How Entrepreneurs Hire

In the last few months, I’ve had an unusual number of calls from people who have decided that they want to leave their gigs at big companies and join a smaller one instead. They may have stuck it out in a job they’ve hated through the recession and now think that things are turning up. If they’ve been in a large company that has treated them like a cog in a machine, they may think that small companies are somehow more humane. Or they have been influenced by the current buzz around small businesses as our economic saviors.

The most common questions I hear are “Where do I start if I want to find opportunities?” and “What do I need to know?” As much as I enjoy being taken to lunch, I thought it was time to write a column and give my waistline a fighting chance.

Here’s the truth: Even if you are brilliant, with incredible experience and deep domain expertise, entrepreneurs are going to be wary of hiring you if you’re coming from a big company. They worry that you may not know how to function without your own personal administrative assistant or that you won’t be properly obsessed with weekly cash flow. There is also a fundamental mismatch in culture and environment that inevitably leads to problems, which makes entrepreneurs doubly leery. Here are the sorts of thoughts that are probably going through an entrepreneur’s head when interviewing a seasoned big-company candidate.

Does the candidate truly understand and embrace risk? If you thought forecasting and planning were challenging in a large company, try it in a small one, where visibility is an almost meaningless concept. The business may go through exhilarating highs, but it will definitely go through deep scary lows, too. Candidates who are prone to anxiety or who are living on the edge financially should probably sit this roller coaster ride out.
Entitlement vs. eat what you kill. I’ve encountered people who have a tough time grasping how cash flow in a small business will directly impact them. They think of themselves in terms of their last salary number, and think that number is what they deserve. Entitlement has no place in a small business. It’s all about what a candidate can add to the bottom line and what the business can afford in compensation based on that added value. Period. This same logic means that no one has a big expense account for entertaining clients, and expense reports get scrutinized.
Title. If the conversation starts with a discussion of title, I know the person in front of me is not ready to make the leap. Titles are not very meaningful at a start-up. What is meaningful? Whether you’re an officer or a regular employee. An officer can legally bind the company in contracts and has a fiduciary responsibility to shareholders that employees don’t have. Think you want to be an officer? Be ready to cough up your personal financials to the bank that extends a line of credit to the company.
Boss. The other thing that’s meaningful, in addition to whether or not you’re an officer, is who you report to. Make sure you are a good fit.

That being said, entrepreneurs have good reason to at least consider someone who has big-company experience. Here’s what they may be looking for:

Understanding of disciplined business process. As small businesses grow, they need to add processes, discipline, and rules--all the things people like to complain about! Candidates from larger organizations can be invaluable when it’s time to establish a process. That needs to be balanced with good judgment and business sense, though. A 100-person company doesn’t need, and can’t afford, the business processes of an IBM.
Perspective on large company clients. People from large companies understand how decisions are made when many stakeholders are involved. This perspective is important when an entrepreneur is trying to close a deal with a client or prospect at a big company.
Domain expertise. If a small business is venturing into new territory, the experience of someone from that industry is incredibly valuable. In addition to knowledge of latest trends and pain points in the industry, some candidates will bring a network of valuable connections that can give the small business a running start.

Diving into a small business can be a shock to the system if you are used to a larger organization. Consider spending time with entrepreneurs, and perhaps informally advising a few, to get a better idea of your unique value in the small business ecosystem. It may be different than your value to a large organization. Ultimately, if you can focus on value, it will put many of the fears to rest—both yours and those of your potential employer.