It’s true, getting talent right is harder in startups than in big corporations. A successfully scaling startup outgrows itself every six months, while a Bigco growing at <15% a year looks the same this year as it did two years ago. In a startup, new roles and a leveling up of experience may need to happen as often as every 6 to 12 months. Startup roles are also more loosely defined than in Bigcos. Team members carry many batons – not just one or two – and roles are fluid. Finding talent that can itself perform and – in turn – find more great talent is hard.
A tech writer asked me recently what Hyde Park Venture Partners looks for in teams we back. While there are many types of successful teams and CEOs, as I’ve posted before, the common theme is that the best teams walk the talk on talent. In that post, I described the top 5 and bottom 5 talent activities we see from the best and not best startup leaders. Building on that, below is a simple framework that I use as an investor to evaluate teams we’re considering backing. It is similarly useful to founders/execs in evaluating their own senior hires.
The framework is simple. Strong startup leaders have the ability to identify gaps at all levels in their team. They are also willing to fill those gaps – unthreatened by more expert and/or senior talent. Then there is capability. Even if she or he is able to identify a gap and be open to filling it, a startup leader still needs to be able to source, screen and sell recruits.
“T” is for Talent
Our raison d’etre as Series A investors at HPVP is to help position a team for a successful Series B raise. We’ve seen this come down to achieving two major milestones: developing and building a team that is capable of catching a $10-15M check and proving a repeatable sales process that can lever that capital. So we pay much attention to the framework above because it’s half the battle.
Fatal flaw: unwillingness to bring in great talent
Investors can play an important role in helping teams with all of the boxes above, except teams’ willingness to bring in great talent. This is something we screen heavily for in diligence. Has the founding team yet brought in other senior leaders; have they shared meaningful equity with these hires (a nod to value); and are they thinking 6-12 months in advance about who they want and need to hire next? The business will never go anywhere if founders/leaders aren’t willing to level-up, and that willingness is usually there or not. It doesn’t tend to change over time.
Investors can and should help
Aside from “willingness”, other activities and skills can develop in teams with time and experience, and investors can help. Investors, advisors and board members have typically “seen the movie before” and can point out a gap when, say, a VP Sales hire might make sense or when a startup is overdue for a VP Marketing or VP Engineering. We can also help source. HPVP has personally sourced (not hired recruiters to do it) 2/3 of the management teams to complement the CEO/founders at two of our best portfolio companies.
VCs with functional expertise can also help screen top candidates for a role, but beware hiring purely on their recommendation. Founders have to live with the hire every day! VCs are often best at selling. Selling needs to happen through the recruiting process, and a meeting with your brand-name VC can have a big impact on a recruit. I know several “unicorn” exits where the founders cited this as one of the biggest impacts their investors had.
The “T” applies to existing roles too
This framework isn’t just for identifying and filling new roles as a startup grows. It also applies to existing roles (and the people in them) as the role itself matures and expands. These cases typically follow two routes: (1) wrong person in wrong role and (2) right person in wrong role. The latter happens frequently in startups as talent is “leveled up” – often because the original role that held many batons narrows. A VP Sales who by default also owned marketing might (happily?) lose the marketing function to a new VP Marketing. Sometimes it just means moving someone into another better-fit role to bring in a big gun. This process is delicate but when done right helps maintain continuity and culture by keeping a constituency of long-timers in the company. In the case of a wrong person in a wrong role, well… act fast. Here is much more on the tactics of sourcing, screening and selling recruits.