A year ago, Hyde Park Venture Partners had 3 employees who sat 3 feet from each other. There were 3 combinations of communication pairs: Ira, Guy; Greg, Guy; Greg, Ira. We had $25M under management in one fund with 30 portfolio companies. We now have 7 employees in two offices. There are 6 x 7 = 42 communication pairs! We have 40+ portfolio companies, more than 100 investors across two funds and upwards of $70M under management. Our responsibility AND opportunity are greater than ever, and increased complexity allows us to manage and pursue both.
As with any growing startup, our startup venture fund needs to manage and adapt to this growing complexity. This requires intentional effort to understand ourselves (self-awareness) and how we fit into our internal and external relationships (social-awareness). So for the first time this year, we undertook a “360 survey” to solicit and improve from internal and external feedback about ourselves and HPVP.
You may be rolling your eyes at the “touchy feeliness” of 360s – are they really worth the time? To be clear, 360 surveys are not about developing “good” or “better” people. It is unclear if being a “good” person even ties to being a good investor – we all know successful investors who are @33 HoLz. Instead, 360 surveys are about molding effective people and teams. Good people are liked, effective people are respected and invited into deals! The values that we believe tie to effectiveness and respect in venture capital are tenacity, responsiveness, directness, and helpfulness, so we tested for these in our 360. Before I share in some detail how we did our 360, I’ll cut to the chase. Here is what we found:
Me: I am pretty direct and action oriented – something I know and like about myself and that is consistent with our firm values. However, this can lead me to push for a decision or action too quickly before others are on board or all the data are in. A few of my fellow board members shared this. I am also occasionally too blunt with entrepreneurs at a cost to my personal and our firm brand – one respondent cited my abrupt end to phone calls when I lose interest. Not good! These are areas I will work on in 2016.
HPVP: As a team, HPVP has made a lot of progress towards our brand and partnership goal of being the “go-to” Midwest early stage tech fund for entrepreneurs and investors, starting from nothing in 2012. How do we know? Our Net Promoter Score score averages in the 60 to 75% range depending on constituency. That’s pretty good when you consider 95% of our job is saying “no”. However, the survey rightly surfaced that we need to be better at evangelizing what is unique and better about our approach and our portfolio. Of course a giant exit would help with this (working on that…), but in the mean time we need to build our brand as thought leaders in early stage tech: blog more, speak more and help our companies more.
This feedback has also helped us prioritize our resources in a growing firm – our most recent hire, Jackson, runs our firm marketing, and our next hire will spend a lot time on portfolio needs.
Can you afford the time to do a 360 in a startup?
You can’t afford not to… at least at the right stage. I don’t think 360s make much sense at the seed stage. If you can’t sit across from your one or two co-founders and hammer through issues, it was never meant to be. But as a company grows into Series A and then to Series B, you add more senior leadership, a management layer and lots of “doers” at the bottom. It is here where things get complicated, and balancing the needs and views of many constituencies needs to by systematized. Many startup leaders are also in roles far beyond their experience set, which requires moving up the learning curve very quickly as the company evolves. An annual 360 can help startup leaders avoid being left behind – and, indeed, the act itself of soliciting deep feedback builds credibility.
What do people think about you and your team? Do your own 360 and find out. A how-to is below, and if I may help anyone in working through this at their own company (startup or VC), I would be honored.
Drafting: Measure twice, cut once:
We spent significant time planning for the survey. As a team with largely external constituencies – investors, entrepreneurs and co-investors – we were about to ask a number of precious relationships to commit real time to a long survey. We wanted to get the survey right and have it count.
We are lucky to have among our advisors Todd Richardson, entrepreneur and former Head of Talent at ExactTarget, and Gregg Kaplan, Partner at Pritzker Group PE and founder/long-time CEO of Redbox. Both have spent their careers building teams. Todd and Gregg helped us form a set of questions relevant to our investing roles and relationships. You can see the full set here. We considered using a number of 360 survey tools out there, including Halogen, Selfstir, Spidergap, and Decision-Wise, but found that they were either not customizable enough for investing roles or too expensive. We went with Google Forms. This created a higher analysis burden on the backend but worked seamlessly for writing and fielding the survey. Of note, we also included a Net Promoter Score question for HPVP overall. If you plan on doing this across a larger team than ours, I’d recommend using one of the providers above to reduce post-processing effort!
Fielding: Be intellectually honest in choosing your survey recipients
Each employee going through the survey process chooses their own “reviewers”, so there is a bias to pick people whom you think are big fans of your work. First, you might be surprised! Second, this defeats the purpose. Instead, we set expectations with our team about what types of people needed to be included. In our case, a mix of each other, co-investors, entrepreneurs, investors and advisors – in all cases people with whom we work regularly enough on important enough activities that the feedback would be both informed and material to our roles. Each person picked 15 to 20 people in these groups. This is the personalized email I sent:
Feedback at HPVP is essential to our evolution as a firm and to my evolution as a person and investor. You are one of the people outside of HPVP with whom I work with the most, and I highly value your opinion and feedback.
Would you be willing to provide detailed feedback on me and HPVP? The survey will take about 20 minutes, and I am looking for earnest feedback, so please be honest and direct. For questions that don’t apply to our relationship, please just select “NA”. I cannot thank you enough for helping me with this.
If you are willing, thank you for filling out THIS ANONYMOUS SURVEY by 5pm on Jan 29.
Please let me know if you have any questions and thank you again.
If you choose people with whom you have real relationships, response rates will be very high despite survey length. Our firm-wide response rate was above 75%. For senior leaders of a startup, I would expect constituencies to include some combination of peers, direct reports, manager, board members/investors (for CEO and CFO), customers, and channel partners. We also filled out the survey once each for ourselves… our self-review.
Analysis and sharing: Synthesis in one place forces discussion, acceptance and action
With about 60 responses for 5 people, it was time to crunch the numbers. For our ten sections of questions (Problem Solving, Board Work, etc) we created an analysis block that looked like the following:
Included are question, # of respondents, average score for all respondents, average score for internal (HPVP) respondents and then self-scores. The analysis also has a column to subtract overall score from self-score to see if we have blind spots (places we rate ourselves higher than others rate us). Since each question was a set of statements about the reviewee that respondents either agree or disagree with, we quantified those responses as Strongly Disagree = 1, Disagree = 2, Neutral =3, Agree = 4 and Best in Class = 5 and then averaged across all responses for a statement; NAs were ignored. A block of detailed comments rounds our each section of the report and is often where the richest and most useful data lie. We did a similar analysis for our firm-level feedback, largely focused on outside views of our brand and partnering acumen.
This analysis yielded a 360 report for each of the five of our investing team and one for the overall HPVP firm. In prep for a facilitated working session on the results, all six reports were distributed to all five reviewees and our facilitator, Gregg. We were asked to read each report head to foot and come prepared with thoughts on the following four questions for each reviewee (including ourselves) and HPVP overall:
- What are their three best strengths?
- What are their three greatest development areas?
- What surprised you?
- How can the group help the reviewee improve?
- What actions should be taken by or for this reviewee in 2016?
When we sat down to discuss, we had an open conversation about each of these questions for each person, facilitated gracefully by Gregg. It took four hours, but was some of the best time we’ve ever spent together. While much of the feedback and impressions was not new, getting it all synthesized methodically in one place forced us to accept it as real and systemic, not as off-hand comments to be dismissed as exceptions or anecdote.
The purpose of the live session is not to beat people up on flaws – or necessarily to change the flaws – it is to understand them and how a team of people can pair weaknesses against another’s strengths. As an example, one of us tends to fall in love with deals more than the rest. In many ways that is a strength because it leads to very strong bonds with entrepreneurs. To manage the risk of love blinders, however, we pair that person on deals with another who is a constant skeptic!
In short Feedback –> Understanding –> Action. Finally, we need to hold ourselves accountable to improvement. We did that by scheduling a follow-up meeting in a few months to check on specific actions, and we will do the 360 process again in a year.