of acquisition, so to speak and, or a cost of recruiting, but definitely move to the next level. So two sub layers on my principles. One, when I say A, A plus players, the right people for the job. And there are some jobs that require a tremendous amount of creativity. There are some jobs that require a tremendous amount of intellect. There’s some jobs that require tremendous amount of focus on execution and operations.

There are jobs that are what I call “Why / what” jobs, which are more strategic, more about thinking more about rationalizing, more about defining and designing elements. There are jobs that are more around the, how, how to execute, how to get something done. And so  when I say I’m recruiting an A, A plus player, I’m not sure only recruiting CEOs, I’m recruiting people that fundamentally can do different tasks in different jobs.

And it’s a little bit of  an issue I feel in particular in Silicon Valley sometimes. You’re always looking for what I call the rockstar hire. And sometimes rockstar hires, we will come back to pet peeves later on, but sometimes rockstar hires are not very good at certain things. And so I’ve had people that I’ve hired that on paper don’t look amazing in terms of their intellect, ability to contribute, and really strategic thinking. But they’re incredible at executing. They’re just machines, people that really love executing and vice versa. People that are probably not great at executing, but they’re amazing at framing thinking. And getting things designed.

So that’s what I mean by A plus players. And finally, again, to come back to the point on, hire slow, fire fast, I don’t mean being too aggressive towards people. Everyone should get a second chance. You should get a chance to show that if you’re not performing, you should get a chance to improve your performance. I believe in performance improvement programs, I believe, that people should be given very specific feedback in how they move forward. Which goes a little bit beyond our recruiting type today, but certainly,  I’m not a big fan of developmental feedback, I’m a huge fan of, strengths-based feedback. But at the end of the day, if it doesn’t work out, if there’s really misalignments around values, or if there is a misalignment around job description and what needs to be done to execute on a job, or skills, then that should be pretty evident pretty quickly. And I don’t think you should lose time, because that time will cost you a lot of money. It will cost you motivation on your team, et cetera.

Bertrand: I think I am in agreement on a lot of your points, quality of hire is key. I guess we all know the story if you start hiring B players then the next round these B players are going to hire C players. So putting the bar at A players is quite critical and obviously the definition of an A player depends on the position. But you want people that are going to be really successful and you want the best for the team. So it’s pretty critical to be very careful. I still remember the story when Larry Page stopped reviewing some candidates at Google, but they were thousands of people I believe. So I think it’s a key part of the game. 

Hire fast, fire fast. I’m also not a big fan, I think you can have an organization that’s designed to move fast, but for good reason because the process are well oiled, are well optimized. But if you’re not sure on the candidate, you want to be very, very careful, because especially the more senior they get, the more it takes time to understand if you made a mistake or not. And the more damaging it will be inside the organization  if you pick the wrong people. At the same time at the end of the day, once you know you have made a mistake, and if you start asking the question yourself if you made a mistake, you probably know the answer: you made a mistake and it’s time to fire fast.

So yes, in agreement overall with these points. I think in term of recruiting there are different stages in a startup life and you have to be careful of recruiting the right people for the right, stage of the business. Someone who can be a fantastic head of engineering at series A might not be a fantastic head of engineering at series D and the same in sales. So you want to be very careful about finding candidates that are going to be excited by the opportunity in front of them. Candidates that ideally would be stretching themself, for this new position, new role. Specially early on people who are going to demonstrate, their talent and quality. But step by step things will change. You will want to have a different approach.

At the later stage, it’s actually a very different game. As you alluded to, when you’re hiring execs at later stage of the game, you’re expecting them to hit the ground extremely running. You expect them to teach you a shitload of stuff that you did not know. And you expect  very fast results, that’s really why you’re paying them so much. And of course, all of this comes with risks. What’s your take on these, different stages, different candidates, different   recruiting processes? 

Nuno: I think you framed it really well. Early stages you need people that are a little bit the Jack of all trades in some areas. In particularly more of the business areas, because you might not be very clear on how you’re going to get your first customers onboard and how you’re going to get your first deals done. Sometimes people overemphasize youth and enthusiasm. It’s not always the right way to emphasize things, but certainly a bit more of a generalist flexible approach, works. The opposite rarely works: if you’re very early in the lifetime of your company, hiring a very senior, for example, a very senior person that is an expert on field sales, high touch sales might not be right if your company still hasn’t figured out that’s the right way to go. 

The other thing I’ve seen quite a bit done that I don’t believe is a great idea is  the notion around titles. There used to be someone used to say that the cheapest thing you can offer in Silicon Valley is titles. You can offer a really senior title to someone. And I think this is true around the world for startups, titles have a cost as well. Even in a founding team, they might have a cost. And in a founding team, that’s a really difficult discussion to have. I’ve seen in particular, a lot of startups that start with two or three, co-founders where they say, this is my co-founder and he’s the CTO. And you’ll look at that person and you look at their experience and you have a few conversations with them and you’re like, It’s very unlikely this person will still be the CTO. To your point, when this company hopefully is successful on a series C or series D. Maybe at best, this person will have evolve to become a VP of engineering.

And titles seem really cheap, but there’s a bit of the other side to it. So be very careful with the titles you give on recruiting, for a variety of reasons, the biggest of which is at some point you might actually have to demote this person. And that’s a huge demotivator. If it’s founding team it’s even worse. So really finding what’s the right title. What’s the right expression. Maybe you can title up as I call it a little bit. Maybe the person is more, a senior engineer, that’s a team lead and you can give them an engineering manager title, maybe the person’s more of a senior product manager and you can give them, maybe a director of product management title early on.

But don’t just turn a senior product manager into the chief product officer, just for the sake of it, make people also grow into those roles and justify that they can go to that level, create a path in the career when you are recruiting. So that people understand it’s like, I’m not desperate, I need whatever for this position, is I am hiring someone for this position that I hope can grow into the position to become much more senior. This will link back to compensation as well. So again, titles seem cheap. But be cautious. You can title up a little bit, but not too much.

Bertrand: I agree, it’s something to be pretty careful. I agree that you should be thinking about providing a bit more otherwise a candidate could get at bigger companies. They need to come to join you after all, but, it cannot be crazy. Don’t name someone a CXO when they could be   a VP, don’t name name someone a VP, when they could be director and they would already be happy. And that’s true, at the end of the day, the higher the title, the more risks that you have to demote, if you demote, at some point in the game, that might be very difficult for everyone and that’s really not where you ideally don’t want to go, but unfortunately, there is high chance you get there especially if the company’s doing very well and you’re very successful.

Making people earn it, slightly go beyond what should be reasonable, especially the more early is your business, makes sense. But step by step, be more and more careful. Another piece is policies, from very early on making sure that you have careful policies. So there is no crazy mismatch inside your organization. I think that part is also critical. You don’t want to be a 5, 10 people, 20 people team, and it’s all over the place in terms of title, in term of comp, that wouldn’t a good way to start and  that will help you a lot going forward. So that part of making sure you’re aligned very early on across the   is very important. 

Going back to the jack of all trades,  another good example is in engineering. Initially, you might like to have a lot of people who are more full stack type of engineers who can touch everything from infrastructure to front end, even app development potentially, and that’s great, because initially you might not know exactly how to best invest, which feature to develop first. So there is value to have a very big flexibility in your staff, but step by step you would want to move to a place of expertise.

And yes, it will force you a bit more into what capacity you have for different piece of the puzzle. But at the same time that’s a worthwhile trade off and obviously this also comes with, retention issues. How do you move with jack of all trades going forward inside your organization, but that will be for a later discussion.  

Nuno: Two elements I would like to add to the conversation. One is the element around early on the team might seem a little bit over the place. 

Hopefully, as you said, you’ll have a little bit of policies around title giving, et cetera. But one key element that I find very few entrepreneurs do early on is what I would call future-proof their organization. Think through how the org is likely to evolve. You’ll never be right. Orgs move at a different pace. Your business moves at a different place. Your go to market might move at a different pace. But certainly think about what sort of org would you like to have in the future, which will allow you to figure out what gaps do you have?

This is a great element. Also, not just for defining policies, but also for having conversations with future investors, defining what your use of funds would go for. Where do you still have gaps? Having that very clear in your mind is something that I believe very few entrepreneurs do early on, but it’s super helpful when you’re talking to investors because investors will see it. And if you don’t see it first, and if you don’t raise it. You’re at the disadvantage, there’s a little bit of asymmetry then in that conversation. 

The second element, and I don’t think this is only true in Silicon Valley, I think maybe it’s a little bit more true in Silicon Valley is because of this old titling up in startups. You end up having talent that is not great. That has had very senior positions apparently. And really clear understanding, we’ll get to advice for recruiters in the next section, but a really clear element that recruiters need to take into account. Be it, the line managers or professional recruiters is what did this person actually do?

Was this person actually a VP of engineering. Was this person, actually the chief development officer, what was their role? What did they actually do? How many people were they managing? What were they doing as individual contributors? What are they capable of doing? And I felt that we have very average, not to say in some cases, mediocre talent, even in Silicon Valley. I always say that Silicon Valley has the top talent in the world in most areas and on average and median, and it’s probably one of the best places in the world for talent in most of these areas, but there’s huge variance. And in some ways the mediocre talent gets away with it because of this, because they jumped from one company to the other, they keep titling up. And at some point you realize they don’t know the basis of that function. You have people that are amazing at marketing on paper. And then you ask basic questions around the marketing mix around how you do certain elements of field marketing, et cetera, and realize they don’t know because they’ve never done it. And so they’ve just jumped from one side to the other without really having those competencies. So be very aware of this titling up phenomenon.

Bertrand: Yes, I totally agree with that and I will go maybe even further which is that yes, you have the very best top talent in Silicon Valley, and once again people  are actually leaving Silicon Valley, in some ways, it has always happen so you can find more and more people with that experience outside. But the other piece I’ve seen is that, because you have all these mercenaries, in a way who come to Silicon Valley. 

You also have a lot of really not so good people, but who are very good at marketing themselves. And as you say, who end up moving from organization to organization with some very nice fancy titles when actually they have not done much and I might be even generous by saying they have  done much. They might have had negative value, actually, to the business. Especially here in Silicon Valley we always have to be quite careful in term of how we evaluate people and I agree with you going back to the basics. What have you really achieved? What have you really done? What  were you really responsible? And at the end of the day, if it’s a manager, how many people were you directly managing, will be typical questions. 

Section 2 – Recruiting Org (18:34)

Nuno: Indeed, and let’s move maybe to the recruiting team. And how do you structure your recruiting organization? Early on, early to mid stages, I would call it maybe zero to 50, maybe zero to a hundred employees, maybe zero to 200 employees. It depends a lot on the organization on the core competencies. The recruiting team starts and ends with the CEO. The CEO needs to set the tone for what culture the company should have, where the gaps lie and how people fit. That doesn’t mean that you don’t start delegating a lot of responsibility to the rest of the senior team and the direct reports for the CEO. But it does mean that the CEO has a significant say in the sort of organization that’s being built. 

Over time, obviously you need to build the overall recruiting team. Not just obviously with the people that report to you directly as a CEO that are the senior people in the organization, with a proper recruiting HR team. I believe that comes into a couple of tens of people in the organization, having someone internal that can really manage it.

I think very little attention is given to the early recruiting hires, and sometimes the early recruiting hires are people that are, do other things as well, admin, et cetera. I do believe maybe you hold on to that recruiting a bit longer, but at the same time, when you recruit someone that focuses more on that. 

Then there’s the element of how much should you work with external recruiters? And I know Bertrand, you have some very strong views as well around that. So I’ll let you talk a little bit about that, but certainly working with external recruiters in my experience needs to be very, well-defined be it for generalist positions or for specialist positions. It needs to be really well-defined, what are we actually looking for?

We’ll come back to that when we talk, about advice for recruiters, but in many cases, if I don’t internally know what I’m looking for. The external recruiters will know for sure. So it’s not like magically external recruiters will know better than I do what I’m looking for. I need to know what would fit into my organization, what would fit into my value system and the sort of skills I really need to amp up my development.

Bertrand: I’ve worked with both sides, internal recruiters, external recruiters, head hunters, both have their their value. I think ultimately very quickly you need both your internal resource as well as external resource, and you use your external resource for where you are not so strong or where you need an additional network or when you need to do some international build-up of your organization and you don’t have local expertise. So you have to mix both of them, but at the end of the day, one thing I’m noticing is that a lot of companies are not achieving their objectives, because they didn’t organize and build up the team, as they say they would and at the end of the day you need to deliver. If you want more sales, then you need to hire the sales people, if you want a better marketing,   you need to hire marketing people, if you want build the product faster, at some point you need more people to build it.

My point that it’s really key to be super aggressive, on delivering the recruiting targets you need them to build up and accelerate the business. At the end of the day, in the start-up space, it’s a question of pace. You need to move fast and if you are going to fund raise from external investor for instance, that’s really part of the equation.  You are getting external capital to help you accelerate the business and the acceleration usually comes with additional hiring for people to do the tasks. I think it’s really key to move fast, to review very regularly, how many positions have we open? How is the pipeline going? And make sure you create a pacing at the end of the day.

I see a lot of companies that are talking about sales targets, but I don’t see that many, actually, who talk about hiring targets with the board at both a quantitative level, 10, 50, 100 open position, to more qualitative levels, these two execs that you absolutely need and where are we on hiring them. And the bigger you get, the more you realize that everything takes time, so if you don’t move fast on hiring these specific exec for instance then, he has not started to hire the people below him, who are going to hire people below them and make the change you need in the product and basically… you wake up and at some point you realize that, yes, some initiative might take a long time start if you don’t have the right people.  

Nuno: To add to that, I think it’s two things, one it’s pipeline management and it’s speed management in terms of recruiting. And, just to give a couple of examples, very early on in my career, I worked at Altran as a business manager and Altran is a very aggressive organization in terms of pipeline management of talent, for a variety of reasons. And I remember our objective as business managers, we were not HR people, we were business managers, we had like responsibility for P&L, and we had to do 10 interviews a week and it was part of our Monday conversations. Had we attained the 10 interviews of talent every week, or not? Did we just do five? And again, it’s horses for courses. That was the model of talent acquisition and the model of talent framing and business model for Altran, but at the same time, there needs to be this pace, this pipeline management, Bertrand,  that you mentioned. 

Beyond that I actually have found, and this is quite interesting. I have some great friends who are external recruiters and they’re exceptional at their jobs. And I would say some of them are specialized. I think specialism comes with specific hotspots of recruiting, certainly Silicon Valley has a lot of specialized, very high level executive recruiters, other parts of the world that are a little bit more generalist in their recruiting.

Again, I’ve worked with some really amazingly talented external recruiters. So I’m not downplaying that level, but honestly, there was a way to recreate this at scale in internal recruiting, I think some of the largest companies in the tech space, Amazon, Google, Facebook come to mind as incredibly good at doing, almost like external recruiting, but with a full internal team. I would honestly say, some of my best interactions with recruiters over the years, even over the last year, just people that reached out to me for some reason have been with internal recruiters. I remember someone from Amazon that reached out to me a few years ago and the way she sort of perceived my profile versus what they were looking for, I was just blown away.

I was like, she’s got my profile. I have a really strange profile for a variety of reasons, given my background. And she sort of nailed it.

So again, sometimes there are advantages in having a really strong, significant internal recruiting team. if you have the skill to do it, you should, at the same time, external recruiters can be extremely helpful in particular, in my opinion, if you’re going outside, not only your network, but outside maybe your geographic area or expanding into a new space, either functionally or geographically, those external recruiters can be extremely valuable.

Bertrand: One of the benefit of external recruiters is one, definitely we talked about geographic aspect. Two, they will bring their own network, and that’s pretty key. Another piece is bringing not just their own network of candidates, but their own network of back channels. If you are recruiting an exec in finance for instance, a CFO in Silicon Valley you will have firms that are just focused on hiring CFO for series D+ type of companies  and because they only do that they will have very strong visibility around all the candidates, but also an ability to back=channel on mostly anyone. So that’s, something that might not be easy to replicate, except if you have Amazon or Facebook’s scale, but it will take you a bit to get there.

Section 3 – Compensation (26:13)

Nuno: So maybe moving to compensation and how to approach compensation as part of our core principles. At the end of the day, obviously you should benchmark, you should know where you stand versus the market. You should analyze local pay versus other types of pay. If you have a distributed team, you should also think through how does this align with the rest of the team that is in other parts of the world? So really being very thoughtful around what will be the right salary for this level? Actually relatively early on, I believe is very important, and there’s so much free surveys out there. There’s so much information out there right now that it’s literally, you’re lazy if you haven’t done this, just doing that basic homework is important.

Where do we fit? Are we top quartile? Are we in the middle. How do we want to attract people on base salary bonuses, et cetera. The second piece is thinking about benefits and in some ways, people, again, in the Bay area, Silicon Valley have been a little bit spoiled around benefits. It became a really significant part  of the compensation. It’s interesting to see how it’s going to change in a world that becomes more remote, where people are actually not coming to the offices and they don’t have the ping pong tables and they don’t have  the nice lunches and nice pastries for breakfast, et cetera.

So how does benefits work? What can I do with it for me? Benefits are part of the compensation package, but they are also linked to the value system of the company. They should never stand in the way of productivity or from productivity. It shouldn’t be about just attracting a specific type of talent, but then misaligning with values or misaligning with the productivity equation. If it makes sense that people can bring dogs to work, it should make sense that people can bring dogs to work. If it doesn’t make sense at all, for a variety of reasons, including some around productivity, maybe they shouldn’t. And so again, the notion of benefits I think, should be very embedded in this. And then finally, how early on do you share your upside with these early team members and stock options again, seem very cheap early on, but as we’ve seen, sometimes you give away too much for too little in return or you don’t nail your vesting period or you don’t nail how you give away options. And this comes back to bite you. So really having a strong view on what’s fair for a specific position in terms of stock options. How does that compare to the rest of the market as well? And making that part of the overall holistic view on compensation for me is pretty key. Again, very few entrepreneurs do this early on and they give away too much. And so having that in mind, I believe  is pretty essential.

Bertrand: I definitely believe in benchmarking. Benchmarking, benchmarking, benchmarking, it’s a key part of the game, in compensation, because  benchmarking lets you understand where you stand, how high, how low, that will show the differences in all these functions. From engineering  to sales, to HR. From, France to Silicon Valley to New York, all of this change, expectations are different, and you should have a general philosophy as a business, but at the same time you have to adjust to the local market reality. 

Some regions of the world, people have very low value of the stock options. They won’t value that much. If you are trying very hard to explain the value, but people don’t get it, you’re  in trouble, because that means that you will be providing too much for no good reason. On the other end, for some region that might be the total opposite. There is a very strong value for stock options and you should use that, if people value it 

At the same time be careful that after a few years, people who who didn’t value initially stock options, asked you for more cash,  don’t end up saying, “Hey, I would like to have both” at the end of the day. That’s something I’ve seen again and again, you start with an agreement and even a year after, suddenly people feel that they should have the same in term of stock options than people who made an effort on the cash side. So you have to be careful about providing flexibility there. It can come back to haunt you in, some ways. And the great news about benchmarking is that, it is very available. Not just for cash comp, but also for stock compensation and I think that’s a great way for you to show that one side you are reasonable,  you are running your business based on data.

At the same time it also lets you detect, people who are not reasonable, who are asking you stuff that is way beyond market for instance and that simply does not make sense. Maybe one last piece of advice, especially early on I would push to look for up and coming, type of profile early on in the organization. It will be cheaper, they will be more ready  to adjust to your business and how it’s working versus trying to make everything work their way. And that can be a great trade-off in term of cost, for your hiring versus, going too fast on more senior profile who anyway would not have the ability to blossom in an organization that is still too young for them and cannot really support them ultimately.

Conclusion (31:05)

Bertrand: This concludes our Episode 18: with this episode we started a new trilogy of episodes on recruiting. 

We went through a highlight of  our overall principles, the evolution of recruiting with your startup growth, recruiting org, as well as compensation.

In the next 2 episodes, episode 19 & 20, we are going to share our advice for recruiters, our advice for candidates, and how recruiting changed in a remote world.

Thank you Nuno. See you next time.