Regret. That’s the emotion I most associate with Pat Kinsel and his startup, Proof (fka Notarize). Because I remember hearing about their seed round and thinking it sounded a lot like a Homebrew company, but yet Pat didn’t seek us out, and we didn’t have him on our radar. Fast forward a few years and we finally connect via mutual friends and Twitter threads, but Proof is Too Successful for our early stage capital, meaning I admire from afar versus from the cap table.
Pat’s recent blog post “A VCs Most Critical Task” both caught my eye and went in an unexpected direction: helping founders bring on great executives, while simultaneously preventing bad hires. I wanted to talk a little more about his experiences and advice here, so thus a Five Question Interview.
Hunter Walk: You recently wrote “I have decided that an early stage (Series A-B) venture capitalist’s single most critical task is to make certain their portfolio companies do not hire the wrong executives.” Without accusing you of subtweeting a particular situation, what prompted the post?
Pat Kinsel: The pandemic, mostly. The pandemic pushed companies forward 3 or 5 stages prematurely, mostly in response to false or temporary demand. The hardest things to reset are the culture and processes set by bigger company executives who stepped into a business everyone thought was further along. Most of us cut costs and reduced our team sizes, but what we also needed to do was reset how we work. It took even longer to realize we were still running a bigger company playbook, just with fewer people on the field. It was exhausting for the team trying to maintain processes without scaffolding and impossible for executives who don’t know how to run the smaller org. Virtually every founder I talk to wishes they could go back in time, hire stage appropriate leaders, and tackle the scale-up challenges in sequence like you’re supposed to.
I said “mostly.” Beyond issues with stage-fit, we should all be honest that people don’t do real reference calls and bad behavior is often never shared. A good VC should be able to get the truth from their networks.
HW: Talk more about the mistakes you usually see made at A/B startups? Is it hiring for resume vs fit? Assuming the BigCo exec can truly adjust to the pacing of a startup? Have you personally made this mistake – as a CEO or VC?
PK: Yes, I’ve made every mistake as a founder.
If the biggest risk an executive has taken in the past few years is joining your company, they’re the wrong person. The job is making big decisions and more – it’s managing teams through risk and uncertainty and that’s a skill that people quickly lose. Others have something to prove and I think this is the key issue to suss out. An executive now at a big co. who truly built a product or a team from the ground up and now has a vision to do it differently and better might be a unicorn for your business. But an exec who rose through the ranks and now has something to prove to his old company probably is not.
I think the primary difference between executives at different stages is how siloed they are. At a big company, a sales leader probably only lives within that function. In smaller companies, they collaborate as part of a revenue organization. In smaller companies, everyone must work together. Execs might need to span functions. Can they? Will they?
This is why VC intros to executive hires can be so so dangerous. Many VCs know people in big companies who manage something important and try to pull these people out when they might be the dead wrong candidate. The risk aversion that kept them in the big company might get broken when the big fancy VC recruits them, but it returns the instant they’re in your company.
Yes, I also made every mistake as a VC. When I was on the board of Drizly and Lob, I was very young. There are a lot of VCs out there offering advice without any real knowledge, either as an operator or as a VC who’s seen some things. I have no idea how the venture industry solves that problem, but founders need experienced voices to help evaluate candidates.
HW: How involved should the VC get in this process? Is it at the level of meeting candidates before the offer stage, or just in talking through the type of roles and people in a more generalized Hiring Plan conversation ongoing?
PK: Both.
Most founders have no idea what a well running team or organization looks like. They’ve never even seen or collaborated with the functions they’re now supposed to build. At a minimum, VCs should help founders understand what different functions do, how they are run, how they should be compensated, and what common conflicts exist between teams. The issues are most often at the intersection between teams; not knowing this, how can founders ask good questions and find the right people?
Beyond that, I think VCs should be involved until founders can prove they can hire. They should come in late in the hiring process and provide a coaching role – “here’s a concern and here’s how we could get more info to address it.” There is tremendous value for founders in talking to many many candidates and that can’t be offloaded – it’s the predominant way they’ll learn about the actual function and what style or vision they align with. The VC should just be a check at the end.
HW: As a CEO, how do you want to talk about Exec Team quality at the Board level? I find there are really two main points to be clear about – how is a person’s performance, and do you think they can continue to scale in role for the next 18-36 months?
PK: It takes a long time to escape the hero mindset and stop believing you personally have to deliver the results – that team is everything. I believe founders should be completely transparent with their boards about the executive team. It takes a year to find great executives so you must always look down the field.
I’d add a 3rd thing, it’s not just about the performance of each executive and their ability to scale, it’s about the performance of the team overall. Is someone personally great, but holding the group back? Could someone new change the dynamic and up level everyone?
HW: What’s a favorite question to ask a potential hire, or ask when conducting a reference check on someone you’re evaluating?
PK: For a senior hire, “Why Proof?”
If you’re hiring an exec and they cannot passionately articulate a reason to join your company, why their skills can 10x your performance (and thus their wealth), why it’s a problem they feel compelled to solve and a mission they must be a part of… it is the wrong person. They should be extremely well versed in your business. If you can’t find that person, bet on someone earlier in their career with drive. As I said in the blog post you referenced, “a firestarter.”
Thanks Pat! And given that last question, feels appropriate to link to Proof’s open roles.
