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Demystifying the conversations we're already here at RRE and with our portfolio companies. In each episode, your hosts, Will Porteous, Raju Rishi, and Jason Black will dive deeply into topics that are shaping the future, from satellite technology to digital health, to venture investing, and much more.
Jason: Yeah, where did the ter—you can’t drop smokejumper, which I’ve literally never heard in my entire life, and just walk away from the term. Where did that come from?
Raju: I don’t know where it came from.
Will: Well, I know. It comes from the wildfire culture in firefighting the big wildfires on the West Coast. So, the smokejumpers are just that: they are their fire people who are trained to jump into the smoke, maybe not knowing where they’re going to land, and land upright, and carve a line, and stop the fire in its tracks. So, it’s a great analogy for what early-stage companies really need.
Jason: I was thinking maybe it was in electing a new Pope or something.
Raju: [laugh]. No I—
Will: Different smoke and on fire, but—
Jason: [laugh]. Okay.
Will: Welcome to RRE POV—
Raju: —a show in which we record the conversations we’re already having amongst ourselves—
Jason: —our entrepreneurs, and industry leaders for you to listen in on.
Will: Welcome back to our RRE POV. Today we’re going to be talking about human capital. After raising the money, you’ve got to build the team, and hiring and who you bring alongside you to help build your company is arguably the most important discipline of the entrepreneur. Equally, making tough decisions about key employees and transitions or even, dare I say it, firing is a crucial skill set. So, to kick things off, Raju, why don’t you give us some top-line thoughts on the hiring challenge in building a company?
Raju: Yeah. Thank you, Will. A really important topic. So yeah, I guess the first point I would make is, two of my startups have used this model—I’m sure you guys have seen it—this Navy SEAL model, which is, by the way, the highest performing organization in the world. And they have this matrix that they use.
The first is based on—the first axis is performance. So, high performing, mid-performing, low performing. And the second axis is trust. And so, performance is effectively, do I trust you on the battlefield? And trust is, do I trust you off the battlefield? So, do I trust you with my life, versus do I trust you with my money and my wife.
So, that’s the kind of model that they have. And, you know, obviously, high performance and high trust is ideal, and low performance and low trust is a non-starter. What they found is that high performance and low trust tends to be a toxic leader or a toxic team member, and it’s much better to hire someone with medium or low performance and high trust. And that’s relative. Like, you can’t have somebody who’s just never going to become a Navy SEAL. But low performance in that category, but very high trust is super critical. So, I think that’s one framework to use.
And, you know, so people have asked me, like, “How do you determine trust?” And kind of the best way—because it’s not something that, you know, is on your resume [laugh]. It’s like, “Yeah, I’m really trustworthy.” It’s like, yeah, I can code, I can sell, I’ve hit quota, yadda, yadda, yadda. And I think, like, one of the key ways to determine trust—and you should do this when you’re hiring your initial employees—is talk to the previous teammates because they’ll tell you.
Like, everybody in the organization can tell you who the person to trust is, you know, who has your back at all times, like, who when I’m really got an extra workload, you know, kind of chips in to make things happen, and then you ask the person, like, “Who’s the asshole?” And then they’ll be pointing to you—really quickly, they’ll point to people, and then—I see you guys pointing at me, Jason, and Will—so you know—
Jason: [laugh].
Raju: —like, inappropriate on this call but [laugh]. No, anyway, that is a good question. And this model has been shared with a bunch of folks. But that’s kind of one thing that I would direct early entrepreneurs to think about is trust. You know, would you go to battle and war with these folks? And performance is important, but you know, that can be trained in many cases.
Will: Well, and Raju, there’s a kind of embedded theme in there, which is, you know, all startups that I’ve ever been a part of, or close to really start out as teams, more than fully fleshed out organizations. And you value the skills that people bring, but you also value that commitment to the team, to the endeavor as a whole, and the trust that is implicit in that. You know, early teams, whether they be founding teams, are the first circle of employees beyond the founders, they’re relatively flat organizations, actually. You may have a founder, you may have a CEO, you may have people in nominally in roles like head of engineering or head of sales, but they’re pretty flat organizations, and you’re trying to—you need to bring people into that environment who can be comfortable being strong team members at a level of equivalency, but who are not also going to have a personal ego crisis when the organization starts to grow around them, and their role starts to narrow and be more shaped. So, it’s a crucial thing to have in mind when you’re hiring in those early days.
Raju: Yeah. I totally agree. And there’s one other parameter I would use, I mean, having kind of done this with my first three startups is, when you interview somebody, and you know, there’s three kinds of people, like, you tell them what to do [laugh], and then you have to train them on how to do it. The second is, you tell them what to do, and they got it, right? And the third is, you don’t even need to tell them what to do.
And the third kind of employee, your first seven hires are so important in a startup. You kind of need people that are willing to—that can just see what’s going on, and they’re going to take the ball and, kind of, run with it. And they also become carriers of the company’s culture, and your future leaders. And so, you know, you really got to be cautious about those early hires. And I know people have a tendency, like, soon as they raised the money, go get, you know, every role filled, but those first seven are super important, from my perspective.
Jason: Yeah. Let’s take it in phases, I think, right? Like the early days of building a startup, right, you’re obviously, your co-founders are going to be your highest trusted, right? I think that, like, we’ve kind of reduced it, maybe, the dimensionality a little bit too low from the outset, right? There’s so many more dimensions beyond performance and trust.
And it’s kind of presupposed in finding a co-founder that you’re going to go off and do one of the most daunting tasks, which is go build a company, right? Like, implicitly in there is that you trust the other people around you. You know, once you get to Marc Benioff running Salesforce, right, he’s still running an organization, he might not even know—and he doesn’t know—like, a huge number of people who are working at the company. And yet, they’ve built a—you know, as you alluded to there, Raju—a culture of trust, a culture of accountability, a culture, to a certain degree, of excellence. And that is cultivated early and then systemized, over time, right, into the interviewing, into the hiring questions, into the expectations at work.
But that gradient in between is, I think, what we’re going to be talking about today, which is, obviously your co-founders and the early employees, you have to have—you have to have trust just generally—but the expectations are also really high that you’re going to wear a lot of hats. It’s not performance along a single vector. It’s like, I think a lot of the early-stage people are people who, justifiably, are like, “I’ll just pick up whatever anybody needs to drop,” and it kind of doesn’t matter what time of day, or what task it is, or whether I’ve done it before, I’m just going to jump in. Like, that’s the quality you’re looking for in the first five to ten. Over time, some people will scale, like, continue to scale with the expectations of the company and the demands on the company.
And you know, other times you need to bring people underneath; sometimes you need to bring people on top of those people, and that’s where it kind of gets a little bit more complicated. And obviously, not everybody who starts out at a company or gets hired in the first three to five years ends up going through to the IPO or acquisition. And so, you know, I think it would be really helpful to just break this down, maybe, into phases. Like, the initial team, I don’t think we’re going to have a ton of insights, unless you guys want to share something in particular. But maybe let’s focus on, kind of, the rounds that we focus on at RRE, you know, those five to fifteen million dollar rounds that tend to fall into seed Series A, and then what we’ve seen across the lifecycle of those companies because we remain on the board through exit, and sometimes beyond as well.
Raju: No, I agree with you, Jason. You know, it’s interesting, you talked about the founders. I really like investing in companies that have more than one founder. I mean, I’ve done single founders many times, but I know the challenges of being a single founder [laugh], and getting that second founder in there, not just like to… you know, keep you sane because you’re like, “Oh, my God, the world’s ending,” and the second founder is sitting there saying, “Don’t worry about it. It’s fine.”
You know, VCs sometimes act as that role because that second co-founder doesn’t exist, but they also tend to be what I call smokejumpers.
Jason: Smokejumpers?
Raju: And that’s a, you know, one of them’s running the company, and the other one’s like, “Okay, you know what? You know, customer support is totally broken, and you know, we had to let that VP of customer support go.” And they smokejump into that role, and they kind of keep it—they figure out what’s going on, they fix it, and then also bide your time to go hire that replacement. So yeah, the early employees are super c—and frankly, it’s not just co-founders that do that, you know? It might be your top first five or six hires that have that level of capability, and you know, sort of care and trust at the company. But yeah, we should spend time on that five to fifteen million dollar round if you want.
Jason: Yeah, where did the ter—you can’t drop smokejumper, which I’ve literally never heard in my entire life, and just walk away from the term. Where did that come from?
Raju: I don’t know where it came from.
Will: Well, I know. It comes from the wildfire culture in firefighting the big wildfires on the West Coast. So, the smokejumpers are just that: they are their fire people who are trained to jump into the smoke, maybe not knowing where they’re going to land, and land upright, and carve a line, and stop the fire in its tracks. So, it’s a great analogy for what early-stage companies really need.
Jason: I was thinking maybe it was in electing a new Pope or something.
Raju: [laugh]. No I—
Will: Different smoke and on fire, but—
Jason: [laugh]. Okay.
Raju: Definitely do not know [laugh] whether you’re getting into the fire or the smoke, but you know, we used to refer to that in all of my companies that we started [unintelligible 00:11:28]. “You’re going to have to take a smoke jump into this area.”
Jason: There you go. Sometimes a cardboard jump, Raju. Maybe you can tell that quick story. That was a fun one, early days.
Raju: Yeah. All right, I’ll tell this story. This is hilarious.
Jason: Good one to kick it off.
Raju: So, this was my third company, my third startup, and we were looking for a VP of business development. And I just—I say this arrogantly: we were a hot company in New York. This was Rave Wireless, and we had just raised money from, I guess, Bain Capital and Sigma Partners at the time. RRE eventually invested as well. But there was two investors at the time.
And we were kind of building out the management team, and we had an open role for VP of business development. Man, we had, like, really good candidates come in who wanted to live in New York and be part of the first wave of hot companies in New York. And three people had come in that day for VP of Business Development. This one guy, Dan Rosenberg, comes in. And he’s, you know, Harvard, Harvard Business School, knew everything I’d ever posted on social media, everything I’d ever written, read every article, knew everything about the company.
And, you know, I said to Dan afterwards—and we just built the office, by the way. The office was—we did Ikea furniture, we had assembled it all night. There was a bunch of cardboard boxes sitting in the entryway, you know, piled high. It was like a lot of Ikea furniture. And I said, “Hey, you know what, I’ve seen, a lot of people come through for this role. Like, kind of, what differentiates you?”
And he kind of gave me the standard answers. And then on his way out—he was wearing a suit at the time with a tie—and I just looked at him in the entryway. And I said, “Hey, there’s a cool pile of cardboard boxes. Wouldn’t it be cool to jump into this thing?” And without blinking, he dove, like, headfirst into this pile of cardboard boxes. And I was like, “You’re hired.” [laugh].
Will: [laugh].
Jason: [laugh].
Raju: And he took the job. And frankly, not only is he hired, but he’s now the CEO of one of our portfolio companies called Octane11 because he’s good. And that level of initiative was just—a lot of people who knew about our business, but that initiative without any, kind of like, hesitation said, this is the kind of guy that we want. But yeah, it’s a great example [laugh] of that impulse. So.
Jason: There you go.
Will: That is an incredible example. That kind of all-in quality, that total commitment to the mission and to being a part of it all, I mean, I think you measure that a lot in the early days of a company. You kind of want to look left and look right and see people who are as committed as you are. And I find that in good cultures in early-stage companies, they have that, and they treasure it, and they actually reject people that don’t live up to that expectation. It’s a sort of organic quality that great teams develop in growing companies.
There’s a cultural standard as well as an output standard. And you often find that’s some of the most telling evidence you get in a hiring process is when, after the fact, you realize that people don’t quite fit against the cultural expectations that have been—
Raju: Oh, yeah. Oh, yeah.
Will: —established.
Raju: And well, just riffing off of that a little bit, there’s this schema—and Jason, Will, and I have talked about this for a while—which is, you know, how do you manage employees, right? How do you know if they’re fits or not fits? And there’s this, like, simple matrix that I’m sure people have seen about knowledgeable and motivated, right? So, the bottom axis is, you know, you have a knowledgeable employee: you know, not knowledgeable, super knowledgeable, and somewhere in the middle. And then the other axis is motivated, not motivated or motivated.
And obviously, somebody who’s not motivated and not knowledgeable, you kind of got to extract them pretty, pretty quickly because they will suck the lifeblood out of the company [laugh], you know, very, very quickly. They wind up, you know, sort of doing busy work or trying to take credit for things and, you know, just engaging too many people in the company try to learn, but they’re not really motivated to create success. And then there’s this axis of, you know, sort of unknowledgeable, but highly motivated people. And you know, your job as a manager or leader or an entrepreneur there is to teach, and just give them the skill sets to get onboarded and go do their job because they have a high degree of motivation. The third category, you know, sort of super motivated, super knowledgeable, you just kind of let them go, right? Like, you get out of their way, and you really want to be sure that you’re just allowing them to execute whatever they can execute, and you’re not sort of hindering them in any way, or putting too many, sort of, restrictions on how they do their job.
And then there’s the super knowledgeable people that are slightly unmotivated. And that’s a tricky category, frankly, because you got to figure out how to motivate them. Some of them, you’re just not going to be able to, and you got to release them, but others you can figure out, you know, is it an issue with span of control? Is it an issue with growth? Is it an issue with personal issues at home?
And it’s a very nuanced category, but you got to figure that out as an employee as well because just swapping people out because they’re not performing isn’t always the right answer. And so, there’s this notion of hiring and firing. But it takes a lot of effort, as you guys know, to bring somebody onboard. There’s a huge cost associated with hiring and training an employee, and if you’re just constantly going through that rip cycle, you’re wasting a lot of money. So, that matrix is an important sort of characteristic to help young leaders and young managers think through things.
Jason: I think one of the most common ones that we see, as just an example of a critical hire that is easy to get wrong and really challenging to get right, is some form of go-to-market person at the series A, right? Just raised ten million bucks, we have some initial customers, those customers were sold by the CEO, and maybe some of the co-founders, and now it’s time to turn those initial proof points into a repeatable engine. And so, we could talk about other roles, but I think this is, kind of, one of the ones that is first on the list in a lot of companies that we invest in: VP sales, sometimes you get a senior enough person that’s a CRO. And it’s a tricky one, particularly because a lot of companies will still be figuring out their pricing, still be a little bit hunting for their ideal customer profile, and the product is probably changing a lot as well.
And, you know, I know it depends on industry. Some industries, you kind of have to have some industry experience, like healthcare, it’s very tough to come in as, like, a brand new, highly motivated, highly knowledgeable person, and still sell into a healthcare system, versus kind of your enterprise SaaS, which might be a little bit easier where your product is the thing that’s kind of like the most important performance, but you still need to structure a team. Maybe we use that as the canonical examples. Like, how do you even get underneath the qualities you’re looking for, the interview questions, how long you need to take in that process, and eventually, you know, the leap you’re taking as a startup is, eventually you have to pull the trigger, right? You can interview as many candidates as you want, but at a certain point, you need to bring somebody in.
So, I’d love to hear what you guys have seen across your portfolio, and the things that go really well in that process, and things that can go wrong. And also, you know, I think it goes both ways. Like, risk aversion and risk taking. Some people are very quick to hire, and that can be a challenge on the talent, and others that might be a little gun shy, and not willing to pull the trigger.
Will: So, Jason, I think you put your finger on a bunch of the reasons that hiring for this role is so challenging, that first real go-to-market role beyond the founding team. And I think it boils down to the fact that a lot of traditional sales leaders, unless they have been part of early-stage companies many times when they’re thrust into that role, they’re asked to do things that you don’t do in a more conventional, scaled up sales organization. So, you can go from being an all-star achieving sales leader, or sales manager, or VP and a well established company and find yourself in an early-stage company leading go-to-market, and suddenly you’re being asked to do things that you never had to do before, for the reasons that you talked about: because the go-to-market model is still a work in progress; because the initial sales were all done by the founders, and in many cases reflected either their personal relationships or their broad knowledge of the product and the problem or just their raw force of personality. And suddenly, you’ve got to turn that into a discipline, and you’ve got to scale up a sales organization around it.
And so, I think the crucial failure pattern on this one—which frankly, I’ve studied this failure [laugh] over and over in companies—the crucial failure pattern is not to hire someone who’s agile enough of mind, and frankly, creative enough to think nimbly about how you position the product to try in a really disciplined and structured way, different go-to-market approaches, to be a real, almost a student of the various tactics and approaches that could be applied to refining a model that can be executed repeatedly by a strong army of salespeople that you’re then going to go and hire up. It’s a very special, relatively creative in my experience, skill set, and it is often, I’m afraid, more likely to come from the founders or a founder-like person than it is from a traditional sales leader. Anyway, that’s what I’ve seen through a lot of examples of our companies hiring in that role.
Raju: I agree, I mean, I have a slightly different tact on that issue, which is, I think people generally, acquiesce and relinquish the sales engine to someone too quickly as a founder. I think one of the things that the founders have real power in is they know the product inside out, and they also control the roadmap. So, they can promise things to a sales prospect that no sales rep can. And so, you know, my coaching to those teams is, hire one rep, a single rep, and see if somebody else can sell this product. Train them, you know, get them up to speed, give them the tools, but don’t let them change the product roadmap, you know? It is basically whatever’s on the shelf they’re selling.
And if they can do that, then you’re ready for the second sales rep and potentially a management team in that role. Otherwise, what winds up happening is you bring in this VP of sales, they bring in this, you know, organizational-heavy approach, and we don’t even know at that point whether or not, you know, there is a repeatable, non-roadmap-affecting sales engine [laugh] that can go along. So, I agree. I just think, you know, you start with one rep, and then you go from there to maybe a second rep, and then that layer of management can come in to—and there’s three arms, right? Like, if you want to hire a good sales rep—sales leader, you measure them on three things, right: recruiting—Three R’s, I call it—recruiting, rep training, and revenue, you know?
If they can hit quota, they can hire, and they can train people, that’s really the metric by which you measure. And so, you know, I actually—you oftentimes hire the wrong one because they can do one, but they can’t do the other two, or, you know, sometimes they can do two, and they can’t do three. If you can do two, frankly [laugh], you can do the third. It’s usually your weakness is, you can only do one, and either you’re hitting the revenue, but you’re not building the sales organization, you can’t recruit and train, or you can recruit, but you can’t train, and ultimately, you don’t hit revenue. So typically, it’s that triangle, it, you know, turns into a dot instead of a triangle, not a line [laugh].
So, you know, I do have this thesis, and when I coach entrepreneurs, I have this monkey-bar process that I recommend, which is, when you’re doing monkey bars, you know, you don’t let go of the first monkey bar until you have a hold of the next one. And, you know, so when you’re recruiting executives in your company, you kind of want to have someone in mind before you’re, you know, eliminating the prior one, except in sales. I think when you know the salesperson is sort of just the wrong person, you know, they’re going to continue to recruit, and build, and execute that part, that’s where the smokejumpers become valuable, where you get a founder dropping into that role and running it while you’re kind of hiring. But yeah, it’s tough. I mean—
Will: Well, to that point, Raju, as you’re describing this, I’m thinking about all the boards I’ve been on over the years, and probably 70% of the cases, I can recall a situation where we had to talk about a founder doing that smokejumping role into their go-to-market leadership once again. This is such an endemic problem that I used to track the failure rate on salespeople in my companies, and I came to the conclusion that we basically needed to over-hire by a factor of two in scaling most sales organizations. Because for most early-stage companies, the failure rate on sales and go-to-market people, it’s upwards of 50%. And if you take that as a statistical given, like, just as a natural law, until you’re going to reach, call it, you know, twenty-five to fifty million in run rate, let’s say, I think you will actually ultimately save yourself time and money. Because to do this, you have to actually be good at making hard calls on people in a shorter period of time, typically about 90 days. And you have to have a constantly running flywheel bringing people into the system. But if you do it, you’ll ultimately end up with a higher level of productivity.
Raju: Yeah. And just to stay on the theme of sales—and I’ll expand this to customer service—there are pieces of organization which are high turnover. This is just the nature of the beast, right? So, sales is a high turnover organization. Customer service is a high turnover organization.
And one of the tips I have—I have a whole of a whole series of tips for entrepreneurs—but one of the tips is for those high turnover organizations, you should always be interviewing. You should always have a handful of people that you can pull the trigger on because your best salespeople might leave, and leave a giant hole in your sales quota because they got a better job, you know, with paying more money. Or a person that you thought was decent and workable just isn’t making enough money in your organization, and they take another job. Or you find somebody who’s really a poor performer, and you cut loose and all of a sudden, you’re like, “Who am I going to give all these leads to?” You know, who’s going to work these, you know, deals that are a third of the way through the funnel?
And you know, same thing with customer service where you’re like, you know, we have a ratio of how many customer service people we have per, you know, revenue, or per number of accounts, and if you’re left holding the bag, and you don’t have somebody in the funnel, you’re asking a lot of people to step up real hard, and it’s a big mistake that people do. But those high turnover elements are areas where you continuously want to hire. And frankly, a good VP of sales, a good VP of customer service is always going to have a queue of people ready to go. And that’s just another mark of somebody who is out there. So.
Jason: Yeah, and even just, I think, you know, we’ve focused on the go-to-market because I posted as, like, one of the most common ones around our investment period, but you know, ultimately, I think hiring is about leverage, and part of that leverage is also back to the trust component about delegating. I think there’s also—we’ve had CEOs who have controlled a portion of the overarching company, or the process, or what’s produced, kind of holding on to an aspect for a role that they’ve actually hired for, and they’re trying to—you know, it’s sucking a lot of their time. They have to kind of remain at this increasingly abstracted role as the company grows. And in order to get leverage, you need to delegate, and you need to be able to push off a task to somebody that you trust to get that task done. And as you grow, you know, getting that task done might be, you know, to a VP of sales who has four AEs, and eventually that’s a CRO, you know, that has a VP of sales, VP of marketing reporting in, has customer support under there, and it might be 50 people under that, right?
And, you know, you’re kind of constructing this model of trust and delegation as you’re going along. And it’s tough when you have kind of weak links. It also becomes increasingly apparent, particularly in these very measurable roles, right—Raju, you mentioned kind of the Three R’s—like, you know, if you’re falling down over and over on revenue, it’s pretty easy to see. There are good reasons, right? You know, like, we’re completely re-architecting the product right now because we thought we had an ICP, we’ve hit the boundary conditions on that ICP, and it turns out, we need this other big feature that is just not going to be available for six months. As your expectations shift and the organizations grow, that’s what makes it really critical in bringing people in and being able to delegate because that’s where your leverage comes from.
Raju: Yeah, I agree a hundred percent.
Jason: Dropping the mic. There we go. Should I drop the mic, or… okay, no.
Will: [laugh].
Jason: [laugh].
Will: So, we’ve pushed a lot on the hiring in the go-to-market area. I think we should push on leadership, and engineering, and technical leadership. And I’ll posit that many of the companies that we are involved with have technical founders, and the whole premise of the business comes from the recognition that there’s a problem out there that can be solved with a product that’s innovation-driven or that capitalizes on a new wave of innovation. And I feel like all of my companies go through this maturation curve from, we can do really cool stuff to we can do amazing stuff that we also deliver at very high quality, on time, that is commercial grade [laugh]. And there’s—development, software development, engineering development, is a function of human capital, talented people that you bring together, and within that community that you bring together, you’re going to have both: you’re going to have great innovators, and you’re going to have people who are really good at managing to a schedule. And I’m curious what you guys have seen in the hiring journey and on the technical leadership side of the companies that reflects that.
Raju: Yeah. I mean, it’s a really, really good point, Will. I mean, the… [sigh] you know, this comes back to one of those things that I give tips on. It’s just interpersonal skills and salesmanship in every role. I think when you want to hire a really good leader, or a set of leaders in the engineering or technical arena, they can’t just be task-oriented. They have to be, kind of, mission-driven, and, kind of, think through holistically where we’re headed because a lot of the technical work is figuring out what to say no to and how to sequence the business in a way that is appropriate.
And so, you know, you can get technical leaders that are, like, “Yeah, you know, I can do all of that.” You know, scope, time, and resources is the triangle, right? You give me more resources, I can do more, right, in the same amount of time. You know, you decrease the scope, I’ll get it done with the same amount of time and resources. And so, that triangle is super important to measure. And it’s the sequencing that becomes more important. Let’s say, the scope, the time horizon is fixed, you got to get something out by this date, you’ve got this many resources, you can’t change that, and now it’s just not—you know, the scope is—the way to partition scope is to create a roadmap.
And the best technical leaders will do that in a way—they have the understanding of the sales organization, understanding of the customer, and the interpersonal skills to, sort of, help sequence the business appropriately. And, you know, when you’re looking for an individual in that role, I think those are the types of questions you want to ask. How have you approached problems in the past where you’re being asked to do something with a limited time window, and a limited resource window, and it’s unachievable? Like that is the single greatest question I would ask a technical resource on how they manage that process, with the CEO, with the VP of sales, the head of marketing, the head of product management. And that to me will determine a lot about whether that’s going to be a performant individual in a company. So, that’s a tip I can give, right? I mean, I got lots of tips that I would give people when you’re hiring, but you know, the sort of the technical roles, it’s juggling that piece of the equation that’s hardest, and that question will give you a lot of insight into how they approach the problem.
Jason: Yeah, I think it’s a really good point. Like, briefly, you touched on in there, you know, kind of every role is not a sales task, but it is an articulation of value. And I do—I think, in our product-market fit podcast, I talked a little bit about you know, you have product-market fit if your customer can pitch you the product, and it aligns with what you think your product is, the value it drives. And a little bit of a prerequisite in there—and it can get lost in the fray as you’re kind of scaling an organization—is, like, what are we all doing here? And I distinctly remember a friend of mine, who was at a—I won’t name the company, but just a large, now publicly-traded healthcare company in New York, who recognized this, kind of, misalignment across the C-suite and the VPs.
And she went in and kind of proactively interviewed each person, like, you know, what is our mission? What are we doing? What are your priorities? What does that look like? And then and collated all of that information and, kind of, presented in one presentation, like, how slightly misaligned each one of the functional organizations within that group were a little bit at odds or heading in different directions.
And I think maintaining that alignment over time is really important, and being able to—you know, if you can’t articulate it to your own employees and the people you’re bringing in, it’s going to be very difficult for you to articulate very succinctly to the people who you’re asking to pay for your product. And, you know, I think there are some things in a company that feel very fuzzy, but have a real purpose, and one is mission. And there’s a lot of things that kind of, like hang off of a mission, and it can seem very like a fluffy statement of like, “Oh, here’s what we’re doing in the world,” but I do think that does really influence how people, number one, fit within the organization, how they’re motivated, but number two, needs to really be reflected in the way that you continuously reinforce, like, why we’re here, and making sure that as your company scales—and it can scale very rapidly—that, you know, growing an organization and making sure we’re still all rowing in the same direction is super important. And sometimes it’s a function of, like, we’ve hired the wrong talent, which is one thing, and the other one is we’ve, kind of like, a little bit lost sight or haven’t reinforced the things that we’re really trying to achieve. Which isn’t exactly a tip, but I do think it’s indicative of, sometimes, issues that you might have within the company, and therefore that will translate into how you’re able to actually scale your product in the market.
Raju: Jason, I think that’s an incredible point. And you do see a set of companies where, you know, there’s just a massive rotation of executives. Just a massive rotation of executives. Like, you sit there as a board member and… confidant, and you’re watching, you know, like, hey, you’re just hiring, you know, like, best-in-breed folks that look, like, good on paper, but they’re just spending a year and gone, right? And it’s like, they feel good.
And it’s like… and part of that problem is that, you know, the company is just doing a bad job of imparting culture and mission into those folks, and they tend to feel like they are a surgical hire there to execute, and it just becomes a giant mismatch. And it brings me to one of my tips. I got, like, five or six that are, like, don’t ever forget these tips. You know, one of them is that you’ve already touched on: interpersonal skills and salesmanship because everybody in the organization needs to sell for their budget, and their people, and you know, really understand the business, so they have to have the interpersonal skills and the salesmanship.
But the second is, like, don’t short shrift the onboarding process. And that onboarding process, like, you can hire an executive, and you can hire a team member, and you can throw them into a role. They’re like, “Oh, this person’s the best customer service rep ever created, and they worked at this company and blew the numbers away, and this salesperson was great.” If you don’t have a good onboarding process that not just trains the individual on the company’s product, and their role, but also that mission and culture of the business, you are going to burn out that—you’re going to lose them, right? A, they might not be productive for a year [laugh], you know, as opposed to, like, three months, or two months, or a month.
And that’s number one, but the worst case scenario is they just never fit because they just don’t understand what the company’s long-term objectives are, and how to make the appropriate trade-offs. So, that onboarding process is just as important as the hiring process. And I think people just leave it out, and they say, you know, just, “We’re a startup. You learn to fly.” Just, you know, throw him into the woods, and you know, here’s—
Jason: Smokejumper.
Raju: —you know, just watch the next guy [laugh] [unintelligible 00:39:09].
Jason: Yeah.
Raju: I mean, and that’s bullshit.
Will: You’re totally right, Raju, and you need to do that process well to impart all that has been learned so that people don’t have to go and relearn things, and waste time and money in the growth cycle of the company. So, it’s actually—a good thorough onboarding process is actually about the ultimate efficiency of the scaling organization.
Raju: Yeah. I’m going to jump in a couple of tips here, and then we can—you guys can chime in on them, if you don’t mind, just because I think, you know, we don’t want this podcast to be… four hours [laugh]. So, one tip—another tip I’ll give folks is hiring for potential, not just track record. So, I think everybody says this, like, what’s the headroom of that individual because, especially early on, those people might become managers of that business, and it is an important barometer. Eventually you don’t do that as much.
But one tip I have for folks—and I used to do this all the time—is ask the individual interview questions from the next level up. Like, if they were the manager of that organization, how would they handle this particular situation? And it usually catches people off guard. Like, I didn’t think I was managing anybody. I thought I was running, you know, sort of X, or doing X, or doing Y. But if you ask them a question from that next level up, and, you know, A, you feel how they react, and you know, everybody’s not going to be a fit, but you’ll determine a lot about how they think about that role and the upward potential of that role by asking that question. So, just a tip.
Will: I think that’s a great one, Raju. I have my own version of it, which is that I love to hire people who are in the process of becoming the role that they aspire to. You know, startups run on life force, they run on human life force, and if you can channel someone’s personal ambition about reaching the next level in their career, or becoming and fulfilling a role, you can often get just an enormous amount of leverage in the growth of the business. And so, your point about hiring on potential, my version of that is sort of, okay, I want people who are going to become the thing that they most want to be in this role.
Raju: Oh, I agree. Another tip I have for folks is just—and you guys can chime in—but interview ratios, right? When you’re hiring for a role, it’s a minimum of four-to-one, right? Four people before you hire one. Sometimes it’s, like, twenty-to-one. And I’ve heard people do fifty-to-one for, like, COO, or, you know, C-level.
But there is this notion of you don’t really know what great is until you’ve talked to enough people. And so, I know it’s easy to get a referral from a board member. You know, I know a lot of people because I’m an old guy, and I’ll refer somebody to an executive, to a CEO, and they’d be, like, “Yeah, I hired him.” I’m like, “No, no, no, no, you still need to interview five more people.” Because, you know, cultural fit might not be there or whatever. I think that’s super important. I don’t know if you guys feel the same way. But I do.
Will: It’s a numbers game.
Raju: It’s a little bit of a numbers game.
Will: And you have to be disciplined about it.
Jason: You said we’re not supposed to be here for four hours, Raju. Don’t get me started on interviewing ratios.
Will: [laugh].
Raju: Okay, fine, fine. Another tip I’ve got is, if you’re just not sure, sometimes you can try before you buy, and bring somebody in as a contractor for a month. I know it’s hard to do at executive level positions, but when you’re early in a business, that cultural fit becomes super important, how they react becomes super important, and you can bring people on a contractor basis. That’s another tip.
Another one I’ll give you, just because of time constraints, is you got to know when to start hiring middle management. This becomes super important. Like, you’ll have a very flat organization, and you know, all of a sudden, three people are reporting in a particular organization. When do you hire that middle manager? And it’s not always a smart idea to, like, take your best customer service rep and make them the manager of customer service, and your best sales person and make them the manager of sales because they don’t necessarily have the skills to do it. So anyway, I’ll open that topic up because that’s a hairy one. A lot of people do this, you know?
Jason: Yeah, I think it just shouldn’t be the default, right? Everybody—just as much as, you know, kind of gets back to Will’s thing. Like, startups are filled with ambitious people, right, who do go above and beyond, beyond their years, beyond their this, than that, then the other thing. But there is a certain amount of experience that you just need in roles, and you know, can you afford to have somebody learning on the job? That is something you want to enable, but not over-enable or you can kind of get into some hot water, particularly because, you know, if you do make that promotion, and take a big bet on someone, there’s no going back from that, right, and then you might have actually just kind of created a situation where your best customer support person has been put in a position where they’re performing in a brand-new manner, in a high pressure environment that isn’t good for them, and it’s not good for the company.
And it’s really tough, just socially and within the culture of a company, to step down from a role and go back to another layer. And so, what you’re doing is, kind of, beyond just, like, company performance, you’re also kind of like sometimes teeing somebody up. Some people can step up, but if not, it’s a bad situation for everybody, which is unfortunate.
Raju: Yeah. You guys ready for Gatling gun, or should we—
Will: Yeah, let’s do it.
Raju: All right. So, this is part of the, you know, every episode where we, kind of, just ask, I guess, the other partners a couple of, like, just simple responses to simple questions, and it should be relatively quick. All right, so what’s the best, highly competitive workplace movie that you have seen? And you can choose from Squid Games or Hunger Games.
Jason: Jeez.
Will: Wolf of Wall Street.
Raju: Ohhh… that’s good.
Jason: Squid Games really gets to—it cuts right to—
Raju: Highly competitive.
Jason: [laugh]. Highly competitive.
Raju: Highly.
Jason: Love it.
Will: There’s a write-in element in Gatling gun, for our listeners.
Jason: There is.
Raju: There is definitely a write-in.
Jason: If it’s top of mind, there’s a write-in, yeah.
Raju: There’s always a write-in. All right, funniest workplace-oriented show: The Office or 30 Rock?
Jason: I mean, The Office. Don’t even have to ask me. The Office, all the way.
Raju: Yeah?
Will: Yeah, I’d go with The Office, sure.
Raju: Office, Office, okay. Best hire—and this is—you don’t really have to choose, but Walmart CEO Doug McMillon who started out loading trucks at Walmart and is now the CEO, or GM CEO Mary Barra, who started out on the assembly line.
Jason: Doug McMillon.
Raju: Yeah.
Jason: Both are good. Like, come on. [unintelligible 00:46:12] at the end of the day, like, any CEO that’s starting at that level is awesome.
Will: I love people with that narrative. Roger Goodell, who’s chairman of the NFL, also started as an intern at the NFL, and never worked anywhere else.
Jason: Oh, my God.
Will: I love that narrative of commitment to the organization, provided that people have done the broad learning that we all need to do, and that they found ways to bring outside lessons into their organizations.
Raju: Okay. So, this is the worst CEO hire [laugh]: Fritz Henderson, CEO of GM for nine months; or Ed Whitacre, CEO of GM for nine months [laugh].
Jason: Neither are really moving my needle [laugh]. I think the co-CEOs of BlackBerry was probably—
Raju: Yeah. Yeah, that’s not a bad one.
Jason: Probably where my mind is going [laugh]. Whenever you’re in a co-CEO scenario, you’re probably going wrong somewhere.
Raju: Okay, this one is free-form. What is the funniest hiring question you’ve ever heard?
Jason: “Will you jump—wouldn’t it be fun to jump in those cardboard boxes?”
Raju: [laugh].
Will: [laugh].
Raju: It’s true. It is true. It is a funny one. Anybody got any—I have two. One is, “What food do you eat every day?” And it is a legit question. It’s a question that’s on a truck driver survey. They actually prefer individuals that like repetition. So, somebody goes to eat, like, McDonald’s every day, like Warren Buffett, they would make great truck drivers.
And the other one I heard was, “Quack like a duck.” And it is a question that’s on a lot of sales questionnaires because they want to see how reactive you are and how well you are to taking direction. So, those are just interesting questions that I’ve heard.
Will: Those are great.
Jason: Those are good.
Raju: I have a quick joke. I’ll tell a quick joke. We’ll end with it. So, there’s a candidate for a police officer, and he’s being interviewed, and the recruiter says—this is, like, an ethics question—if you had to rush your wife, what would you do? And so, what the applicant says is, “I would call for a ton of backup.”
Will: Ssss.
Raju: Sorry. I—
Jason: Raju’s comedy career is slowly taking off. It’s—
Raju: Slowly taking off.
Jason: It’s the folks that listen to the end of the pod, they skip right to it in the chapters. The Raju Rishi comedy podcast, the RRCP is launching this summer, so July 4th, big celebration, the RRCP, look for it in all of your podcast hosting locations.
Will: And now all of our listeners know how to get hired by Raju Rishi [laugh].
Raju: [laugh].
Jason: [laugh].
Raju: That’s too funny.
Will: Thanks for listening in.
Jason: Thanks for listening in. This is, as you guys know, RRE POV. You can find it wherever your podcasts are hosted, you listen to them. You can follow us on Twitter at@RRE, and on LinkedIn; we’re just RRE Ventures, and we are rre.com. Thanks for listening in, and we’ll talk to you guys next time.
Will: Thank you for listening to RRE POV.
Raju: You can keep up with the latest on the podcast at @RRE on Twitter—or shall I say X—
Jason: —or rre.com, and on Apple Podcasts, Spotify, Google Podcasts—
Raju: —or wherever fine podcasts are distributed. We’ll see you next time.