I’ve Spoken With Hundreds Of Potential Employees, Most Don’t Ask Everything They Could

The other day I was sitting in a New York City park, talking to a senior engineer who had an offer from an early stage startup we backed. His questions of me were pretty comprehensive — trying to understand our rationale for investing, getting a VC’s perspective on what they needed to accomplish for the next financing, and most importantly, gut-checking some important cultural attributes which mattered to him. Two days later, he accepted the offer to join!

I’ve written before about how much I enjoy participating in the hiring process and how I try to make it about the candidate picking the company, not the other way around. The candidate I mentioned above did one other thing, which I often employ when I’ve referencing an individual or doing diligence on a company. Finish up with the open-ended “is there anything I didn’t ask about but should have?” (another way of phrasing when trying to get smart about an industry, “If you were doing investor diligence on this company, what questions would you be asking that I failed to raise?”).

I paused for a moment, and verbally ran through the stuff the engineer *did* ask about, to make sure we both had a sense of what was covered. Then I suggested there were three questions that might be of use to him, that he didn’t ask, but which I’d offer up and answer.

1. Has There Been Any Attrition At The Company?

Obviously the bigger and older the company, the more this question needs to be tuned for specifics, but at a young startup (say under 20 people), it’s fine to start with just “has anyone left” and see what the investor says. You’ll learn whether there have been any transitions, and whether they were ‘regretted’ or ‘unregretted.’ It will shine light on their hiring philosophy, how quickly they correct mistakes of fit (if applicable), and so on.

2. When They Raised Their Series A [or whatever their last round was], Did Any VCs Pass and If So, For What Reasons

Here you can understand whether there was a lot of competition and demand for their fundraise, and whether the investment community say it through the same lens. Or whether it was a polarizing deal with firms passing for similar (or different) reasons. This is an “outside-in” view of what the startup needs to accomplish, while similar questions of the exec team should provide you “inside-out” perspectives.

3. Do You Think The Current CEO Can ‘Go the Distance’

While it’s still quite early in the company lifecycle, you can get a sense of how the earliest investors project not just the current competency of the CEO, but their pace of growth and maturity as well.

You’ll notice I didn’t include a whole bunch of basic questions here about the company’s financial details. It’s my opinion that the founders should be the one to share company-specific data, and I trust they are doing so responsibly. I don’t want to erroneously contradict something they’ve said since they’re closer to the day-to-day numbers. One exception is that if a startup I’m repping has fewer than 9-12 months of cash on hand, I need to be able to convey the risk profile adequately to a candidate and share my perspective on how funding will go. From my perspective, it’s irresponsible to bring a team member on board if they don’t know the company will need to fundraise in the coming quarters, regardless of whether they ask directly or not. Many candidates are fine with this risk, especially when the company is doing well and insiders want to put more money in regardless.

What Makes A Culture “Bad” Isn’t Just That You Don’t Like It

I won’t invest in a startup that doesn’t care about its culture. Because a culture is going to form regardless so you might as well be deliberate about it. And it’s with your first hires that your intended culture will be solidified, evolved, mutated, or challenged. So be thoughtful about the characteristics you seek out; the motivations of those individuals; the processes and practices you put into place at the startup; and the behaviors and outcomes you reward. But in talking about culture with founders, I’m very deliberate when I characterize what I believe is a “good” culture vs a “bad” one. And I think we as an industry are very sloppy when we say “oh, Company X has a bad culture” because more often we really mean it’s just one that doesn’t appeal to us and isn’t objectively bad.

“Good” cultures are clear, consistent, scalable, actionable, well-matched to the company’s business model, and legal. By this definition, there are lots of “good” cultures that aren’t attractive to me as a team member. Amazon, from the outside, is a company culture that has always been extremely intriguing to me but where I’ve never felt a gravitational pull. Coinbase, which has been quite aggressive in defining what’s expected of you, isn’t my cup of tea, but I can still appreciate the clarity they are providing for potential employees. Similarly, the ‘holacracy’ style that has been explored by some startups sounds like a nightmare. But that mere personal attraction or repulsion doesn’t make them good or bad.

Some of the most controversial cultures in our industry are kneejerk labeled bad, in my estimation because they aren’t broadly appealing (on the surface) to a majority of tech workers. But so long as they meet the criteria in the paragraph above I’d call them polarizing, not bad.

Bad should be reserved for:

•           Inconsistency in how values are implemented into management practices, hiring strategies, reward and recognition
•           Lack of self-awareness, which prevents potential employees from understanding what that company values, and prevents current team members from improving or codifying practices
•           Incentivizing or permitting illegal or unethical behaviors on behalf of the company
•           In conflict with one’s business strategy and objectives

Are there certain types of cultural traits which tend to increase the probability of ‘bad’ things occurring? Sure, I’m open to the idea that the more aggressive, less respectful, binary-outcome cultures can attract people willing to break rules to win and managers who are incentivized to look the other way, but that’s a risk factor, not a fundamental quality of these systems.

Whether I’m on an org chart or cap table, I’ve historically found that culture is the most difficult part of a company to refactor once matured. Code can be rewritten. Products can be built, modified, sunset. Investors can be bought out. But culture is like super cement that’s oozed into every nook and cranny, often beyond the reach of a jackhammer. This importance is why the categorizing, assessing, and discussion of culture has to be very specific. So that we can understand the difference between effective vs ineffective, good vs bad, and ‘for me’ vs ‘not for me.’

Tough Love, Running Effective Meetings, Making Products That Produce Emotion, and More

Cross-country flights are great times to catch up on newsletters and unread feeds. This week there’s a bunch I want to share with you.

1. How Levels Does Meetings

Levels is a consumer health company focused on glucose monitoring and they run themselves in a very deliberate manner, mostly asynchronous and fully remote from what I understand. Levels publishes a lot of how they work and the above meeting guide is a great overview of system-thinking. Not all of it will necessarily be the right fit for your org, but it’ll certainly produce some ideas

2. Tough Love by Jared Hecht (Fundera and GroupMe cofounder)

Jared’s a really talented NYC entrepreneur who recently started blogging more. ‘Tough Love’ is about being good at giving hard feedback, especially as an investor. As Jared notes,

“The irony is that withholding the truth is the opposite of being founder friendly. There is a market for those who can do this exceptionally well. It’s something I try to do when I invest in companies and work with founders. And to my delight, it’s not just me who appreciates “real-talk.” Entrepreneurs crave it. They may hate it in the moment because it can hurt the ego, but it resonates. When it comes to company building, I want to partner with someone who tells it how it is and isn’t afraid to hurt my feelings than someone who prioritizes simply being liked. In my experience it’s those that dish out the tough love that I’ve grown closest to and admire most.”

Read the whole post and subscribe to his newsletter.

3. Optimism Shapes Reality by Scale.ai CEO/cofounder Alexandr Wang

One of the advantages working at a high quality company provides is understanding what excellent execution really feels like. In this post Alexandr talks about when he felt that first within Scale.ai, how he communicated it to the team, and his philosophy on maintaining it. Not so much with org charts and KPIs, but with goal setting and optimism.

4. Optimizing For Feelings by The Browser Company

An incredibly sharp team that’s doing what the company name suggests: building a modern web browser. Ambitious, yes? The team comes from a ton of different web2 successes (and beyond), and they’ve eschewed a number of the traditional ways of measuring product success. Not just shooting for numerical targets as a true north but rather vibes. It’s one of the things I was getting at a few years back in my own post, We’re Running Web 2018 With Web 2008 Dashboards. And That’s a Problem, so I’m of course down with what they’re trying. And also a personal investor, so skin in the game.

5. Applying the Burn Multiple to Marketplace Business Models by Jeff Fluhr (Craft Ventures)

Jeff modifies his partner David Sachs’ SaaS ‘Burn Multiple’ concept for marketplace businesses. I find these types of analysis really compelling and it forces you to justify why you’re a positive outlier if you aren’t tracking against their segmentation. That’s not to say that it’s 100% correct but it’s certainly directionally right. And Jeff just led a deal we participated in, so I’m excited to hopefully see this play out in that company.

There you go, five of the best things I read on airplanes this week 🙂

The Things to Know When You Lose Your Job In A Downturn

RIF aka reduction in force. Sounds like a Magic: The Gathering card but it’s actually a polite way of saying you’re being laid off. And with the tech valuation reckoning underway, if you’ve been RIF’ed you’re not alone. I can’t tell you whether this is just a few months of rightsizing or a multiyear recession but I do anticipate there are going to be more cuts — and outright failed startups — before our industry outlook returns to half-full instead of half-empty. In these moments there tends to be a lot of content to help CEOs and founders manage through a downturn, but not as much for those team members impacted. So let me take a (non-exhaustive) cut at Things You Should Know If You’ve Been RIF’ed….

NO SHAME. For many people this will have been the first time you ever got let go, and the emotions can be fierce. Know that many of us (myself included) have been in similar situations, and you shouldn’t feel embarrassed. It’s not the end of your career, your reputation has not be sullied, and there are still seats on rocketships waiting for you.

The Blocking and Tackling Basics of What to Do When You Lose Your Job. Our Head of Talent Beth Scheer wrote this resource as an overview of things to consider as you’re exiting a company. Not every situation will apply to each individual but folks have found it very helpful and comprehensive. If you have any questions about its contents or any ideas for things we should add, tweet at Beth.

Some Things You Can Ask For On The Way Out That You Didn’t Know You Could Ask For:

•           Rewrite Your Job Title

Very often at startups your title isn’t reflective of all of your roles, or is quite generic. This is great for company culture (in my opinion. I agree with Gokul.) but it’s not as helpful when you’re suddenly looking for a job. Sometimes, within reason, for the sake of specificity and focus (not aggrandizement) the CEO/your manager at your former startup will allow you to change your outgoing title, so that when you apply for new jobs, it better fits with what you’re seeking in the role. For example, I was sort of a non-engineer jack of all trades when I worked at Linden Lab (makers of virtual world, err metaverse, Second Life). When I left in 2003 we agreed that my final title could be focused on Product and Marketing, since that’s what I was interested in pursuing next. Obviously this can be a bit tricky but in small companies when you have kind founders and you’ve been a great team member, it’s ok to ask.

•           Extend Your Stock Option Exercise Period

The ‘average’ startup offers a 90 day period post employment where you have to exercise any vested stock options before forfeiting them back to the company. An increasing number of companies have created more flexible timelines and in the wake of non-performance based layoffs, can sometimes change the structure for terminated employees. There are tax implications, etc etc and IANAL (or accountant) but be sure to check your stockholder agreement and ask your HR person about this.

•           Prep your manager, peers to be references. Perhaps even ask founder/CEO for a favor chit.

Basically replenish your reference checks. Don’t script their answers for them, but keep them in the loop about what jobs you might be seeking out next, how you’re describing yourself, and so on. If you have a relationship with the CEO or another VP/C-level exec at your previous company, you might let them know that you might need their help. Basically, if there’s a job you’re applying for where you’re getting deep in the process, a note from a previous CEO or executive validating that you’re awesome, that you just got caught up in some hard decisions they had to make as a company, and that they’d hire you again in a new venture, is going to be a pretty strong thumb on the scale.

And finally, two conversations to have with yourself

Even if the job didn’t work out exactly the way you hoped, was joining the company the right decision? If you can focus on making the right decision repeatedly, you’ll be quite successful over time, even if some of the outcomes aren’t perfect. Understand your own framework for decision making and keep it honed for the next choice you’re going to make. Which is…

What do you want to optimize for next? I don’t believe you can start a job search without knowing what’s most important to you. It’s not about pros and cons, but tradeoffs. Figure out what 2–3 qualities matter most to you for the next phase.

Whether you’re heading right back into the job market or taking a break, Homebrew portfolio companies are eager to talk to you when you’re ready!