What I notice most about Founding CEOs at startups is that they don’t know what they don’t know, and they’re either aware of that or they aren’t. Since they’ve had to rely on themselves to get things done, figure it out and make it happen, they tend to trust themselves more than anyone else. When working with a Founding CEO on an executive hire, here are the three things that prove to be the biggest obstacles to completing the search quickly:
Let’s look at each of these in turn.
1. Availability of the CEO.
If you aren’t able to fit a 20-minute call into your schedule once a week to go over the search, then finding this person isn’t a priority for you. I understand that you have a million balls in the air, I know that the company you are building is weighing on your shoulders. But, I need you to be invested in this search in order to ensure a successful outcome. Searches where the CEO participates regularly close more quickly than those that don’t. We need you to hear the feedback we get from the market, and we need to hear your thoughts on the candidates we are speaking with. We also need your real-time updates on what's happening with the business that could impact the interactions we have with candidates.
In addition to being available for weekly update calls, you need to be available to interview candidates. This is always a huge challenge because most Founding CEOs are on the road quite a bit and every meeting is a priority. The travel piece is always the biggest challenge, especially if you are raising money. But this is what you need to keep in mind, in executive search we are looking at passive candidates meaning they are either employed or they have just exited a company and they are “on the beach” evaluating opportunities. It’s a candidate market and they cannot disappear from work repeatedly to meet with you when you have availability. You have to be flexible, and you must consider off-hour meetings. It’s important that you work with the candidate’s schedule instead of trying to force them to accommodate yours. Not in this market.
2. Access and transparency with the interview team.
Oftentimes, CEOs will tell us that they will gather feedback from the people on their team who have interviewed the candidate. This rarely happens. More often, the CEO will gather piecemeal feedback via one-line text messages or passing conversations in hallways. And typically the feedback is broad and basically boils down to, did you like this person. As part of our process, we meet anyone who is on the interview panel when we kick off a search so that we have a relationship with them, and so that we can learn how they are viewing the role. This gives us an opportunity upfront to let you know if there are people on your team who aren’t seeing this position the same way you are and who might be looking for a different profile.
Now that we know each interviewer, we can prep them pre-interview on what to focus on when they meet the candidate. The focus is determined by you and me on our update call, and then after the interview, we email the interviewer with specific questions that they’re prepared for. That way we get comprehensive feedback and gather that into one document which we can review together.
3. Unrealistic compensation expectations.
This is complicated. Every founder thinks their baby is beautiful, and they want to hire executives who share their perspective and are interested in a higher equity ratio because that means they believe that the company will be worth a lot of money. There is wisdom in that. Of course, in a startup, you need people to be invested in the long-term growth of the business, and they should be willing to sacrifice some cash in exchange for equity.
At the same time, the cost of living is high. If you are looking for executives with a proven track record of success, and you want the years of experience necessary to prove they have a pattern of winning, then you are looking at people in a time of their lives where they likely have bigger expenses, mortgages, cars, kids, schools, etc. They aren’t able to pay the bills with a low cash compensation. When it comes to compensation, it won’t matter how great your business model is.
The people willing to really take that risk and work for a lot less cash are either going to be less experienced or this is their thing and they will have jumped from startup to startup hoping to land on a Unicorn. But in those cases, you will likely be annoyed that someone doesn’t have more than five years of experience or that they haven’t been in a role for longer than two years. So, if you want people to work for less than the market, and take a chance on you, then you have to take a chance on people that aren’t as senior as you wanted or who haven’t hit a big win yet.
There is a lot more to be said about the nuances of these three points and there is more to discuss in terms of what can be done to make better hires faster for startups. But for now, let's keep it more simple and stay focused on the three points I’ve highlighted. Here is the thing, as a search partner, I want to help you find the best person to take your company to the next level. I’m personally invested in your success. It makes me feel good to know that I’ve helped. I’ve always been a good support person, and I like to work with talented people who are doing something great and help them to make their dream a reality.
I’m the same outside of work. I surround myself with people who have big rearms, who are making a big impact on an international scale and I like being there to help out. This isn’t just a contract, it’s not just business. I really want you to succeed. I wish that Founders viewed our relationship that way more regularly. Usually, it takes time and then they understand. They get it when they can call me at 10 pm every night and talk about an offer they are putting together. They get it when I answer a text on the weekend. They start to understand that I am available because I want to be. As a team, we can get it done more quickly. And when we develop faith in each other, we take the chances that are sometimes needed.
What kinds of chances? Chances on candidates. The better we know each other and better the relationship is, the more likely it is that I will say, “Hey this person isn’t at all the profile you wanted, but here is what they have done that makes them compelling, and trust me when I say that this person is incredible. You have to meet them.” Then you say, “Well okay.” And then you fall in love and it is perfect. Years later when that Chief Product Officer you hired out of a totally different industry has made headlines for the work they’ve done in your business, and a journalist asks you about how you came to hire that person- you will recall how you to a chance on meeting them because the recruiter you worked with understood the business so well that she was able to suggest someone who wouldn’t have normally been on the radar.
So, invest the time, let your search partner run point in the interview process, let what you can afford in compensation guide you to the experience level of the candidate, and build a relationship with your search partner. This isn’t transactional; this is a process. One that is usually three to five months long and you will have a better experience and a great outcome if you have a relationship with the person or persons who are leading this search effort. And come on, everyone works harder and more diligently when there is a sense of camaraderie when there is a relationship.