Startups are hard. You've heard that a million times. Those that we survive with become family. It's something you can't know unless you've ever been in the trenches. Working hard together at a big company just isn't the same.
The truth is you really don't know how your teammates or your bosses will perform in good times and bad. You hire people who look good on paper. You join teams that got good write-ups on TechCrunch, have great VCs, have star CEOs, whatever.
After six months, you know. You REALLY know. Which engineers dialed it in before a big release because it was during July 4th weekend? Who came in the office at 2 am when the servers crashed--even on the night of the big company party? Who was willing to jump on a plan on a Sunday morning with a hangover to make sure they were there the night before an important biz dev pitch on a Monday morning? Who instead said, "That's what Skype is for?"
Who cut you in on their bonus because even though you're "just a sales engineer" they know you really deserved more credit for this deal? Who stuck their neck out for you and got you the important promotion?
We tell startup stories. We tell of the highs and lows. Sometimes they're funny, sometimes stressful, sometimes heartbreaking. But they were once reality, and we lived through them. And we did so with people who were as crazy, as dumb and as committed as we were. It was a moment.
So one of the surest signs you've hired a leader is the willingness of his or her former team to re-assemble. To drop whatever they're working on for "the cause." Strangely, the best I've ever heard this exemplified is in Anthony Bourdain's Kitchen Confidential--which is really a book about startups as told through kitchen stories. I listened to it on tape (he reads it), and it is absolutely brilliant. As long as you're not put off by a little swearing, drugs and rock n' roll. You'll never eat Sunday Brunch buffet's again--this much I know.
When you're hiring, most reference checkers focus on the person's former bosses. You should also focus heavily on his or her former employees. In many ways that can be way more telling. How about asking, "If we hired Susan could you imagine considering coming with her?" Just as a test. But it's instructive. Just this week I had breakfast with a guy giving a reference who said, "He's brilliant. But he knows it. And I'd never work with him again. I don't know anybody who would." Wowza.
I would take a strong employee referral from an existing employee I trust 10 times over a person more qualified on paper (given similar skill levels). It's not just the trust, but the camaraderie and the ability for teams to perform more than individuals. It also has to be said that bad apples on teams bring down productivity even if that person is individually a superstar. Many teams pay bonuses to employees who bring in people they know. This isn't just to save on recruiting fees--it's also about "getting the band back together."
It's like you hear about "mafia's" of PayPal, Facebook, MySpace, Salesforce, etc. Mafias matter. They have trust, short-hand communications, know each other's strengths and weaknesses, etc.
Mafias matter a lot to me, as well.
In a way my firm at Upfront is mafia. Our founder, Yves Sisteron, was my mentor and board member at my first startup. My other partner, Steven Dietz, was on the board of my second company. We knew each other for eight years before I joined. So as I like to say in private, "they knew what a pain in the arse I could be before I joined ;-)" or as Steven likes to say, "It was an eight-year interview." But it's that exact trust that allowed them to agree for me to join. They gradually introduce change (that they encouraged and supported) and eventually co-led the partnership after just a few short years on the inside. We all trust each other and play to our respective strengths and weaknesses.
It is with the greatest pleasure that I can FINALLY announce that I am bringing another member of the band back together. Stuart Lander has joined Upfront Ventures to help us run operations. Stuart was a co-founder at my first startup company and ended up running global operations. Nearly any funny startup story I've ever told about the "early days" of startup land (and many stories I've saved for my book) somehow involve Stuart. Here's just one example post featuring the wisdom I learned from Stuart about negotiations. In fact, just a short Google search reveals that I've referred to him frequently through the years.
The stories still to be told? Walking with Turkish construction workers in leopard-print, bikini underwear to get to an outdoor shower because we were too cheap to pay for a proper hotel. Moving our entire office furniture and computers in the middle of the night to improve our negotiating position with an unreasonable landlord. Practicing fake crying. Running from Indian taxi drivers in Pune. Walking into the restaurant kitchen with Jamie Oliver because somebody wanted him to make a custom order and many more. Writing a book will be fun.
Stuart is well worth following on Twitter and now that he's a VC he is likely to share his wisdom more freely.
The challenge that I see with many VC funds is that the managing partner either spends too much time running the fund (and therefore not enough time with portfolio companies and sourcing deals) or there isn't enough time, energy and direction for associates, principals and platform teams. So the partners who push for resources hardest tend to get what they want. Neither is very strategic nor in the best interest of either set of customers that VCs have (portfolio companies & LPs).
So I was patiently waiting until there was a good opportunity to bring Stuart on board and took the opportunity when it presented itself. The fact that he's also worked with Steven and Yves for years is a huge bonus. And the fact that we've all worked for a decade with Dana Kibler who is our long-time CFO and now helping run Investment Operations & Platform Services we have a truly senior and killer internal team.
"Getting the band back together" doesn't stop for me with just our fund. There are a number of highly talented family that I would love to work with again. Sometimes life presents that opportunity, sometimes it does not. But I patiently wait, often cajole, never stop trying and back off when the timing isn't right. My latest friend in SF who has been my target in the last three to nine months knows who he is. So does that guy in NYC who needs an exit so he can come do a startup again.
But last week did see one of my closest family members--David Lapter--join MakeSpace as their CFO & SVP of Business Operations. I started working with David when I was an entrepreneur and he was an associate with a VC firmed called …. wait for it …. GRP Partners (now Upfront Ventures)! I liked David so much I eventually persuaded him to join BuildOnline as our CFO. David is also frequently an inspiration for a story on my blog. After BuildOnline, David was CFO at Spark Capital backed KickApps and when that got sold I called my friends on the board of an early startup called Fab and told them David was the best CFO I have worked with. So he went on to become the CFO of Fab through their growth years dealing with warehousing, inventory management, facilities, CAC/LTV analyses and of course fund raising.
David is nothing short of a superstar, a mensch, a team-player and a very hard working supporter of CEOs and boards. I can't wait to start working more with him.
And just so it's clear that I practice what I preach …
When it was time to bring on a CTO at Maker Studios in the early days, I passed over many local LA video CTOs and found the one guy I KNEW could deliver magic for us. We brought Ryan Lissack down from San Francisco to become Maker's CTO and the rest is history. He was a very key player in why Maker Studios was eventually sold for up to $950 million. Very key.
DataSift? We already had a genius tech founder in Nick Halstead. In fact, he really is the smartest enterprise tech visionary I know. If I don't work with him at every future company he founds, it will be a big disappointment to me.
But for every great visionary, one needs a superstar product manager who can pull together disparate requirements from customers, sales, marketing, operations and the tech vision and build a cohesive roadmap that pleases everybody. The problem is--the perfect guy for the job was head of European Marketing for Salesforce.com and Saleforce has continued to go from strength to strength. Luckily we had history together. Tim Barker worked with me at my first startup and left with me to be co-founder of the second. Tim can match up with any Silicon Valley product manager and has been doing the role for global software businesses for 20 years. But he has the added benefit of living in the UK--making him the perfect partner for Nick. We have worked together ever since. Band. Back together.
I think it really helps to have been an entrepreneur in the past both because I have a strong sense for which former employees will be able to punch above their weight class, and also I think there's a certain rapport of having worked together before. I think it's true that when a VC works closely with a management team they also develop these strong ties and it's probably why VCs like to back entrepreneurs multiple times.
I will say, though, that there is simply nothing like having been in the trenches together. It's why your high school friends or college buddies are often more lifelong friends than those that you meet when the craziness is all over. There is something about being able to clear away all the BS, say "I knew you when … "-- no pretenses. Just roll up your sleeves and just get down to work.
This article was originally published on Mark Suster's blog, Both Sides of the Table.