Welcome to the Logan Bartlett Show.
On this episode, what you're going to hear is a conversation I have with Andy Price.
Andy is the co-founder of Artisanal Ventures, as well as the co-founder of Artisanal Search, one of the high profile search firms in Silicon Valley.
Andy has worked with a number of successful businesses in the past, including Databricks Snowflake Confluent Syera, Abnormal Security AcuityMD, among a number of others.
In this discussion, Andy and I talk about a number of different things, including how founders should work with executive search firms, the role that a founder should play over the course of a hiring process, what founders can do to best set the stage of success for the potential executives that they bring into the business.
We also talk about the different trends in the market today.
We also talk about how to best do back channel references and the different questions that founders should be asking to set the stage for success in a hiring process.
A really fun conversation that you'll hear with Andy now.
Andy, thanks for doing this.
Thanks for having me.
We've been talking about it for a while.
Excited to actually make it happen.
I can't believe I'm on this air.
There's a lot of people you've had on this show that are pretty important people.
Peers of yours.
Must be scraping the bottom. in the barrel.
No, no, no.
Listen, we went, we did a lot of CEOs, founders, that type.
And one of the things I want to do is do a little bit more diving deep into focused areas, be it hiring, sales marketing engineering, like all of that stuff.
And so I could not think of anyone better than my old friend Andy Price to talk about some of the elements of hiring.
So maybe for people that don't know, can you give a quick snapshot on your background?
Yeah.
Spent about 28 years doing recruiting in tech.
Started in semiconductor, went through networking, went through security, went into green tech for five seconds before I realized it was a big scam.
Sorry.
Scam.
Just because it doesn't pencil out.
Yeah.
I was the president of a big search firm in California and then I decided I didn't like running a big company.
I'm not a very good manager.
So I set up another search firm that's doing really well.
And then, in parallel with that, I set up a venture firm, venture capital firm, called Artisanal Ventures, a 60 million fund.
And we basically collected a bunch of operators like former CEO of Snowflake, former CEO of MuleSoft, former CEO of Splunk some really interesting people.
A person who invented EC2.
And that's so the two companies kind of mesh together.
And you spend most of your time on the fun side, but the two things kind of intertwine, where you'll advise on searches and then ultimately invest in these businesses.
What I basically did was not clever, because recruiters have been taking equity in companies all the time for years, decades.
What I decided to do though, is just use my search firm as sort of an insider trading platform that, I believe is legal and ethical.
I know it's legal.
Some people are like, that's not fair.
It's kind of asymmetrical data.
You guys got a cheat code.
I'm like, so?
Do it.
Do it yourself.
So what I do, though mostly, is I'll spend a lot of time on founders that I'm backing, spend more time with them.
I spend time with our other founders too because I always want everybody to win if they can't.
Let's let a bunch of people win.
It's good for society.
But I spend a lot of my time thinking about how the founders that are in our portfolio can just become gigantic winners, like more snowflakes or Databricks or whoever.
And so your portfolio, we've been lucky enough to invest in companies together.
And it seems like those are going well.
They're doing well.
Your portfolio, how do you sort of think about where you parachute in on the company side?
Like, are you just focused on more of the big searches or where do you sort of play?
Honestly, I spent a lot of time with early stage like somebody coming out of Israel.
Spent a lot of time with them, trying to keep them out of trouble, because they make a lot of mistakes in hiring and recruiters do to ourselves included.
So, things coming out of the 8,200 unit, things coming out of Palo Alto Networks.
I have a great founder at Reach Security.
I love that guy.
You know, he's a top SE at Palo Alto and a really charismatic guy.
So I spend a lot of time at early stage to make sure they get that first hire right and they have the best shot at executing to get to this Series B or the Series A or whatever.
So, as you think about hiring, I'd be curious what you think.
What's a good success rate for companies to kind of as a North Star of hiring executives or keep people into the business?
What gets you in the Hall of Fame?
C to A, 50% or better, you're looking good.
Past B, it should be 75%.
I won't say what.
My search firm's success rate is very high, but I will say that the blowout rate, for a variety of reasons early stage is the highest.
Well, I'm curious, so why is it so hard to get higher?
Well, think about this.
If you're an executive who's had any success, why would you do super early stage, right?
You're not going to get paid the 800K OTE.
You might get paid a 200 million ARR company, right?
And yet you're taking all the risk for the stock that you know is going to get diluted 5000 times before you go public.
You don't have PMF.
You're duking it out against DIY, a bunch of incumbents and 10,000 other startups in every space.
What is the trade?
So only a certain type of person can go down market and be clever, set up the right deal for themselves and go out and be the player or coach and kick down doors and win.
Those are rare animals.
And so do you think it's more like the success rate as it gets better later stage?
Is that more the talent pool opening up or the business refining what it is that they want?
When you go from 50 to 75?
Well, I think what happens is, you know, as you get closer to PMF, you can raise the bar.
When you're looking at these early, early stage people, you have to really squint and you have to dig.
Like, who are these people character-wise?
What's going on with them?
I'll give you player coaches.
I'll give you – there's a guy named Max Stevens, for example, at Upwind.
I think this guy is just perfect.
Up-and-comer.
The guy who built Zafran early stage.
These are just two examples of early stage companies coming out of Israel just for random sake.
These two people are out.
They went and beat their numbers and went from zero revenue to many millions in ARR.
They're out scrapping and hustling, and they're just leading from the front.
And then you start building, like Steve Raj at Sayer is a great example.
I went in there, it was a $1 million company.
Now you know what it is.
We won't say publicly what it is.
It was a screaming company.
And those people are very brave, very brave.
Typically at that early stage hiring point, it sounds like the pool, it makes sense.
It's a different risk profile.
And so you're not going to get the CRO of the public company that's interested in going back a little bit earlier.
You're going to take a chance on someone that looks a little different.
The people that you see more successful in that?
Do you typically see people that have come out of successful trees but maybe were an area vice president or something on the on the sales side?
Or do you see people that maybe had rolled boulders uphill and it came really difficult because their last business was a shitty one and they were maybe the vp of sales at a bad business, like which one do you think tends to draw better talent in?
Well, I mean, everybody wants Adam Aarons who built Okta, you know, to hundreds and hundreds of millions from basically zero.
And he came from PTC, the McMahon School of Sales.
And you know, if you look at, Degnan went from zero to 3 billion and Grabisco went from almost zero to a few billion dollars.
Yeah, but it's like, if you look at these people and their backgrounds, know they might have spent time at a place like emc in the case of dagman and he goes to some crappy little startup that none of us even remember i remember hey yeah yeah yeah that was a ptc i think like yeah yeah but when you think about security there aren't that many trees because as you know the industry was a var space was disney oriented then it went to clouds and people started going okay the direct sales people they didn't have much Diaspora.
You don't have a bunch of Blade and PTC kinds of people.
And for people that aren't following.
In the early days of security, when it was more appliance-oriented, you were selling through resellers more often than not.
That was the deal.
You built a giant channel.
There weren't a big direct sales people that sort of built out there.
That's why there's no like core lineage and big trees or little trees.
Like if you look at where Steve came from.
He came from Forescout, which you know became a half a billion dollar company or something and got bought by private equity.
They needed a couple of, let's just say, small side of interest, kind of like Degnan did.
And then he took over this company at one million.
It just went just – hit it hard.
So you really need these hard-hitting player coach, hands-on people that want their glory, haven't had it before, they're scrappier and hungrier.
Then some of them are better trained than others.
You know there's some people that came from palo alto and then went to a startup and those people seem to be doing pretty well, but there aren't, there aren't many trees.
Even palo alto is, you know, newly into cloud, somewhat new Yeah.
When you're preparing to hire someone and let's say we're going through, let's just use because we're going down the sales path right now, and I think that's often one of the things that founders are really thinking about.
Top of mind.
Top of mind.
Yeah.
What should you do before engaging with a search firm, if you sort of realize hey, I need to go, maybe hire my first VP of sales, or maybe replace my VP of sales, or something?
From a foundational standpoint, if you're a founder, are there things that you can do prior to engaging a search firm to make sure you have a higher rate of success?
Yeah.
I mean, the first thing you have to do is say, okay.
I have to spend real time actually bringing my product vision to life.
What is that?
You can't just be like, oh, I'm doing this.
I'm doing a better mousetrap that catches mice and rats and flies and bugs of all kinds and colors.
You're like, no one's going to believe you.
So you have to be like, this is what I'm going after.
I have a red dot on this company's back.
I'm going to go hit this company.
And then we're going to take them down and then we're going to go own the space.
And then you got to defend how you're going to do that.
What is your hypothesis?
And then you can talk to a search firm, because the best search firms only take your assignment unless they think they're going to be able to get somebody you actually want to get.
Otherwise it's a struggle because you're basically telling somebody every day your baby's ugly and I'm sorry to be the one that delivers the bad news that your baby's ugly
No self-respecting search firm wants to do that.
Yeah.
It's interesting too when people talk about the value of venture capital firms.
I guess the ability to bring on, to get people such as yourself to take those searches.
It's very much a referential network that that ends up how that kind of plays out in some ways.
Oh yeah, willingness to engage and therefore also the candidate side.
So maybe talk about like, the importance of the venture capital brand, because some people you know it's huge And so how does that play out?
Is it candidates more interested?
We won't even take calls from second tier firms.
I'm sorry.
You won't take calls.
And the salespeople probably.
If let's use Sequoia as an example Sequoia they're much more inclined than a random VC to take a call.
If you're coming out of Israel and you're not backed by Gilead Ronan, it's a little bit of a question mark.
Gilead Cyberstarts.
Gilead Cyberstarts, yeah.
And so there are a bunch of people that people always go.
Okay, that's interesting because they're pretty discriminating.
They have discriminating tastes.
Yeah.
And so it's like if those guys did a bunch of underwriting, which they do.
I mean, I remember working here as a venture partner 80000 years ago and watching Scott Rainey blow up ideas all the time.
That's just not a good, that's not going to happen.
And you really have, those firms have discriminating tastes.
So then the candidates kind of go, okay, cool.
That's not the first question they ask.
First question to ask, what are you building?
Who's the founder?
What do you think of the founder?
What's their deal?
Why are they special?
And then they get into it, and then you start saying, well, VCs.
But if you start going to second or third tier, then you start losing interest.
But it's not gone.
Sometimes they'll say, okay, well, because Splunk was not backed by any A-tier VCs.
It was a $30 billion exit.
So people do believe that outside the top 10, there are some interesting winners.
You could say that big firms like Insight, where are they ranked?
I don't know.
But they've backed some really good companies like Abnormal.
So the aperture is wider than people think from what the executives feel.
But the best people will say look, if Doug Leone is on the board, or Pat Grady or Eric B Shreve from Benchmark, or Fenton or someone like you or Rainey or someone like that, you're going to get people responding.
Their eyebrows are going to raise a little higher, a little faster.
We talked a little bit about preparing to go into the search.
Actually, let's say, we've engaged Artisanal and you guys are going through.
You're running the search for us.
What can founders do?
What's the most successful ones?
What do they do best in the search process? process as they kind of refine their candidate pool?
Do you find that the best ones are actually reaching out themselves to some of these candidates?
What are some of the best things that the people do?
Yeah, I love, I mean, over the weekend, a founder you and I know very well growing 300% a year.
Yeah, we've both been in since the early days.
That guy, he made like 20 inquiries on LinkedIn himself for a hire.
It was interesting.
So yeah, some of these people will try to work networks for sure.
What they do is they build a thesis.
So you call it thesis-based recruiting.
So the best founders, early on, before they start a search, you go look, let me show you 10, 20 different people.
Let's really go into their backgrounds.
Whether or not we can even talk to them, whether they'd hang up the phone when we call them, whether they'd even take a meeting, doesn't matter.
You need to do A-B testing on people.
Like what's this founder gonna resonate with and why?
And what are the influencers around that founder are going to think too?
You have to factor them in too, and you have to enlist them.
Because you could go down a path where the founder's like oh, I want somebody that's four feet tall and runs a 440 in three seconds.
And you're like, what are you talking about?
That person doesn't exist.
And then, you know, but they go, well, find me the four foot tall 440 runner, you know.
And then one of the backers blows them up after you spent two or three months with them.
It's just a waste of time.
So you have to understand what the stakeholders are doing and try to drive that alignment early, especially in early stage.
Later stage, if founders already had a bunch of success, they're running the show.
The VCs are not that influential, as you know.
The influence...
It starts to wane, at least in my experience, as the companies get much more successful because they're like, I got this.
I've already proven to you guys.
I've got a lot of credibility.
Let me do it my way.
There are a lot of founders that just ignore their board when it comes to hiring.
When they get to that 50 100, 200 million range, right.
Yeah.
What role do you think a firm plays artisanal plays in the vetting interview process versus what is the role that the founder?
That's like very unique, that the founder really needs to own at its core of the decisioning process with the candidates.
I mean, listen, there are several.
There's some really great recruiters out there beyond Artisanal.
We have some very worthwhile competitors.
And so I think the you know the thing you want to try to do is you have to stick to that thesis until you've proven and you need to prove it that it's either right or wrong.
In the first 30 days, I always go Oh well, let's calibrate.
You should calibrate before you even start.
This is what this is the animal we want to hunt this animal want to kill.
This is what we need to go to kill that animal find that animal.
And staying together, talking all the time.
You can't talk to your clients every once every two weeks.
You got to talk to them like every other day.
It's like, oh, I just met Logan Bartley.
He's really tall.
He's taller than I thought he'd be.
Really smart guy.
But he can't run a 440.
Yeah, exactly.
So it's like you've got to have these rifts and be like, all right, what are we going to be?
What are we willing to live with?
What are we willing not live with?
You have to understand all the components of the candidate, all the major ones.
Lifestyle.
Did they drink too much?
Did they do stupid stuff at Christmas parties or whatever holiday?
Yeah.
Do they focus?
Can they convert?
Are they too senior, too junior?
You have to really try to levelize that when you're going through people.
But honestly, if I look back at the 30 years I've been talking to executives, in talking to founders, at the end of the day, the theme actually came down to how people experienced each other.
I know that sounds soft, but it wasn't about like some job spec and the specific deliverables.
You have to have that stuff, that's table stakes.
Where people really move, like where they really know that they're gonna get together, is when the conversations flow.
And those conversations are very content rich.
The first meeting might be like getting to know, are we interested in having a second meeting?
The second meeting better be really content rich.
The third one better be like, what are we going to do?
And how are we going to tell our VCs together what we're going to do so they back our plan?
Then you know you have your candidates.
So it's like when people have chosen, it never really came down to resume.
I mean, could have.
I'm not going to say never, but it rarely does.
It comes down to how... You have to have a reasonable buyout to even be considered, obviously.
But it comes down to how does the person synthesize information the executive, How does the founder synthesize a similar information about the executive that the executive is synthesizing about them and their value, prop and their likelihood of success?
And where those two start to converge is where people start going, you know what?
I'm feeling this.
It feels right.
And it can still go sideways because we're in the business of human beings.
So you just don't know.
What are the questions that the best founders or the most successful founders are asking, either of themselves as the interview process is going along, or of the candidates that is ultimately trying to de-risk the marriage?
And the first conversation should be, do you understand my ICP?
And then who can you hire?
I mean if they don't ask those two questions.
So if it's like access to market and access to talent, those are the choke points.
If a person can't actually convert some customers on their own, they're going to be viewed as a no-op.
And a lot of these early stage founders have to be impatient.
Time is against them.
When you're a 150 million company, you can raise money raising your hand if you're a reasonable company, as you know.
And when you're early stage, you might die on the vine if you don't execute from the C through the A, And so that hiring is extremely important.
So you can't have a no-op that takes six months to figure out what you do or what matters.
And then when you hire people, they have to have access to marketing influence.
So if you can influence a bunch of CISOs, for example, in security, or data scientists, for example, in big data, or all these different users in the AI world, if you can access that market or influence that market and hire a team behind you, that's fantastic.
You're going to die in the vine.
So you're vetting the ICP and who will actually follow that person.
I'm curious how much I guess in the early stage sales.
How much of someone's success do you think is related to their ability to actually execute on the product and be able to build the compelling vision versus recruiting and get the good people in there?
I realize the answer is probably both, but...
It is both.
I mean, you know you expect your sales exec to be part product person because they're coming back being like hey, you thought that the customer care, that you can catch rats and mice, but they only want a great mouse trap.
And you know, you have to say, like they're going to say this, but they're only going to pay for X, Y and Z and not A.
Like that's important, that direct feedback to the product team and the founder and engineer.
So I think that's really, like that linkage between market and company is driven by the field.
Are there things that are non-obvious red flags or non-obvious green flags that you maybe tease out in an early conversation with a candidate that like okay, they said this and that's just going to be NFW?
Are we going to be able to make that work?
Or is it too simplistic?
I've seen people blow interviews and still get great jobs and do great.
Yeah.
And then everything in between.
But, you know, here's the interesting thing.
I have like, in my old age, I've decided that I think interviewing is a waste of time.
It's really just to kind of like, do we want to be in the same room together?
And that's honestly even overrated.
If you really look at the great companies over time, it wasn't a bunch of buddies hanging out.
It was a bunch of people putting their heads down and executing, getting shit done in almost like a maniacal ruthless, like we're in a military Navy SEAL type of operation.
We are tight.
And it wasn't personal.
They kept their personal lives separate.
And so, if you think about what these people really should be asking, they should just be asking almost empirical questions of each other and doing a ton of back channels.
Because processes, like I said, you can grind around and nobody knows how to interview.
And even if they do and you give them all the questions to ask, they get into a conversation and start telling oh, tell me about your high school life, or whatever.
It's totally irrelevant.
Next thing you know, an hour has gone by and nobody's learned anything about each other.
It's a waste of time.
So what people should do is go, okay, we're gonna have a structured interview.
Here are the key things you have to get out.
We keep reminding our clients, do not spend more than 50% of your first conversation selling.
Don't.
Founders can't help themselves.
They're salespeople for a living.
They might be PhDs from MIT, but they're still selling the dream.
And so you have to coach them to be like, no, you're going to actually ask questions.
You give them at least five or six really highly specific questions to ask.
And sometimes they ask them and sometimes they don't.
So the early conversations really have to be around, what do we need to know about this person?
How do we find the information from people we can trust?
It's interesting because I'll hear a lot from especially technical founders that say well, every VP of sales or CRO candidate I talk to is very compelling.
Like they do a very good job of their job is to sell.
And so how do I calibrate in when everyone is very charismatic when I'm talking to them and they can convince me that they could be the best candidate?
I mean, I'll tell you, though, I think that's changed.
I think in recent years, because metrics are so important to financings and IPO and valuations and all that stuff.
I mean, look, the VC industry has forgotten that, as you know, that metrics should count again.
And they're back to this like throw money at everything, some more than others unfortunately, for their LPs.
But I think the key questions around this stage of like any hiring process has to do with like really understanding who am I getting?
What kind of human being is going to operate here and how are they gonna conduct business?
That's what people should be focusing on.
How are they gonna get this done?
This work is important.
And then you asked earlier, actually in passing how do you know when people are gonna make the transition?
How do they make the leap?
It's when they go from being cowboys to ranchers.
And like, all right, it's about keeping, you know, you look at Yellowstone, right?
Like they kept a tight operation going.
Rip was good at his operation.
And he wasn't just about managing a bunch of cowboys.
It was like, we're going to manage a business here.
You see what I'm saying?
And so, like these metrics have forced these salespeople to stop being cowboys and being, you know, Mr and Mrs Charismatic.
And they've actually had to become more clinical.
More like, I'm in the details.
I'm in the weeds.
What are you selling?
How are we going to sell it?
What's the ASP?
Are we competitive on ASP?
Where's our pricing diamonds?
They almost have to play a marketing hat, a sales hat, a product hat.
So people have gotten a lot more professional in recent years.
If you meet someone like Degnan, he's not there pounding his chest.
He's super professional, very buttoned down, paranoid, factual, content-rich kind of person.
He's very humble.
And he's very focused.
You need to learn that from Frank Sloot when you learned it from just from really McMahon, but just who he is.
And so if you look at the modern sales exec, I don't see them playing themselves on charisma.
And I know that's a long winded way of saying in almost circular of like the industry's changed.
You don't see these chest-thumping super charismatic and nobody buys anybody based on acquires an executive of any kind anymore.
Based on how they talk is really what they will do and the richness of that content.
So it sounds like in the first meeting you're trying to get a handful of questions and make sure that the resume matches the substance of the individual, but also just assessing the fit.
Does it feel like we want to spend more?
Do we want a second meeting?
Do we have a second meeting?
And then you drill in and you'll ask some of the different questions.
But it sounds like you're a big believer in referencing in the back channel of the actual candidates.
Honestly, I think it's 80 percent.
And so I'm curious.
How do you do it?
What are some of the best practices for going about doing a back channel or referencing?
Well, first of all, I think the industry was forced to specialize about five years ago six, seven years ago.
The recruiting industry.
Yeah.
It used to have executive recruiters who do CEO one day, HR the next day, finance the next day.
You just didn't really have any native familiarity of like who are the key people.
Do I have connectivity to those people?
Can I just call them and get a confidential back channel?
I'm not gonna get sued for having this conversation.
You have to have the network.
If you don't have the network, you won't get the back channels.
You might actually the back channel that you think you're getting that has no reason to talk to you and give you any intel on anybody because they're worried they might get sued If they say anything.
That's not flattering.
So you have to have the network to get the back channels.
If you don't have that, you're not useful.
So the recruiting firm can help with that.
Only if they have deep connectivity with the people they know.
They have to back channel the book on person A or person B. Person A, person B.
And so when you're doing that, I guess, ultimately people grow over time, people change.
And you know the reason you got maybe didn't work out the last business.
You could be successful in the next one, or the situation is going to be a little different versus now, versus the existing business that you're going into.
And so what are you trying to tease out when you're doing the back channel or references?
I guess, how do you actually go about it?
You call me up and you say, Hey, Logan, I saw you were on the board of this company.
What do you think of?
Do you ask me, do you give a name, or do you say hey, I'm interested in a search?
Do you know anyone that comes up that might fit this bill?
Yeah, it's going to be a noncommittal answer.
It's totally situational.
A lot of times the VCs get filtered information through the founders, as you know.
So they don't really know what the execs are living with every day.
As you know, they might be smart enough at board meetings to be like all right, we're going to have the execs come in there and the founder is going to step outside for a few minutes and we're going to hear directly what they say.
But this is such a pro-founder world, and has been for so long, that VCs are afraid of pissing off the founder by being like.
We want to hear directly from the horse's mouths what's going on on this ranch.
And that's just not happening.
And so you have to actually get to the operators.
You have to get to the operators.
And so what are the things that are important to tease out?
If you're trying to... think through if the situation's actually going to match.
You find someone that's actually worked with them or under them or, I guess, who are the people that you're looking for?
And what are the things that you're trying to tease out in a back channel?
You got to have one or two people that work for them and a couple of peers.
So, unless you're talking about a CEO, which is a different kettle of fish and, let's be honest, that community, there's not a lot of Slootman's running around and Slootman's done.
How many Slootmans are there?
David and Sherry.
I can list a few world-class executives or CEOs that were brought into high growth companies.
And so most often you're talking to execs that are going to report to a CEO.
You have to understand what the peers have to do, have to say, because sales can take over a company.
And honestly, it's the biggest population center after engineering.
And most often, sometimes at scale, they get bigger.
So there's a lot of risk in those transitions and in those hires.
And so if you don't understand how they operate with other execs, like they beat up on the product people every single day because they kept throwing stuff over the wall to sell whatever they could sell.
That's a big theme, right?
They just come back from the field going, if you can't build me X, Y, and Z, I can't make the sale.
And then it's on you.
You failed the customer.
That's a dynamic you have to suss out.
You have to understand, like, are people professional about how they go about that?
Like I said, that linkage between the field and then the product, you know organization, product and technical organization.
And if they're not professional with that, having good judgment on like can this customer buy into our roadmap or do they have to have this thing right now?
Because then you get pulled in 50 million directions and then you don't have any linearity and your engineering team's suffering and they start to quit.
So you really have to understand, like, how do people conduct themselves with peers?
It's extremely important.
How do they show up in meetings?
How do they show up with customers?
Do they convert?
Do they hit their numbers?
And then, you know, in the early stages, you're really looking for these –
Personal conversions.
Are you in the field?
How much time do you spend in the field?
Actually, I have to ask a detailed question.
Tell me, in the last year, how many miles did you log?
How many flights did you take?
How many customers did you personally touch?
And then in the later stages you're like okay, tell me about when you missed a forecast, missed a number.
How did you build pipeline quickly when you knew your recorder was going to be soft?
How do you do planning?
How do you interact with finance to get an annual plan together?
And then how do you do instrumentation when you think about instrumentation as a priority, right?
And so you start thinking about when do you start doing IPO reps?
Like, where are you gonna beat and raise even as a private company.
Those are the conversations to start having when you start becoming later stage.
If you're lucky enough to get to later stage, those are the high class questions and issues that you're going to sort through because you want to be a public company.
You don't want to just have lumpiness where you can never show the street that you're actually a well-run company.
That's where things start to really change and get interesting.
How long, when someone's making a hire, how long do you encourage them to think about like can this be the person for?
Is it two years?
Is it five years?
Is it situational?
I tell you man, anytime I hear a person be like oh, they're just going to get us through next year, I'm like how naive could you be.
Because think about this for a second.
You hire a VP of sales.
They turn around, they hire 20 people.
When they get fired, guess what those 20 people do?
They follow them out the door.
Then what?
Then you're going to be flat.
You're going to have nobody talking to customers.
You really have to look at people and go, okay, I know they can de-risk me from zero to 20 million.
Can they presumptively go to a hundred?
Can they be Steve Raj?
Can they be Chris Degnan?
There are a bunch of people, Cabrisco.
Again, you go back to this.
There's not a lot of people.
There's this guy, Todd from Confluent, blanking on his last name.
He took the company from basically zero to a hundred million.
And then they brought in Erica.
We had a hand in that, who had been there for a thousand years now and grown it to a billion dollars.
And her wisdom, and the same with Kofoid at Databricks.
The wisdom of those two people was they figured out how to keep their claws in those first VPs of sales that built the company, Who are the gems in their organization.
What are they doing right?
You can't just be like coming in and throwing people out of the company because they weren't your people.
You find gems in there and you want minimal disruption.
And I really think that, like Abnormal, did the same thing, brought in President and their CRO, this guy Kevin, stayed.
He's going to stay through the IPO and everybody wants their hooks into him because he grew the company from almost zero to whatever.
Very bar, very big.
And so the point is that, you know, you talk to Kevin, he's like, oh, I'm here.
And DeCesar made my life easier for me.
And so that's.
Those are where you see people grow out of this whole like resume obsession into obsession around building a company.
And that's what everybody should be thinking about.
How do I make this company gigantic?
If I can do that with all my heart and soul and conduct myself in a professional way along the way, then I'm going to be a big winner, no matter what.
If I just jump around trying to find the next hot thing, I'm going to end up with a weird resume and probably no wins.
How can founders stand out?
It sounds like we talked a little bit earlier about storytelling and that being a big like anything else, I mean at the end of the day, you're trying to get people to buy into the vision.
Are there other ways that you've seen founders successfully stand out to differentiate themselves in an ever-evolving competitive market?
It comes down to soak time.
If the founder's really smart and they go.
You know, I really like this lad Logan, or I really don't like this guy Andy.
I'm not going to spend any time with Andy.
I'm going to spend all my time with Logan.
All right.
How much of that person's mind share do I occupy?
And what are they asking me that I need to spend a lot of time answering and, you know, demystifying for them.
What are the key things this person's in their head?
Nobody cares that you remember what their daughter's name was.
I'm sorry, that's a myth.
They just don't care.
They want to know.
Like, did you really hear me when I said I think your margins are going to be a little crazier?
I think your assumptions around... your competitors are a little questionable.
Like you really didn't drill into them.
And then the founder goes back and does more homework and goes okay, I'm competing against X, Y and Z, Here's our architecture.
Here's our architecture.
Here's why the thing wins.
And I'll give you a couple of customers that will validate that.
So they really run down the concerns that the executive will have.
They listen intently, and they spend a lot of time with them.
I mean, I tell you one of my best founders, this guy's going to take a company public, his company public, guarantee it within five quarters and it's going to be a monster.
He spent 35 hours with this president that he hired, 35 hours singularly focused on that one person.
Looked at the market, said, I don't want to talk to these people for these reasons.
I do want to talk to this one person, hired him.
And then that person has made the company IPO ready and Less than two years.
Was the 35 hours, how much of that was selling versus diligence?
Honestly, man, it was a discussion about the business.
Most of it, like the first probably four or five hours was like, do we want to work together?
It turns out, they drove the same kind of car and they lived in the same kind of neighborhood, and they had a lot of things in common.
But that didn't, that was not going to carry the day.
What they did, it was, and I actually advised both of them.
I was like, why don't you guys just dig into the P&L?
Just dig into the who's, what reps are making, you know, who's making attainment?
Who's attaining quota?
Who's over-performing, who's under-performing, why?
Let's drill in to this thing.
And really so.
You both have extreme conviction on each other as a painless process in the end and a home run hire.
And so that's something a lot of people don't do.
Like you'll see these founders do these fly-by-30-minute interviews with people.
What are you talking about?
You can't even barely remember a person's name in 30 minutes.
You're not going to get any quality material out in 30 minutes.
You've got to soak with people.
Everybody's got a story.
Everybody's got a plan.
And you know what?
You can build that plan.
There's actually a few executives –
I mentioned Slootman earlier.
He used to tell me that he never really wanted to hire anybody that had 100 of the resume he was looking for.
It was like 70% or 60%.
Like, I'm going to make this 40.
This role is going to be the next 40%.
And really cared a lot about tugging the line and people that like synthesize the things that he would say.
And then comes back to him, not just plays it back to them, iterates on it.
And then it's had more interesting ideas than maybe he did.
And then he'd be like, that's my candidate.
When these things don't work out, not over time but like in the short term are there things that stick out as the most common failure modes that you sort of see when you make the wrong hire?
Biggest one is expectations.
So a lot of times you'll have like these early stage companies will go over hire because they'll be like oh, I want some heavy hitter that can de-risk me to a hundred million bucks.
Or like that person's not going to go out and get on a plane and do the you know scrappy hustler stuff.
And then the founder gets really annoyed because they know they're on a short time horizon, right?
They got to work on this next financing and they got to execute and they get to the 5 million ARR to get the growth round, or whatever you call, whatever their metric is or their deliverable, their milestone.
And then the executive is focusing on the wrong thing.
So it's lack of alignment between founder and executive on exactly what the critical work is on a literally week-by-week basis.
You've got to stay so close.
When the two diverge and there's not a – this is the other thing that happens.
Nobody's training the founders to be CEOs and sit down with somebody and have a professional conversation and be like hey, this is not going well.
This is what we needed to correct.
This is what later stage companies do or public companies do routinely.
HR component is just missing.
They don't even have an HR person.
It might be the office manager.
It might be the front desk person is playing the HR role.
And so you really need to teach these founders to actually like operate with a new executive, where the expectations might not be lined up with reality.
Or you went in the market thinking that your better mousetrap was in fact, a better mousetrap which is only iteratively iteratively, iteratively better and it wasn't actually gonna convert a lot of customers.
So what do you do?
Do you pivot on product or you just fire the sales exec and blame that person?
You see what I'm saying?
So it's like a constant alignment, constant communication.
And I think these founders are just not very well trained in actually being CEOs and understanding the big picture and saying do I fire this person?
Am I set back six months, a year, three months, six days?
In the case of one founder, I saw him shoot the – I hate the word shoot – fire the senior sales exec, elevate the number two, and the number two was a home run.
So you've got to give people freedom to hire around them and build a team so that you have some continuity there.
Yeah.
But I don't see enough people doing that.
How do you make sure that you don't let perfect be the enemy of good?
Or at what point do you say hey, this is the can lip pool and I i realize you think there's a snowflake out there, and maybe there is, but we haven't found that snowflake yet.
Like, how do you advise founders?
And you got to get someone in that seat, and time is money at the end of the day, versus holding out and trying to find maybe their ideal candidate.
That checks all the boxes.
Yeah, I talked to one of the smartest founders I've met in years recently.
I mean, just a brilliant, brilliant woman in the AI world.
The company's gone from zero to 100 million in two years.
I know you're going to ask me what company.
I think I know.
You can talk later.
I think I know.
Yeah, yeah.
And so she just said, you know, I want this.
I want that.
I want the other thing.
I don't like these companies.
And you're like well, you just walled off the talent population in like 80 of the places where you want to find AI engineering talent.
You're saying you hate those companies.
So where exactly do you want to look?
And so you really have to coach them into opening their aperture, and early on, being like perfect is indeed the enemy of the good.
How do you define perfect?
And is that realistic?
There's always a delta between theory and reality.
The question is, how do you close that gap and get people to just see the market for what it is?
It has to be a discussion, almost like you're looking at a bunch of numbers, although that sounds impersonal or even cruel in some ways to compare humans with numbers.
But that's kind of how you have to look at empirically, like here's the market, here's what the market will bear, here's what the market will not bear, here's why.
And if that's a conversation that's data centric, like data oriented, as opposed to just your conjecture, just you know your off the cuff stuff, Founders will, usually smart founders will adapt their thinking early enough to correct and then go after the right people.
Because you're right.
If, like search takes longer than six months, in the end most often people capitulate and are the person that just is like okay, I'm sick of the search.
I'm sick of looking at Andy Price's team or whoever, you know, my car competitors.
I'm sick of this whole dynamic.
I'm just going to hire so-and-so and hope that it works out.
You really need to get these hires done inside of six months to optimize the outcome.
90 days, people are like, oh, I want it done in two weeks.
I mean, that's undisciplined.
But somewhere between two or three months and six months is...
I'm smiling because we just had a founder do eight days.
I know.
That guy was unbelievable.
I think it'll work out.
That's a rarity, though.
That was a rarity.
I hope it works out.
That founder was unbelievable.
The fact that you knew the candidate didn't hurt you.
Yes, yes, yes, yes.
That definitely helped.
I'm curious, as you move from a – the founder-led of all this.
We talk about founder-led sales, but let's say like pure founder recruiting to.
At some point you need to build an engine that at least has an infrastructure that your other executives can hire as well.
And maybe they need to hire.
Maybe it's a CRO, they need to hire a VP of sales, maybe a CTO need to hire a VP of engineering.
Whatever it is.
Sort of So mechanizing the organization to have the infrastructure to hire.
Well, are there?
Are there important things that stand out as as it sort of transitions from the founder being very much involved in every single key hire to mechanizing?
Maybe it's a VP level and ultimately you're going to delegate a little bit more to the executive that it rolls into.
Are there things that sort of stand out in that transition?
Oh, man, so much.
Yeah, so much material.
I'll go right to the highlight and just highlight a company.
I won't name the company, but it's these young –
Brilliant college dropouts.
They built a really interesting business model.
All the best VCs.
The company's growing at an absurd clip.
I don't know that there are only two companies I've ever seen grow faster than this one.
They're named OpenAI and Anthropia.
This one's a very close third.
And when I told these founders, I said, what are your hiring choke points?
And they were like well, we need to hire 40 engineers in the next quarter and we want them all from Databricks.
I was like, well, they said, how are you going to do that?
I'm like, you're not.
And so you know what's happening is in the last three years, because this economy has been a little weird for tech, as we know.
I won't go into why here.
I don't have to.
You know you've had this like de-emphasis on you've had talent has been de-emphasized in terms of the acquisitions internally.
Like you have to build that muscle early.
You have to actually have a recruiter on your team and actually treat them well and treat them like they're an inside player.
Tell them what you want.
Be talking to them as much as your sales leader or your marketing leader, your engineering leader, product leader, because those people are the people that are going to inhale the talent for you and run this process and make sure that your job isn't full-time recruiter.
Founders have a lot of masters to serve, as you know.
They need to be out selling and raising money and whatever.
And so if people don't build that talent muscle early and often and invest in it, they're going to get choked.
I mean, I can't tell you.
When's the last time I talked to a founder that wasn't sitting there freaking out about 2025 and their hiring plan was just not?
They were not going to even come close to making their hiring plans.
And that is their choke point to growth.
So I think it's fascinating right now, the shift from...
You know, the view that, oh, there's a person on every street corner the last three years.
And now, like after the election, the talent war has kicked into World War V and it's become insane.
Every single offer for every single candidate has four or five competing offers.
It's really absurd.
If you have any kind of good bio, good resume, good track record coming from good companies –
Everybody wants you and they've all figured it out very quickly.
And people have gone from kind of playing defense, playing offense.
And nobody's really thinking about.
Well, not nobody, but very few companies are thinking about.
Hey, the first thing to do is just what's the choke point?
Well, I don't have the mechanism to inhale talent.
And some of the backend engineers you need are just as important as the best salespeople you need, as you know, or the AI research person or whatever.
You, the founder, are not gonna be sitting there on LinkedIn for 24 hours a day trying to scrape around and look for these people.
And hiring recruiters, half of them don't even know what they're looking for at those levels.
And those are yet critical, technical, people you have to acquire.
And so I do believe that building, investing in a strong internal talent mechanism is way more efficient.
Not just cost effectively, forget the cost.
A lot of these companies have money that burn on stuff like this.
It's just really about how do people allocate time.
And if there is a specialist group that's talented, that can do that internally, I'd say, use those people more than recruiters externally.
And so when are you bringing in maybe IC recruiter type and when are you bringing in VP of people?
As early as humanly possible.
But is it first 10?
Is it first 50?
Is it employees?
What do you think?
Let's see.
At about 20 employees is when the founders start going, well, it's getting a little harder.
I'm starting to scrape around.
And the talent bar is kind of getting lowered and lowered.
And I really don't like that.
And I'm spending all my time recruiting and selling people.
And I'm actually leaving all these other things to smolder.
That's not a good scenario.
Do you encourage people to start with a VP of people type or start with an individual recruiter?
It's ICs.
And then you go, and then you pick the best one and you make that person quote unquote head of talent.
Then it's a VP talent.
Like I'll say that it was his open information.
Anthropic did a really smart thing.
They hired the top VP of talent from Databricks.
Like at a really important moment, that was a big hire.
It was smart for them to do that, for them to aim high.
Now they went from zero to huge really fast.
So that's kind of an anomaly.
But I would say that people sort of not aiming too high but really investing in that function, I think.
And having a high bar, making sure those people come from A-plus companies is important too, because they in turn even the talent people of the networks.
It's all about how fast you can tap a quality network.
Those are the muscles that you build.
If you can build those muscles in any functional area or in a centralized talent function, You can blow through hiring choke points really fast.
People ignore that idea or that critical function.
You don't need an ER.
You don't need an employee relations person, compensation.
You can outsource that stuff to someone like a Nancy Connery, who was the first VP of HR at Salesforce.
Those people are around and you can find them later.
But that talent acquisition muscle is something that too few founders are thinking about building early.
And I assume bringing in maybe one to focus on technical, one to focus on go-to-market.
Ideally, yeah.
Exactly.
You dual-thread it.
Your two biggest, like I said, employee centers are engineering and sales.
So just those two.
And you can try to figure out the marketing stuff.
I'm not saying marketing is not important, but...
Those are ancillary.
We generally operate in B2B and marketing is generally a smaller percentage of overall sales and marketing expense than something like CPG.
I guess how much.
How important is it, as you sort of set up this internal talent infrastructure and all that, how important is it to run very consistent processes and go through in a structured manner, as you're sort of bringing people onto the team and going through the funnel, versus allowing people to draw between the lines or paint and be a little bit more exception-oriented, given talent can be an exception business.
I mean the best run companies have.
It's very interesting you ask that question because if you look at the best companies out there, what they do in common, what they all do in common, they actually do have a filtration system.
It's like if people don't fit this criteria, they're not going to work here.
And we're not going to have, because, you know, having riffraff around, it's just, it's distracting.
They take up a lot of time.
They're disruptive.
And you've got to fire them.
Then you look like a high turnover kind of company.
Now, turnover is inevitable in tech and any other industry.
But at the same time, you really want to keep it at 10% or below if you can.
And a lot of that just has to do with like look, these are the five or six things these people have to have in order to work here.
I can't stand the word culture.
It's so outdated.
It's ridiculous.
Because you have all these subcultures in these companies engineering subculture, finance subculture engineering, product sales.
It's value system, not like, how am I going to conduct myself?
What's important here?
Are they gonna sit at the water cooler and talk about how pissed off they are that the election switched and they didn't get their way and whatever?
That's a waste of time.
You're here to work.
So what are you focused on?
How do you conduct yourself?
That's important.
And so I see these really great companies focusing on that.
What are the attributes of the human being?
The resume, it's important, but not the only thing.
It's what they think of their duty to their employer.
I know it sounds old school.
You are employed by an employer.
Not just a founder.
It's not just a club.
This is a company.
This is a going concern that's got a lot of money at risk for a lot of people.
So let's get it right.
And I think that the gene pool engineering, as Vinod Khosla used to say, is important.
Inevitably, there's going to be tradeoffs in any hire.
Maybe you get your exact candidate that meets every requisite that you had coming in.
But I'm curious do you, do you encourage companies to make sure, use the skill set as a table?
Stakes of like must be this tall to ride the ride.
Yeah.
And then solve for the, the culture, and maybe allow that to be a little bit more developmental on the skill set side?
Or do you do use the opposite, where you know the culture is within a zone and then skill sets are the requisite thing?
You don't even talk to people that have some reasonable, some reasonably applicable background that they should be in your field of view.
You know you shouldn't be talking to people that are like application layer JavaScript engineers if you're going to do something really interesting and foundations or training or any of these other more advanced things.
Yeah.
And so in that case then you're solving for culture, assuming that the resume will tell you roughly the skill set, and then spend more time orienting on the culture.
There has to be a reason someone's in front of you and then you can get to the soft stuff.
Absolutely.
Yeah.
Yeah.
I guess one of the things that we've sort of talked about or alluded to earlier is when.
It feels like you might be outgrowing someone on the team.
And obviously, it's something that no one hopes to have happen.
But I'm sure a lot of times you get a call from a founder to sort of give an example of this.
And it's, hey, my VP of sales is doing a great job.
It seems like he got us, she got us from zero to 50, 75 million in recurring revenue.
I'm starting to ask myself are they going to be the person that's going to take us from 50, 75 to 500 a billion?
And you don't know.
Are there questions that you encourage them to ask of?
Hey, is this person going to be the person to take you through the next stage of the journey?
Oh, yeah.
100%.
I mean, the first thing founders have to ask themselves is, why am I asking this question?
Am I the problem?
A lot of founders will say, oh okay well, this person in their resume never got past 75 million ARR.
Well, that doesn't mean they can't do it in the next one.
Degnan didn't do a $3 billion thing prior.
Yeah.
A lot of times founders just get – they get happy feet in some ways, or they get trigger happy.
Whatever your metaphor is.
And they start saying well, this person hasn't done this, so I feel like we need to top them just because they haven't done it.
And you're like, okay, well, what are the symptoms?
And then when they don't come up with any symptoms to give you, like there's nothing –
There's no coughing and sneezing and vibrating coming out of that unit.
So like, why are you thinking about this?
Are they hiring?
So these are the questions you ask.
Are they hiring at the right clip?
What's the turnover rate in that organization?
What's the attainment rate?
What's happening operationally speaking?
Are we hitting our number, beating our number?
Are we wildly swinging, blowing it out one quarter, not blowing it out?
What are the issues that you feel insecure about this person's ability to scale with you?
And a lot of times founders can't answer that question.
So I'm like, hey, keep the person you have as long as you can.
But the biggest issue, like I said earlier, is about founders.
Just don't have this training to actually sit down and have a quality conversation with a human being.
I know that sounds soft, but it's where the rubber meets the road.
Hey, you're not getting these things done.
I know I told you to focus on growth last year.
We can't triple, triple, triple, double, double, double.
That's not realistic.
So what we're going to do is...
We're going to come up with a plan.
And the biggest area where I see sales execs – this is the first thing I ask the founders.
Okay, once you've done this internal checklist of why you're really convinced you need to upgrade this person – and again I hate the words.
Let's just change this.
We need somebody with different skills.
Is how do they do forecasting?
How do they roll up a bunch of data and actually pin a number and then – orient towards that number and beat it or raise it or whatever, but they can't miss it wildly and then not know why?
And why is that an important, the most important thing?
Because the best companies start practicing their IPO reps at like 50 million, 100 million.
If you're not practicing IPO reps past 100 million, you're going to get to 200 million with a lot of bad habits.
And really not getting even understand, like you'll blow a quarter right into a important financing or you guys, you'll get ready to go do your roadshow.
If you don't know why, that's the most important thing.
The revenue leader and even the marketing leader.
You know, somebody asked me the other day.
It really
It's a very high profile marketing thing.
And again, I just advise because I mostly manage them are fun.
And so I just advise all these situations, but it's really common.
And you said, okay, well, what are the symptoms of the marketing leaders issues?
It was just a lack of being able to budget right plan serve the different masters inside the company.
Who are the constituents?
Who are the internal customers?
So you ask questions like that.
Where are the weaknesses?
Because a lot of people just say okay, I just want you to do this one thing this year focus on US enterprise.
And then they wonder why the commercial business falls apart or they can't do anything internationally, things like that.
So...
I think that the skills that are needed often are actually already in the person you have.
You just have to tell them you want them to flex these other muscles and less so about these other things.
Delegate something, maybe hire a sales ops person.
Maybe you're upgrading your head of North America so you can focus on international.
There are a lot of things you can actually do to upgrade the talent of your own person, the skills of your own person, like bring on a mentor on the board, like McMahon mentored.
Degnan.
And there's a lot of examples of that around where you had like an advisor, CyberStarts has a guy named Adam Ahrens, who was this legend from Okta.
And he's there mentoring their young founders on how to think about this.
They're first timers out of the 8200 and they need to know.
How do I think about hiring that first sales leader?
And then how do I know when I've hired the right person or the wrong person?
And then when do I need to up-level their skill sets?
But I'm actually a big believer in continuity.
I just think that anything a founder can do to say I really want to hang on to this team as long as I can without sacrificing operational excellence.
That's the ultimate knife edge for me.
Yeah, forecasting is an interesting one because there's the element of hey at the end of the day.
That's what, especially on the sales side.
But maybe we'll call it planning or resource management or whatever it is, if you're talking about marketing or product or whatever.
Yeah.
A different functional area.
But then it's also a – it's a roll-up of a bunch of other inputs that sort of show the pulse of the business that you have.
And so not only is it going to be how your stock is going to trade after a quarter, or you give guidance over the course of the year, but it goes to –.
How your pulse on the individual deals, your pulse on the team and the rep performance, your pulse on the product market fit, on the relationship with marketing, on the relationship with the product and the deliverables.
It sort of is this thing.
That's a discrete component but it really spideys out across the organization and shows really does that CRO leader have the sense of all the different little component parts that go along with the job?
Yeah, I mean, the biggest thing is that the CRO is coming to you saying I need these resources to get to this mountaintop.
This founder shouldn't be going.
Hey, I was surprised.
I looked like a clown in my board meeting and it's really your fault because I was surprised.
What you want to do is demystify companies.
You want to actually...
Take complexity out of them as much as you can.
Mike Volpe taught me that term.
It's like take complexity out of a company whenever you can.
Just dumb it down.
And so that means people are gotta be on their own functional thing.
You know, like a lot of marketing people get fired constantly.
Biggest reason is people like, oh, the demand gen thing wasn't working.
Well, there was one thing that wasn't working, that wasn't operationally amazing, so that the thing has to come across multiple functions.
Same with sales, same with products, same with engineering.
So people just...
They don't realize that they're really optimizing around one skill set.
And then the great leaders are the ones who go.
You know what?
I've got a blind spot in areas X, Y and Z and I'm going to go out and I'm going to work on those where I actually suck.
Where their skill set, they take 1% of their brain to do what they do great, right?
It's the areas where they're kind of not great, where they have to hire really great people to flank themselves, to go all the way and power through.
So I think the best executives are the ones that go to the CEO and say hey CEO, found what?
And say look, this is what I need.
This is where we're weak.
This is where we're strong.
I don't want you to be surprised.
I think we're going to get here.
This is my plan.
And then they hit the plan, whether it's a revenue plan or hiring plan, or an operational plan instrumentation forecasting, whatever it is the muscle that they need to get ready.
But I think that's the issue.
Nobody likes to be surprised.
VCs don't like to be surprised.
CEOs don't like to be surprised.
Execs don't be surprised.
Public markets certainly don't like to be surprised.
Public markets hate it.
And once you surprise them to the downside, they take a long time to forgive you.
Yeah, you get put in the penalty box for a while for that one.
So we talked about the example of like hey, you got to ask yourself what the actual inputs are, why you're asking the question of if this person should be up leveled.
And we gave the examples of, hey, you know, It might be – be careful what you wish for.
It might actually be a really good situation and you're just sort of being existential.
But let's say you identify there's a problem and maybe it's forecasting.
Let's use that as an example.
At that point in time, do you counsel CEOs founders, to just go to the individual and say i'm starting to think that this might not be.
You're getting a little out in front of what you managed before.
Here's the examples why we're going to start thinking about maybe bringing someone on over you.
Or how do you, how do you counsel people to have those first symptoms of the person's lack of planning?
Orientation is when that ceo should be talking to the executive.
The first signs Hey, there's a speed wobble or is the axle going to come off on the freeway?
Like what's going to happen here?
You know that you have a tire that's running a low PSI on the right passenger side?
Like what's going on over here?
And if the person doesn't have a coherent answer to that going, okay, you know what?
I'm on this and I've been fixing and here's my plan to address the issue.
I'm glad you flagged it.
Again, it's better if the executive goes to the founder and goes, hey, look, here's our meeting.
Here are the issues I've got.
This is what I'm going to do about it.
And then actually do it.
That's what you want to do.
But I always counsel founders, do not ready fire aimer at people.
Don't.
Blow people out quickly.
Don't make knee-jerk decisions on people.
You want continuity.
You want the rest of the organization to see people treated fairly and treated in an organized way.
It wasn't just a, hey, this didn't go right.
Okay, we're blowing somebody out.
I mean, I had this founder.
I just decided not to talk to the person.
I did some diligence on that individual and you just have this knee-jerk way of firing people, almost like it's a sport.
I was like i'm not gonna spend any time with this person.
They're unhinged.
No, thank you.
My time's more valuable than that.
I'd rather go for a bike ride, you know?
Talk to whoever.
But there are certain founders.
And once you get an employment brand, that's about ready fire aim and you're not on your you know what operationally and founders aren't adapting and figuring this stuff out on their own and them growing themselves.
I mean, that's not one of the biggest founder mistakes is they don't grow them.
Like I said earlier, their own skill sets.
In being executives, being CEOs, understanding that no human's perfect.
And how do I figure out whether the speed wall was just a temporary thing or the pothole in the road, or if it's more systemic, like the car's going to break down because the person just doesn't have their you know what together?
And where I always ask them to drill in is what did they tell you they were going to do?
And did they do it?
Did you do it better than you thought they were going to do it or worse?
Didn't you give them like a quarter or two to keep going?
I was at a conference recently where some pretty big execs that are more accomplished, smarter than I'll be in 10 lifetimes were all saying this quote-unquote when you know, you know.
And I disagree with that.
When you know, it's really that you think you know.
You know, if you look at Ali Ghodsi, he's a world-class CEO.
He's a professor at Cal.
He's never had an – to my knowledge, he's never operated in his life.
And he's one of the best CEOs in the world.
And, you know, he had to evolve his own skill set.
And look at the people he's kept around him.
And he kept those people, even through critical transitions like bringing in a CFO and then bringing in a president and bringing in – these different cast of characters that up-leveled the organization without having a lot of roughness around turnover.
And he's like look the turnover I do have.
I want it to be there because it means people can't hang and run at the pace that we want to run to build a 100 billion company.
There's a certain sort of ruthlessness, but it starts with the founder evolving their own CEO behavior.
And it didn't hurt that he had Horowitz on his board.
Obviously, he's been a veteran company builder.
Yeah.
But Ali's his own man.
Yeah.
As an example of somebody that levels down skills.
Sure.
When you're on the –.
We've been talking a lot about the hiring side, but I'm sure you've counseled quite a bit on the firing side as well, with founders having to go through this or people that have been on the other side of it.
Are there –
Anything.
The people that do that well it's never an easy conversation, but the people that do it well.
Anything that people should internalize or try to take away from this.
Absolutely.
Give people a good narrative.
Unless they're doing something that needs to be fired for cause, and that's a cancer cell.
Cut it out.
And you're just going to have to explain to people, hey, I'm not going to go into details.
You can't do that really legally.
You just have to say like, this just wasn't working.
Don't really want to go into why, but we have to make a change and we made the change.
So if it's character related or you're going to fire somebody from cause, do it quickly.
Get the person out of the organization thinking that they're a metastasizing cancer cell.
That's an urgent need.
But if somebody's just like not performing, the best thing to do is just tell them listen, let's build a good narrative for you that keeps your dignity intact, and then you're gonna do me a favor by elegantly helping me recruit your replacement.
That's the perfect Nirvana scenario where you're enlisting the executive.
So look, any smart executive's gonna call the person they're replacing and be like what's up with this situation?
And if they say well, the founder handled me roughly or they didn't fire me for fair reasons or whatever, and that's going to harm the recruiter's ability to recruit somebody new into that role.
Because people back channel you too all the time.
And everybody knows each other in tech.
It's very incestuous, as you know, in the B2B cloud world.
You're always one.
You're like everyone's Kevin Bacon.
You're one degree, you know, six degrees, whatever.
So you gotta be careful to treat people in a humane way.
And that's your employment brand we're talking about.
And it gets around pretty fast.
So give them a lead time, tell them exactly what's going on, give them a little time to correct.
But if you've made your decision you need to get rid of them then you have to do it in an elegant enough way that there's a glide out and a glide in.
If you can coordinate that, where the new person is starting very quickly after the old person leaves, even if you have to keep an okay person around for an extra quarter while you look for the new person, it's probably worth it to minimize disruption, unless they're totally incompetent, in which case again, they're metastasizing cancer cell, not for personality reasons or whatever, but because they're just tanking the company.
Yeah, there's an old Bill Campbell quote about firing, and I think he said something to the effect of you have to take their job.
You don't have to take their dignity.
And it's an important one walking away, because I think you can – in an hour you can burn – years of goodwill right and just just the way out.
That's how people remember how it went down, and the good memories kind of get blocked by.
Whatever that last memory is, it harms your soul.
It'll harm your soul even if you don't, even if you're so heads down.
You're the terminator and you're gonna go out and you're gonna win the war you didn't.
Even if you kill it.
There's going to be a moment of reckoning in your own heart where you're like I just treated this person badly.
Most people that aren't sociopaths feel that at some point.
They're human beings.
They have families at home, mortgages to pay, kids to put through college.
Treat people... humanely is a very important thing.
Negotiating with candidates.
So now you've made a decision.
Generally, you're trying to spec if it's within zone.
Maybe the recruiter's back channeled, hey, here's what they're making their last job.
Now you're a founder going in and negotiating with a candidate and trying to get the job done.
Any tips or tricks around that?
Yeah.
I mean look the recruiter if they're doing their job, or the founder if they're doing it through the network, or the VC talent person came up with the idea.
We'd love that too, by the way.
It should come from all sources.
People should come from all sources.
I think the most important thing to do in negotiation is actually set the stage, but the founder and the executive really need to get into the details together.
Because it's a test for how they're going to solve conflict together.
Because there's always this thing where the executive goes to the founder and goes hey, I need X, Y and Z, I need X number of dollars this year to go hit my plan.
The founder's like, are you sure?
Why can't you just get more productivity?
And that's the exact correct question.
Are you sure?
Because people are always going to ask for more money than they probably need.
Because we've been a capacity-driven industry because of the uplift until the last three years, which now we're at least hopefully.
Maybe that taught us some discipline as an industry.
But I really believe in detailed discussions aided and abetted by the recruiter or some external party, to make sure that both sides aren't off track.
But I just saw a founder over the last few days close an executive that's had probably 30 offers and has turned them all down.
And this founder was just so determined And he wanted to do the deal himself.
Now, when he ran into trouble, he called us and said, okay, what about this?
What about that?
And we said, you know, you guy wanted a single trigger.
We're like, no, walk out to walk away red line.
Do not.
And there are certain things where you just want to tell the founders hey, here are the guidelines, the guardrails, if you will.
And then the executive, sometimes you just need to have the, quote unquote, intestinal fortitude, put politely, to go to the executive and say, you know what?
You're unhinged.
This is crazy.
This is not marketing.
We're fine walking away.
Peace out.
Love you, but this is not going to work.
You've got to resolve that pretty quickly.
I've seen people spend a month in redlining, and the lawyers love to redline stupid things.
So you really have to have people that are reasonable and set that stage before they even get to that phase of their discussion.
You have to set the stage.
This is what our parameters are.
What are you thinking about?
And if you don't get that alignment in the first couple of meetings, then you really shouldn't go to a third meeting.
It really should happen in theory after the first meeting, but you really want to know.
Founders will stretch for an A-plus person that's a stretch candidate that actually makes sense.
It's not an overhire, and that's wise.
And executives will take a lesser offer from a better company if they're smart, and that's wise.
So it's like trying to find the wiseness axis, right?
The wisdom axis, if you will, where you're like.
Okay, both sides didn't feel like the other one took something from the other person.
It was a fair landing spot.
Fair is important.
The fairness is the key piece.
Because it's the start of a journey.
That's the thing that I think people don't appreciate.
It's true of VCs as well.
But the people that are the deal junkies that just get off to negotiating just everything.
And, at the end of the day, sometimes you'll have salespeople that are successful because they've been successful deal junkies and trying to get these things done.
At their high maintenance.
But they're high maintenance.
And when you find that, when they're negotiating their own employment contract, it's just generally a bad sign.
If you push it too far, then the founder, even if you get what you want, be careful what you asked for, because now the founder.
I love this metaphor.
They're going to be like.
Well, you told me you had a blue suit with an S on the chest, a red cape and you could shoot laser beams out of your eyeballs and fly around.
And you can only do one of those things.
And you're not Superman.
And I paid you Superman dollars.
I'm really pissed.
And so that's like a dynamic you don't want to see if you're an executive.
You want to feel like, all right, I'm paid fair market value.
And maybe not when people say we want to do 50th percentile.
It's like it's a walkaway founder.
It's like.
Okay, you want average talent, fine.
75th percentile and above, there's a comp framework at all stages for the 75th percentile.
And I believe that staying within that framework zone is where you want to be.
Any trends on the compensation side that you're seeing right now in the market as we sit here mid-February 2025?
I'd say that candidates are getting a lot more sophisticated around equity structure.
Okay, what are the RSUs?
Okay, now I'm a $300 million company.
I can't do options because the company's worth $8 billion and the 409A is crazy.
So there's a lot of discussion around, okay, should I take RSU and options?
What's the combination there?
Now, when people fixate too much on the details of every nickel they're going to take out of the company, that's a bit of a red flag.
But at the end of the day, the comp, believe it or not, has stayed within some ranges of sanity.
And when you have a desperate company, they'll pay a stupid amount of money.
And I'm sorry, but if you're a stupid executive, you take stupid money.
You should never take stupid money.
That just means the company needs you more than you need them.
Why would you do that?
You should go to a company where you want them as much as they want you.
It's kind of equilibrium there.
So I actually have not seen a ton of comp discussions that are different.
People are optimizing around RSUs in later stage, but there's some issues with that, some taxation issues with that, some liquidity issues with that.
There's some, how do you, when you leave the company, do you get to take the RSUs?
So it gets a little legally tricky.
And the smart companies are late stage.
They've gotten really good about driving their 409As as far down as they can in the last couple of years.
And so I think that you're back to that ultimate question of is this an appropriate situation for RSU?
Is it an appropriate situation for options or both?
But on the cash comp side of things, it's exactly the same.
Has the pendulum stayed roughly equal?
Is just more sophistication on the equity side?
Or is it switched a little bit more?
It's the same.
Yeah.
I mean, some people can be, oh, yeah, candidates want this, want that.
But that's only the undisciplined people that let people hijack the company.
I wouldn't listen to them.
We talked a little bit about different pitfalls and mistakes that founders make.
Is there anything else that stands out or anything that if someone's listening right now and they could take away one two, three points beyond whatever we've talked about for an hour plus here?
Are there other things that kind of jump out that you would love to see founders never make this mistake again?
When you don't understand what you're getting, that's number one mistake.
You really need to understand.
Yes, this person does not shoot laser beam out of their eyes, but they can do this.
And it's not just a short-term, they can do this.
It's they can do this for me now and this for me later.
And they're thinking about it in a longer-term way.
Short-term hiring is a huge mistake, huge mistake.
Because, rotating out your VPs every day, you'll dilute the company at a higher pace.
As you know, by keep giving – you keep giving everybody 1 of the company, 2 of whatever the number is.
They take much of that vesting and then they're gone.
Then you got to give another grant for the next person.
Everyone's taking – so think –
It's like when you look at founders, great founders, they think big and start small.
Same thing with executives.
Think, can this person go all the way?
And really understanding what you're buying is important.
And then the biggest mistake is not really understanding what this person's capability is.
And then the third one is just like being unrealistic about what any human can do within the constraints of your company.
There are certain gravitational constraints.
There might be market related, financing related, board risk tolerance related.
Could be all kinds of things.
Could be competitive dynamics.
And so understanding like what's realistic.
And then at all times, this is the last one.
I know you said three, but I'll give you five.
I think we're on five or six now.
Being pragmatic is number, probably it should be number one, pragmatic.
I don't see tech having a lot of pragmatism in general.
Is this like a reasonable ask?
Am I being reasonable?
Am I looking at this person through a fair lens?
That's a big one.
In a fair lens of what the expectations are with them coming in.
Yeah, and what they're doing.
And do they have handcuffs?
Did you say well look, you need to go out and get in a knife fight, but I'm going to put one hand tied behind your back, but still go out and win the knife fight.
That's not going to happen.
And so you're sending somebody out to fail, just knowing what your own constraints are.
You know, a lot of times I've seen founders actually throw executives under the bus as an alibi for the company missing its target, when it was really the CEO's bad decision making.
I've seen that too many times to count.
And these people end up being sacrificial lambs.
So you could actually, you know, you asked about references earlier.
You got to reference references, understand the context of what somebody's saying about somebody else.
Because a lot of times it'll be like, well, they fired you.
Okay.
That's an easy one.
But you could also reference with a founder who's like, oh yeah, they didn't do this, this and this.
And then you talk to somebody else.
They're like, yeah, but they didn't have a competitive product.
So they got smoked by X, Y, and Z because they had a better architecture.
And so this person was selling a subpar product.
Wasn't their fault.
So understanding that stuff is, I think, important, the contextual story around everybody.
Everybody's got a story.
You have to understand that story as holistically as you possibly can to de-risk or mitigate risk and the blowouts.
That's, like I said, a major theme I'm on right now.
I'm curious, as we as we look forward, we're seeing some businesses grow at exceptional rates.
You've referenced a few of them that have gone zero to 100 billion in two years, or maybe even less in some cases.
As you think about the way that these businesses can actually scale operationally.
Clearly, the demand on the market side is super strong.
But, as you're kind of seeing this, are there – if you're in the hyperscale mode and you're just getting the suction from the market –
To actually make sure that your foundation is intact and that the growth isn't actually going to break the business.
Are there things that you've encouraged companies to think about?
I mean abnormal.
I wouldn't name abnormal security here because I think the company is just going to be a monster.
It looks like an email security.
It's a way bigger thing than that.
And their performance has proven that.
But wait till you see what they're going to do.
And the founder was obsessed with building internal processes from day one.
He knew he had a monster product that was going to smoke all the incumbents and there already are and blah, blah, blah, blah, blah.
But he thought about processes that would, that would take complexity out of the business early and often and enable them to be a high margin business from day one.
And they just hired a world-class CFO a couple of weeks ago.
And so they thought about it very early and very often.
So I do believe that building some thoughts around internal processes early is important, because too many companies hit the wall because they're scattershot operations.
They're just under this kind of a goat rodeo.
You look at these things, you're like, how do these people even get anything done?
They're totally dysfunctional.
And that doesn't really manifest till later.
You're just so focused on converting customers related.
Can you get your product into production?
Okay, fine.
You got a product in production.
Can you sell it?
And then you start getting some, you know, ramping some sales.
A lot of these companies that I could.
If you look at the leadership teams of extremely high profile companies out there and you say what is the evidence that these people have ever done anything interesting,
Now, of course, the CEO might be world-class at training them up.
They might have a board that's training them.
There may be things going on externally that we can't see.
I do think that a lot of these companies are held together by bubble gum and duct tape, and that's a little alarming given how many –.
Venture dollars are flowing into these companies and the velocity and the price points are like.
There is no investor thesis there.
There's nothing there.
What are these people thinking?
They're just playing an AUM game, the VCs are.
And it's pathetic.
The LPs will pay a very dear price for that insanity, that recklessness.
And so the founders that you want to back are people who have this one founder, This company, called.
We'll name it Plentful.
Really interesting company automating pharmacy back operations and really clunky healthcare operations.
Very interesting workflow products.
And the founder thought about unit economics from before she started the company.
And then they barely touched their A, went into a B. And this is a very well-run company.
It's a vertical SaaS company.
And so you go, okay, well, is that a real business?
Yes, it is.
Another one, Acuity, that we love.
Mike, I mean, he's a real business person.
And he thought about process early on, built the leadership in the Series A.
That leadership's still there.
That could be a team that goes all the way through the IPO.
And some of these people.
So to your point.
I do believe that if founders aren't thinking about internal processes from first, principles from day one, they're going to end up cleaning up a lot of messes later.
That's a big distraction.
And the bigger you get, the bigger distractions.
We're talking about the ecosystem in general.
I guess we sort of have this.
I mean, almost everything's getting stratified in some way, shape or form.
And we have, you mentioned, the people that are AUM seeking potentially, versus the people that are a little bit more boutique-y in nature in terms of how they're going to market.
We also have the DAI companies, that some of them are growing at an exceptionally high rate, and we have more of the traditional kind of enterprise software businesses.
I'm curious, I guess, as we sort of zoom out a little bit in your role of looking at both the talent side as well as the VC side, I'm curious what your more meta observations of the ecosystem are right now.
I mean honestly.
I think the best words are.
The industry switched from fear to greed after the election.
And you could hate the results of the election.
I'm not going to comment on how I feel about it, but it's like the industry, as you know, switched on really hard.
It switched on last year too, remember that?
For a little bit, and then it kind of went back dormant.
But now it's total insanity.
I just heard about a company this morning with no revenue got marked up to 400 million pre no revenue.
And this is a business that's not an AI company, doesn't have imminent customer traction, is going into a Tufts category.
And we're seeing and I don't know the specific example, but we're seeing people lose term sheets and then come in and mark it up right after the fact.
And so, hey, your A got done, we lost.
Discipline has disappeared.
And so, with that lack of discipline, there's more money flowing in the system than I've seen since 2021.
I don't know if that's the same as you, but I see the same, we are back to that.
It's like, I said the other day to somebody that history does in fact repeat itself.
And so we're in another brand new bubble.
And I don't think that founders have figured out how bad the talent war is gonna be in 2025 as a result of that.
Now the smart executives will say, you know what?
I'm not gonna play that game.
I'm not going to go into the company that has this vanity valuation, this like sexy this and sexy that, and it's 3 billion this, 4 billion, that on minimal revenues.
Like that's insane.
And so the smart ones are going to pick the companies that are well built, built to last and built to that's why i love these you know even things like vertical sass on the side you know data companies whatever security the boring stuff that's those are there's a lot of real businesses that are emerging out of there and as opposed to the shiny new object that just sounds awesome i'm going to leap in the smart executives will actually choose more wisely now than they would have even a couple of years ago because now it counts You know, you've got 50 million software companies.
I believe that there are way more software companies in the world can ever absorb in our lifetimes and in our children's lifetimes.
So picking the winners and losers, okay, the M&A will come back.
IPO market will come back.
But the queuing of 50 million software companies at scale with pretty good economics, gross margins 60 to 80, these are good businesses.
And they kind of own their space, number one or number two.
How many companies will the market accept as public companies?
That's why I said getting your reps down early and make you more interesting.
You can be subscale and be blowing your numbers out of the – beating and raising all the time and grow into some real valuation later.
But right now, I do see that the market has switched from fear to greed, overly so.
And market always has, as you know, a violent swing of the pendulum one direction or the other.
And the last few years were interesting because you thought you could get some value.
Market didn't correct as much as we hoped it would.
And now you have this swing back effect where you're like, oh my God, you can't.
You know, there's a lot of interesting stuff around quality companies, a lot of them.
And there are a lot of companies that don't deserve their valuations and everything in between.
If you're an executive or founder or whatever is the case and we're looking out and you're saying hey, the talent wars are going to be crazy in 2025, combination of venture dollars kind of sloshing around, some of this hyper growth stuff we're seeing in AI.
What are the implications or the considerations you would have if you're a executive or a founder in the seat and you're mapping out your plans for this year, maybe next year as well?
What does that mean for you?
That's a good question.
Everybody's like, oh my God, the market's great.
I need to aim so high and I need this celebrity.
And you're like well, most of the celebrities just made a hundred million bucks over the last thing that went public or got bought for billions of dollars.
Okay.
So what does that person want to do in the next thing?
Are they going to want to go grind through your thing?
No.
So you've got to be like, okay, who's that person?
Who's Erica Schultz before Confluent?
You know, like think about that.
Think about the rising star that's coming into their full bloom.
Think of them as a beautiful flower, right?
And they're starting to really bloom.
And you want the person that's just, the flower petals are just popping open.
And that's the most important thing.
They're well trained and hungry.
If you can find that person very well trained and hungry and if you add curiosity and the will to achieve or overachieve.
And you start looking into okay well, Erica was like a competitive swimmer at Princeton or something like that.
You just kind of look at these people, like who they are.
That's where you start getting into- I'm embarrassed that I think it was Dartmouth.
I'm embarrassed to actually know that.
Something like that, yeah.
Yeah.
But you know, you started looking like, hey, that person's like really special in every way.
They're innately competitive.
Elegant, well-trained came into that role, scaled the business to a billion dollar.
You're not gonna...
You have to be really exceptional to get her to do your company.
So do you need to get out in front?
I assume that's probably the counsel to all the companies right now.
And if we're going to be even more in competitive talent markets, does it just mean you got to get there even sooner on these candidates and maybe lean in even a little bit more to the market, to the risk?
And do you use your analogy like the flower is beginning to bloom maybe?
Maybe you need to do it right before the flower starts to bloom.
In that case Yeah, I mean, you know it's good to be thinking about people cultivating them early, but being realistic that you know in certain situation, I mean it's interesting.
Some founders look at executives and say, you know, I'm going to build a relationship with you.
And that relationship is going to be very authentic and very deep.
It's going to take a while.
Like this situation that I'll name abnormal again.
The way that the founder and his president got together dozens and dozens of hours.
And he was originally approached as a board candidate.
And then just there was this relationship that they built.
And it took a bit to soak, right?
And so executives should be cultivating short lists of people that they would love to have and then having a contingency plan in case those people are like listen, I love you, but I'm just not going to come down and do this.
You got to be 150 million and somewhat close to some IPO before even my skills are applicable.
I'm not going to go out and be the person logging 400,000 miles on United Airlines every year.
I'm just not interested in that.
I'm going to orchestrate the construction of a great machine, but I'm not going to go driving around the track. and um there's a certain reality to that that people get to a certain stage doesn't make them lazy it's just where they want to apply their skills and so founders have to realize like okay what does this person actually want to do and is it the work that i need to get done You can look like a celebrity or look like a hero for going and telling your board you just bagged some Tom Brady, but you're like, well, the guy's 43 years old.
He really doesn't want to play football anymore, but he's here.
We can win football games with Tom Brady.
What's Aaron Rodgers going to do next year?
Would you want Aaron Rodgers on your team?
It's a high-risk thing.
And so he's a great football player.
Does he still want to play football?
Can he play?
I don't know.
I don't even watch football.
But the point is that that metaphor is perfectly appropriate for these founders that are aiming too high at somebody that's already past their prime or doesn't really want to work on the stuff you need to nail down in the next couple of years to be a world-class company.
I want to give you a little bit of an opportunity to plug you guys and what you do.
And I guess the question I would ask to that end is one What do you see as the key – we've talked about a bunch of them here, but the key components that working with a search firm provides.
Because sometimes I fight this battle where it's like, can't we just do that ourselves?
Yeah.
Sometimes yes, sometimes no.
But I have my articulation of what a search firm value is, but I'm curious that one.
And two.
Then the second one is a premium search firm and not just okay, I'll do the search and I'll get the person that's the cheapest, or bottom 25, or I'll pick the wine that's the middle price.
I don't want the premium price wine and I don't want the super cheap wine.
So maybe go on that a little bit and like how founders should think about these things.
I mean, there are search firms for everybody.
We have really high quality competitors.
And so what I would say the best search firms do is that they don't take on just any client.
And here's why.
You have to think about your value proposition, not just about facing VCs as more like a channel to get you in front of interesting founders.
That's what a lot of recruiters think of as VCs.
They build a relationship with the VC, hoping the VC will introduce them to a bunch of founders and then they'll get business out of them.
The most important thing to think about is why does that search firm have a brand with a candidate population?
Is there pull where that, you know, because recruiters, anybody can be a recruiter.
It's not that hard to just jump in the recruiting industry make a bunch of calls, hustle some candidates, throw some stuff at the wall, see if anything sticks.
What matters is when that search firm can actually get that candidate to take your offer over the other four or five that they have in hand, because that candidate actually believes in you.
And that's where specialists have crushed everybody else.
If you're a generalist still, you are on your way out of, you're just not relevant.
And I think you know it doesn't matter whether you're working for public companies, private company.
You have to be like if you're doing go-to-market, you do marketing sales, maybe customer success.
But you should really be focusing on two, not three.
And if you're doing engineering, it might be engineering product or just engineering or product whatever.
But you've got to really natively know these executives and have pull with them.
And how do you have pull with them?
By showing them good companies.
So Artisanal.
The way we thought about it was like we just went to the major VCs and said look, you give us your best companies.
We'll make sure, we'll kill ourselves to make sure they're great.
And we'll only work on a handful of searches at a time, because we don't have bloated office space but millions of HR people running around wasting money and time, and VPs of strategy and all kinds of nonsense.
You think about where do you spend money?
The money needs to flow to the people running the project so that they don't have an incentive to do 30 projects for 40.
It's crazy.
Some of our competitors will do 20 to 30 searches at a time and give clients about seven you know six 7 of their mind share on a good week.
You want people being like, I'm going to be an extension of you.
And I'm going to take your company as if it's my employer feeding my family.
And I'm on an existential mission to make your company gigantic.
So whenever I see people mailing that in looking for contracts, it's kind of stupid.
You can pay more for a search firm.
That's premium, that has pulled the candidates and know that you're going to get more of their time and the influence, because you're really paying for the influence.
And founders don't know, they don't understand that.
They think, oh, okay, well, this search firm did 85 searches just like the one I want to do.
Okay, I'm going to hire them.
What they don't feel is the search firm asking them really hard questions, early and often to know whether they even want to take the search.
Because it's low integrity move just to take a search to get a contract.
You want to be like I'm taking this contract because it's opportunity cost for me to do this work for you, Mr or Mrs Client.
You know, I could be working for some other company.
I might be able to put my capital into it or just not take a fee and just take the stock.
It's a huge opportunity cost to work with riffraff companies and your candidate brand sucks.
So if you have no pull with that market, what is your actual value?
LinkedIn has democratized access to executives, what is it, 15 years ago?
Google kind of did, but then LinkedIn really did.
And now there's a bunch of AI that can get the answer to the best 17 logical candidates in the market.
So you can get to that answer in about three seconds.
It's really about...
The rubber meets the road when you influence that candidate.
You know everything about that person.
The only way you can do it is a specialization approach.
Does that mean there's actually a point of not just diminishing returns but also like maybe, negative returns of someone that's done too many of those searches, because it starts to be maybe a little formulaic around certain –?
Yeah, absolutely.
I saw a CFO search done recently up close and personal.
I won't name the situation because I don't want to trash the competitor.
I really like the competitor as a human being.
But that person has hired millions and millions and millions of CFOs.
So the person couldn't go after anybody because they'd already hired everybody.
So this other group...
I will say that is my partner.
Christine's her name.
Very interesting person.
She does a CFO search, very high profile situation, lands a superstar in about two months.
The other search firm took nine months and landed a person that was fired in 45 days.
Because it was just, there's no access to market.
So you're absolutely right.
The girth and size in any space can be a liability.
That's why we're trying to stay small, trying really hard to stay small.
It's kind of hard, but you have to try.
So when we were prepping for this, you mentioned one of the things you've been thinking about is the need for founders to have different mindset shifts, and they've been.
Probably some founders have been steady as they go over the course of the last whatever five, 10 years, and now we have this Whole new growth expectations, new companies being started at an increased rate, new capital that's going into the market.
I'm curious what your thoughts are on that.
Well, I mean, for the last few years it's been pretty reasonably easy to get people to talk to you and get people to take meetings or whatever, because everyone was grinding.
No one was having any fun.
And now this market is not just forget the greed aspect.
The market is going to be much more lubricated.
It's going to be more easy to sell things because people are in this, okay, deregulation is coming.
Market is going to come back.
Forget the stock market.
It's just like the buyer environments. are going to be a lot more accommodating.
And as they become accommodating, it's gonna be more fun.
And so, all of a sudden, all these companies have been financed, or refinanced, or new capital whatever.
And that means, Usually a hiring spree is followed by a financing, as you know.
And what's happened is that founders haven't really a lot of founders haven't really adapted to the reality that hey, in my situation there might be only five people that make 20 total sense for me.
And I need to go find those people and obsess about them for the next few months, as opposed to shopping and like I'm at Walmart and just trying to find the best product at Walmart.
Like I need to go to Dean and DeLuca and cherry pick the best organic raspberries that they have.
And I'm going to pick through those raspberries to get the best five.
And I'm going to eat one of them.
And they have to be thinking along those lines and urgently, like you've got to build that talent mechanism early.
But you've also got to be thinking, like I always love this metaphor too spearfisher person.
As opposed to throwing the net in the water and just picking through the rubble that you get, you know the flat tire, the shark though, whatever you didn't want to catch, you have to get in the water with a spear and aim it at a certain target that you know presumptively going into it, that you want, and go after those people and focus hard.
You can't think like a shopper, you gotta think like a buyer with very discriminating tastes, And not enough founders are making that mental switch to understand that they're all of a sudden, like I said in World War V, talent-wise.
It's crazy.
Our search firm is getting 40 inquests a day.
I mean, it's insane.
We can't even respond to all the demand.
And I know our competitors are doing fine, too.
The demand pull is extremely strong.
And that's obviously an indicator of the macro meta situation that we're in.
And I think founders have to adapt to that really quickly.
It's not going to be easy to get people and you got to focus like crazy on the best people for your situation.
Anything else?
No, man.
I'm just really enjoying being here.
Yeah, thanks for doing all this.
Always a pleasure.
