A Guide to Hiring Great Startup Leaders
July 2, 2021
If you hold product-market fit as a constant, why do some early-stage companies thrive and grow like a weed with seemingly unstoppable force while others seem to consistently struggle?
In my experience, the simple answer is tied to how successful the founding team is in attracting and hiring amazing senior-level talent.
Terrific functional leaders are what’s required for a company to move from founder-led “everything” to a set of repeatable motions and functioning organizations that you can then lean into and hire aggressively.
Sounds simple, right? Wrong. I often think of the advice I received in my startup operating career when I was kicking myself for some poor exec hires - “you know you are a real entrepreneur when you have cycled through at least your first set of management hires”. Been there? That’s okay - so many have - join the club! The key however is to not keep repeating these hiring mistakes as they can be truly deadly to your company’s success.
Why is hiring the right senior executive for a start-up so hard? Let’s lay it out.
The Top Five Reasons Founders Hire the Wrong Executives
Reason One: Good is Better than No One.
You might have a bit of impostor syndrome and don’t recognize who you truly deserve to hire and/or you are so stretched across the company and you just need to fill a gaping leadership hole quickly and Mr./Mr.s “fine for now” are available and interested.
This approach NEVER works. “Fine” is the enemy of success in my mind. You have a great start-up. You are a great leader. You need to just commit yourself to find the best amazing people out there and go get them and do not accept mediocrity. Remember “fine” leaders attract and hire only “fine” and “less than fine” employees.
Reason Two: Hires Fail to Stretch.
This happens all the time and truly is often the hardest thing to predict when interviewing and making “leadership hires’. As you are just a small start-up, it’s hard to attract the killers who have been there / done that to your company, and you look for the ‘up-n-comer” leader who works for the head of sales, product, marketing, etc at their company. Similarly, they are motivated to join your company partially as they can finally get that top role. But then, you find out, post-hire, there is a reason sometimes they didn’t have that job and they struggle to stretch into a self-directed leadership role.
Don’t get me wrong - at seed to A stage, I actively target these up-n-comers, but it’s critically important that they are mentored closely by you or they can easily fall into the vortex of doom where they try to do many things at once upon joining your company
Reason Three: Senior Hires Fail to Get Their Hands Dirty.
The inverse also occurs when you find the senior leader you wanted even though perhaps it feels too early to hire such a person. All too often, these hires seem good at first, providing strategic advice, refining go-to-market plans, etc. but as time progresses, it is clear they are not in the actual flow of the work being done and do not have a command of the details.
This is a disaster in that you wanted this hire to help you create the scaffolding, the recipe, and the plan for scale in the function but they are not close enough to the actual work to be that informed around what the company should do. This is most true when, invariably, just like it does in every start-up, the sh$T hits the fan (i.e missed ACV target, pipeline dried up, product slipped, customer churned, etc). As you dig into the “why’s" with these types of hires, you realize they don’t have the data-driven answers to diagnose what’s wrong.
These folks have been “senior” for far too long and are either unwilling or unable to “do the required IC work” that any great senior hire should do so they can be astute as to what is working and what is not and, as a result, the concrete set of priorities, actions, and hires the company should pursue.
The fix for this failure is just a much better and detailed hiring process where you properly qualify the candidates and their real aptitude to get their hands dirty and scale simultaneously - more on that later. You also as a CEO need to be very clear in setting expectations with candidates that you need them to get their hands super dirty in the early days. Folks who keep their hands clean and have done so for a while will often opt out of the interview process.
Reason Four: A Truly Poor Fit with the Founder.
Many recent conversations I have had with startup CEOs (from seed stage to series F) on looking for new exec hires have started first with a conversation on the founder’s personality and strengths. In early-stage companies, we routinely work with founders to do a candid assessment of their own operating strengths - i.e. are they a marketer, salesperson, technologist, etc.
This drives where we prioritize our senior hires - i.e. go hire the leaders first where the founder’s strengths are weakest. That seems patently obvious. What is less understood is how do you hire senior execs where the founder does have some overlapping serious skill - the two most obvious founder archetypes here are the deeply technical founder and the deeply outbound charismatic founder. For the first, CPO hires fail often a lot and for the latter, most CMO’s don’t last a year. Why is that? It’s because the founders, thinking they have real expertise here, often do not actually hire the strongest candidate who may correctly challenge them. As such, the founders over time, end up not completely trusting the “hires” intuition, and can’t help but step in and micro-manage their hire’s organization. That never ends well.
To that end, founders should know their strengths and personality types - if you are a Myers-Briggs ENTJ (like I am), for the love of good, do not hire a leader with somewhat of an introverted, passive personality, especially for roles in which you might have overlapping skills. Don’t get me wrong - I believe diversity is hugely important for any company’s success across race, gender, and personality styles. I just ask founders to know themselves well to understand which type of leaders on their team they gravitate towards, will trust more, and micro-manage less. Remember, however - if you are an alpha, and you hire an alpha leader, you MUST give them room to roam :).
Reason Five: You Run a Very Crappy Process for Hiring Execs.
This is by far the number one reason why founders find it hard to hire the right senior executive you so desperately need. Your approach, simply, sucks.
First, you have not come to terms with the simple fact that you should be spending at least 40% of your time today and, as it turns out, forever in adding great talent to your company. The “I am so busy running the business that I don’t have enough time to focus on hiring” is bollocks. Have fun with that - you keep thinking that and you will be running a very small business by yourself forever.
Second, you are using the wrong recruiting strategy. Yes - your seed-stage funding announcement is exciting and your product hunt upvotes encouraging and your personal blog and tweets so authentic. But remember - no one really knows who you or your company are. So creating a great job req and then posting online will likely generate crickets or surface people who need a new job.
For these types of roles, you want the passive candidate - the one who is doing quite well at their existing job but could be tempted to talk to you. You are looking for senior hires who are not looking to run FROM their existing job but actually run TO your company because it is just so damn compelling. As such, you must go outbound hard to find the right pool of candidates: work your networks, put your investors to work, talk to your customers, hire great search firms if you can afford it, etc.
If you as a founder are committed to spending as much time as possible hiring and also agree to work your magic outbound to find a set of great candidates - terrific. You are almost halfway there. You will hopefully find the tips and guide below very helpful in landing those key leaders you need to partner with you and lead your functional organizations to great success.
Two Screening Tips to Separate A Players from the Masses
Tip One - Only Consider Those Who Have Won Before.
Whenever I look at a candidate’s profile for our founders, I quickly say to them “yes” or “no” relatively quickly. How? I fundamentally believe that you can NOT hire a leader for your start-up in which this will be their first career win. Start-ups are super hard - you get about 9 negative signals a week and must be ready to listen for, celebrate, and learn from anything mildly positive. Additionally, start-ups are way under-resourced vis-a-vis the company’s ambitions and it’s super easy for new leaders to come in and be sucked into what I call the “vortex of many doom” where they come in and try to do everything poorly as opposed to the vital things well. As such, someone must have a career win under their belt to properly and confidently work through the day-to-day drama and knock down the basics of what must get done and who needs to be hired.
As such, when I look at a resume, I ask myself three questions about the candidate to understand if they have “won” before
- Company Impact - did the company they work at achieve something meaningful in regards to revenue/employee growth, etc during the candidates’ tenure?
- Candidate impact - did the candidate contribute to that impact in a meaningful way?
- Impact Validation - was the candidate recognized or promoted for the impact that they made?
I get that there are always valid reasons for why candidates may have jumped from role to role over short periods of time or why the candidate was never promoted at a successful company. That being said, unless the answer to all of the three questions above is YES - then at best, you are hiring a “fine” candidate. Fine candidates hire fine to less than fine employees and leave eventually, especially at the senior leadership level. So do yourself a favor and run away from fine. Once a candidate passes the “three impact” yes eye test, then proceed forward at godspeed.
Tip Two - Do Not Be Afraid to Assess for EQ & IQ.
This may be an unpopular opinion but I actually believe that using assessment tests for senior hires is incredibly helpful. There are many of them out there but two I love are the following from Criteria Corp - Cognitive & Personality. You can easily have these included as part of the hiring process you use in any of the modern applicant tracking systems. Why do I like using these? It’s simple.
- I want to hire clever people who are also good humans and culture builders versus sappers. Non-clever people and jerks will never work out as your senior leaders’ long term. By getting a quick read-out on whether or not a candidate has the right EQ / IQ mix, we can be confident that we are not wasting our time on candidates who won’t win at our company.
- I want the majority of the interview process to be about what I call mutual situational fit - i.e. is this candidate a great fit for us and are we a great fit for them? I do not want to have a set of uncomfortable conversations around where it’s clear what I am trying to vet is whether the person is clever and not a jerk.
The Four-Phase Hiring Process for Great Candidates
I advise founders to break down their interview process into four phases for senior candidates. This process will not only work well for you but terrific candidates will truly appreciate the process and think more highly of you and the company. The process allows for the natural spacing and mutual knowledge absorption about each other required to properly transition from high-level conversations to very detailed “okay, what you would do in the role” discussions.
Word of note - throughout the process, it’s important for you to be as transparent as possible about the business such that the candidate can not only properly assess if the opportunity is for them but can also more likely shine in speaking to specific recommendations or actions that they would if hired. Remember senior hires looking at a startup are trying to assess the risk/reward profile of the job. Their final inside voice, even on a super hyped company and a huge role with lots of equity, asks themselves the following three questions: what does this company need? What is messed up? Do I provide what they need and do I know how to fix what’s missing or broken? Don’t make great candidates wrestle with these questions - help them answer them so they can lean into accepting an offer if you extend one.
This seems obvious but I don’t have enough fingers on my hands to count the number of times when I come in to interview a candidate as a board member and dig into what they would do in the role and they can not answer it as they haven’t seen a detailed demo, haven’t spoken to customers, don’t have a clear picture on the need, etc. I know - shame on them for not asking but this is more on the companies than the candidates.
When you first meet candidates, explain to them up-front what the interview process is and walk them through the four-phase approach you are taking. They will appreciate it. They will especially like the fact that the first phase/call is not some weird grilling with interview questions when the candidate doesn’t even know if they like you or your company. I always found that such a weird dynamic as a candidate where in theory I was supposed to be effusive about the company while at the same time figuring out what was wrong / needed to vet whether it was a good fit for my skills.
Phase One - You and Your Company
During this phase, the CEO explains to candidates the mission of their company, why its trajectory is so promising, the early wins, and what they are looking for in a partner for this role. I always say that the first part of any executive interview is to a) break some bread and b) pitch the candidate on why your company is so exciting and c) pitch the candidate on why working with you would be great.
If the candidate seems engaged and interested beyond this discussion, share with them a candidate data room if you will - which includes some recorded product demos, customer reference testimonials, and the latest corporate pitch. There is no reason to not share these with the candidate. In fact, if you don’t love some of those materials, they will serve as great fodder for asking candidates, if appropriate for their function, how they would improve them.
Phase Two - Candidate’s Experience
During this phase, the CEO digs in with the candidate on their specific work experience to assess if it’s a great fit or not with what they are looking for. The core to this phase is q&a around situational experience and role philosophy.
Instead of peppering a candidate with questions in an actual interview where what you are assessing is their ability to reply on the fly and not actually their fit for the role, I recommend that the core questions that the CEO would like candidates to answer be sent to them ahead of time.
I would also ask the candidate to take their time (i.e. give them a week between sending the questions and follow-up interview) in writing up their answers to the questions. In the follow-up phone/zoom conversation, the CEO can walk through with the candidate their answers to the questions and dig into specific areas he/she found wanting or particularly interesting and wanted to dig into deeper. If you are old school, you can choose to not send them and just ask them in person but I bet you get more in-depth thoughtful answers if you send them ahead of time. Personally, I also like to see how people write as well because it’s rare that a strong senior executive is also a poor written communicator.
In regards to which questions to ask, I have compiled here the top questions I would use for Heads of Sales, Marketing, Product, & Success. Each question vets for a different core skill-set required for each role and is sourced from my noggin, founders I work with, or from online postings from other amazing thoughtful people.
Phase Three - Exploration of Mutual Fit
During this phase, candidates that make it through the first two phases will now meet with key execs at your company, learn more in-depth product and company detail, and ultimately present back to the CEO + team their plan of attack if they were hired.
You should identify 3 key leaders in your company that you want to meet the candidate. You should share with them your notes on the process so far including the candidates written responses to the questions that you have sent to them. Your leaders' role in these interviews is to primarily validate that the candidate would be a good fit and someone they would truly look forward to working with. Additionally, the leaders should be ready to share with the candidate more information on the company, what’s working great / not so much in their org, and the core things they would love to tackle together with the candidate if they came on board.
After these interviews, if they go well and you get the thumbs up, the next step would be for the CEO to follow back up with the candidate, get their perspective/assessment on the discussion they just had and explain to them the next key step in the process: the “what I would do in the role” if I came on board. Layout to the candidate that you would like him/her to come and present to you + the 3 leaders the 1/3/6 month plan of attack they would pursue once hired. Explain to them they can use any format they want but the idea is that it would be an interactive discussion with the crew where both sides would likely ask each other a number of questions. Tell the candidate that this is also a great preview for what it would be like to work here as they can experience first-hand how the leadership team engages, partners, and works through things.
After that session concludes, have an immediate follow-up session with your team to get their read and decide if it’s a go or not. If it is a go, follow-up with the candidate and seek their input on how they thought the session went and then tell them everyone was super impressed and we would like to move forward to an offer.
Phase Four - Negotiation & Validation
This article/guide could extend to 65 pages if it provided all the steps on determining at the right level of compensation to pull a hire across. It won’t but good fodder for an article down the road. There are plenty of great online resources/benchmarks to use such as homebrew’s guide, angel list's real-time benchmarks, etc.
That being said, here is what I will say - the most important reason for an exec to come join your start-up is emotional and tied to the “three impact” test we used to quick screen candidates. They will be emotionally excited about the role if a) they think your company is going to have a real impact b) they think they can make a major impact at your company and c) they think they will be appropriately recognized for doing so. They also really jibe with you and think it would be quite fun to partner with you on the journey.
Understand that these hires won’t come cheap. They won’t necessarily demand you match your salary at their current roles but they do expect significant equity to make up for that. As a general rule of thumb and it can vary - senior leadership roles will cost you before your Series A fund-raise around 2 points, 1 point after your Series A, and around less so after your series B. Finally, don’t skimp on your benefits - I have seen many times when an exec at the last minute pulls out because joining your company would mean their children would need to switch doctors - a no-no for getting someone over the line and accepting all this personal risk to jump headfirst into the pond with you.
Once you finalize package details, it’s time to run a terrific mutual reference check process. Many leaders rush through this process as they are so excited to hire a candidate who has gone through the long process successfully. Word of advice: do NOT rush through this. Also, remember that this should be a mutual reference process where the candidate can also double-check their hunches / address their concerns.
For references on a candidate, I suggest at a minimum three references, hopefully from people at companies they worked at that thrived while they were there. I like a 360 reference process whereby you ask the candidate to provide to you
- Above - Someone they worked for. These conversations should be around how effective the candidate was in their role and allowed their boss to scale.
- Lateral - Someone they worked with. These conversations should be around how effective the candidate was in building bridges with their peers and how they resolved conflicts/differences.
- Below - Someone that worked for them. These conversations should be around how effective the candidate was in both providing direction to their employees, building team camaraderie, and mentoring and building the skills sets of their direct reports.
For candidates you love, you should strongly consider opening the kimono to them more and allow them to talk to:
- Board Members - Especially if they are great at selling the vision of the company and can help close candidates.
- Customers - I am always shocked when senior hires don’t ask for this. Introduce them to a happy customer advocate or two of your current offering so candidates can hear and feel their rational and emotional connection to the value of your product and company.
Do those references. If they shine, and the numbers work out on the package, make that hire. Be super confident that you followed the process and it is far more likely than not that this new senior exec hire is going to be awesome and will help your company shine.
Of course, it is still going to be hard to attract and hire the right best leaders for your company. But rest assured, if you follow this process, you will be doing better than most of the other startups out there competing for that very same candidate you are trying to close. If you found this guide useful and want to put it to work at your company, I have created a sample hiring process template that you can use and tweak to your liking. Best of luck and let me know if you see a huge difference in your exec hiring results.