by Elad Gil
Naval: That’s right. It’s a credit thing, so that always does make it tough. It’s sad, but I see too many late-stage entrepreneurs spending literally half their time just doing board management.
The other thing you can do is space the board meetings out further. So maybe have a board meeting every three months, and then do an update call every month. And keep that call short. I’m a bit of a jerk with my companies, when I’m the entrepreneur, in that I set the expectation very, very early on that I’m not going to do a fancy PowerPoint deck. I’m going to have a sheet of paper with the big points on it and the big numbers on it, and then we’re going to get together and have a conversation.
It’s very important as a founder-CEO that you manage your board. Because if you don’t, then whoever the next most aggressive board member is will step in and fill that vacuum. You don’t want to be in that position where you’re always responding to them or answering their questions. You want to guide the board and guide the company.
“Every experienced board member will tell you that they favor private company boards of five or six people or less.”
—Naval Ravikant
Elad: Have you seen any circumstances where people have used a chair for that function of coordinating with the rest of the board members? Or does that happen more with public companies?
Naval: Yeah, that’s more of a public thing. Generally—I’m thinking of the founder-CEO model, which is the most successful model in Silicon Valley—if there’s going to be a chair it may be the other founder or a departed founder or a retired founder. But it’s sort of odd to have a chair who’s not also a founder.
“I see too many late-stage entrepreneurs spending literally half their time just doing board management.”
—Naval Ravikant
Elad: How do you get rid of somebody who is starting to be destructive at the board level? The nightmare scenario, to your point, is that it’s your first company and you do a shotgun process. You end up with somebody awful for your series A, and then your company is really working well and you’re stuck with this person. What should you do?
Naval: Terrible situation. It’s very, very hard to navigate. Usually you end up buying them out for more than they’re worth, which sucks. And usually your other board members really help you on this; this is where the other board members earn their keep. Generally the most senior person on your board, someone who is good to work with, will hopefully help you with that.
Elad: Is there anything you can do with the VC firm itself? Can you go to the firm and complain? Can you ask for a different partner?
Naval: That’s a last resort. That’s going nuclear. It only works if the person who is being difficult is a very junior person and you’re willing to take the gamble that they’ve been exposed internally. But that can backfire on you just as much as not. It’s almost like going to a husband and saying you don’t like his wife or going to a wife and saying you don’t like her husband. VC partners are married to each other in these very complex, decade-long or multi-decade-long arrangements. So I would not attempt that maneuver unless there’s someone on your board who’s willing to do it on your behalf, who says, “Oh yeah, I know so-and-so who runs the firm and I have a good relationship and I can give him that feedback.”
Elad: And at that point, you have to go to the person running the firm. You can’t go to another junior partner. You have to go to the very top.
Naval: That’s right.
Elad: I guess it also depends a bit on firm structure. Because if there are multiple senior partners, then power is fragmented. And then it really becomes a weird situation.
Naval: Yeah, I’ve seen that situation actually kill companies. My solution to most board problems is going to be highly unacceptable to the venture community, but we don’t give out permanent board seats. We would never ever give out a board seat that we could not remove. And in AngelList and my company, that’s what I’ve done. The only board seats I’ve given out are ones that can be removed; there’s no such thing as a permanent board seat.
Elad: It sounds like that’s something you should start negotiating from your very first round.
Naval: Experienced entrepreneurs will. Otherwise it’s marriage with no possibility of divorce.
The way my company is structured is that everyone can be removed, including me. Then it is actually a very consistent moral argument that I can make, which is saying, “Hey guys, you can remove me as well if I’m out of line.” Nobody is safe, and that forces everybody to behave.
CHAPTER 3
Recruiting, hiring, and managing talent
One of the biggest challenges a company faces as it scales is to revamp its recruiting and employee onboarding processes. When Twitter bought my startup it had just 90 employees. By the time I left two and half years later, Twitter had grown to close to 1,500 people—93% of the employees were new.
In order to add 500 people a year you need to change the way you approach and scale your recruiting organization, you need to think deeply about employee onboarding, and you need to maintain and evolve your culture. In this chapter we cover these and other shifts required to hire and manage talent.
Recruiting best practices
As you scale from hiring 10 people a year to 10 people a week, a small number of recruiting processes can go a long way in maintaining a high bar and expediting key hires.
Write a job description for every role
Many companies start off recruiting via personal networks for a small number of roles—e.g., engineers and designers. As a company scales beyond individual contributors in a handful of functions, it is important for people hiring for a role to understand what is important in the person they hire. For example, if you are hiring a business development person for the first time (see “how to hire great BD people,”), what should people look for in that person and role? An engineer on the interview panel might not know the difference between a business development and a sales person. Clarifying skill set and role is important so everyone is looking for the same type of candidate.
For each role you should write a job description that explains what the role will do, and what experience and background you are looking for. You can also the list the things you are not looking for, or consider less important. This description should be circulated to people interviewing for the role with a short note explaining what the hiring manager is looking for and prioritizing. If your team subsequently raises questions about who to hire for the role, you can refer back to the original job description to correct any bad assumptions.
Ask every candidate the same questions
For each candidate for a given role, ask the same or similar interview questions. This will allow you to calibrate candidates across identical questions.
Assign focus areas to interviewers prior to the interview
Often you want to interview candidates for specific aspects of their role. For example, you might interview a product manager on their product insights, past accomplishments, culture fit, etc. Rather than have every person the candidate interviews with ask the same set of questions for every area, you could have three or four interviewers each focus on a different area that you assign to them before the interview. This will allow for an in-depth view of each area, versus a shallow view of all areas.
Additionally, if you bring the person back for a second round of interviews, you can double down on areas of concern with more focused interviews.
“One of the biggest determinants of candidate conversion is how quickly you interview them and how quickly you can make an offer.”
—Elad Gil
Work product interviews
For some roles, the best way to assess a candidate (outside of direct prior knowledge working with them) is to have them develop a work product as part of the interview. This could happen either onsite or as a take home. For example, an engineer could do a coding exercise, or a designer could be asked to do a quick set of wire frames or workflow for a hypothetical produ
ct. A marketing person could be asked to generate a hypothetical product marketing plan. In general, it is good to avoid asking for work or output on an existing company product to avoid the perception of getting free labor out of a candidate.
Candidate scoring
As each person finishes their interview, it is good for them to enter feedback about the candidate before talking to other interviewers. This avoids people biasing each other and forces each interviewer to take a written stance on a candidate. You can also adopt a numeric ranking system (e.g., 1–5 points) or a simple “hire, no hire” scale. The key is consistency, as well as providing interviewers with a clear definition of what these outputs should mean. Consistent scoring can allow you to quickly reject or pursue candidates. In general, your scoring system prevents interviewers from having the easy out of a “neutral” option. Hence the “hire/no hire” framework would lack a “no opinion” option.
Move fast
Every company I have ever worked for, or with, has realized that one of the biggest determinants of candidate conversion is how quickly you interview them and how quickly you can make an offer. Beyond conversion, a key metric to track is how long candidates spend in each step of the interview process. You should optimize for shorter times between each step and for rapidly getting offers out.
Check candidates’ references
Reference checks are often the clearest signal on a candidate. You should referencecheck everyone. Be careful with businesspeople—they tend to provide friends in their organization as references, and in general will get glowing recommendations from their friends. I have found engineering and other functions to be more direct/honest when providing references for their friends. To compensate for this, try to broaden the scope of references you check for businesspeople to other functions to ensure clarity of their skills and areas for improvement.
Diverse candidates
Ensuring diversity (of gender, race or ethnic background, sexual orientation, social class and background, and more) in your employee base and interview process is the subject of numerous books and blogs. One excellent resource for this is Joelle Emerson’s Paradigm Strategy website, whose focus is diverse hiring practices.26 You can also read the interview with Joelle later on in this book.
There is a lot of detail and nuance in getting to a diverse workforce. A few key items:
1. Ensure that you have diverse candidates for each role. You will never have a diverse employee base if you do not ensure diverse candidates in your funnel. Building a diverse funnel means not only sourcing a broader spectrum of candidates, but also thinking through the language in your job descriptions, how employees are represented on your website, and other factors that will impact who applies.
2. Focus on eliminating biases from your interview approach. A number of biases exist in standard interviewing approaches. A simple example would be whether the names and gender of candidates is blinded at the resume review stage.
3. Provide benefits that support the needs of underrepresented employees. Paid parental leave is one simple example. Think through your broader potential employee pool and what benefits would support their ability to focus on their work at your company.
For a more in-depth resource, I recommend you read a white paper from Paradigm.27
Scaling a recruiting organization
The use of recruiters by a startup will shift dramatically over the lifetime of the company.
As a small startup (e.g., 3–10 people), using a recruiter is usually not as useful as direct founder or employee networking, using LinkedIn and other tools. In contrast, when I was at Twitter, the company grew from ~90 to ~1,500 people over a 2.5 year period. As your company scales into the hundreds and thousands of people, you will want to bring specialized recruiters, sourcers, university programs managers, etc. in-house and potentially use retained external recruiters for executive hires.
Early days: Your team as recruiters
Early on, the best approach to recruiting is to have people on your team actively refer in people from their network. Similarly, many founders & early employees spend as much as 30–50% of their time early on (e.g., when scaling from 3 to 15 people) on recruiting. There is no easy fix around it. You need to just grind through large numbers of people (via networking, LinkedIn, friends, etc.) to find the handful of people to join your team.
Some startups I know successfully hire someone who is a mix of office manager/social media manager/recruiting coordinator. This person will often spend a lot of time scheduling referred candidates and reaching out to passive candidates via email and LinkedIn. Once the candidate expresses interest they pass them off to a founder or hiring manager.
Initial scaling: The in-house recruiter
Once a company hits a certain scale and is growing fast enough (adding 15–20 people per year or more), hiring in-house recruiters makes a lot of sense. The recruiter initially plays a few different roles that in larger stage companies will get split up including
Sourcing.
Running the recruiting process (scheduling, collating feedback, coordinating with hiring manager etc.).
In some cases delivering offers (although I think often hiring managers or founders can do this).
Depending on the strength of the recruiter (and, importantly, the company branding with your candidates), the recruiter will be able to hire 1–4 engineers per month. This shifts as the company scales and adds more differentiated roles (see below).
“The importance of the hiring manager and other executives being involved in the recruiting process cannot be over-emphasized.”
—Elad Gil
This means that if you are hiring fewer then 15 engineers a year, you may want to have a part-time or split-role recruiter, grow organically via company referrals, or find an alternative structure with external recruiters.
For non-engineering roles (e.g., sales) a single recruiter may be able to hire a larger number of people per month. This is driven in part by the referral-heavy nature of sales hiring as well as the fact that there are fewer high-growth companies for sales, marketing, and business development people to go to. In contrast, every startup is trying to hire engineers and designers.
Things that impact the ability of the recruiter to be effective include:
Brand of the startup with candidates.
Strength of the hiring manager and executive team as recruiters. If they are active and engaged, it makes recruiting run smoother and will help to source and close more candidates.
Breadth of network of the employees at the company.
The importance of the hiring manager and other executives being involved in the recruiting process (through informal conversations, extending offers, meeting for lunch, etc.) cannot be over-emphasized, no matter how strong a recruiting org you have. The candidates will always want exposure to people in key roles in the company (Mark Zuckerberg at Facebook is famous for his “closing walks” with mid-level candidates).
High-growth: Multiple recruiting org roles
When a company is growing really fast, the set of roles on the recruiting team tends to fragment and you need to start to specialize the types of people on your recruiting team.
1. Sourcers. Sourcers research, cold call, email, and otherwise create a path to passive candidates. In some cases they then transfer the candidates over to recruiters who will feed the candidate into a coordinated interview process. Some sourcers manage candidates up through an onsite interview, but seldom beyond.
2. Recruiters. Recruiters manage the process of coordination of the candidate through scheduling various interviews (phone screens, onsite, executive, etc.) and then circling with the team or hiring manager to determine whether an offer will be extended. At some companies the recruiter may extend the offer, in others the hiring manager does so.
Your first few in-house recruiters should have experience sourcing as well. This helps in a number of ways:
The recruiter will likely be more effective in sourcing and recru
iting specialized engineering roles.
There will be fewer hand offs between people on the team (e.g., sourcer, recruiter, hiring manager, etc.) which means less friction to the candidate and fewer people fall through the cracks.
Splitting the recruiter and sourcer roles tends to work best when you are hiring large number of people of a specific type. For example, if you need to hire 50 back-end engineers, 30 front-end engineers, and 20 PMs, starting to segment recruiting roles makes a big difference.
3. Candidate researchers. These people may scrub LinkedIn for all the engineers at Google, prioritize them, put them into a spreadsheet, and then hand off the spreadsheet to the sourcers to actually do the outreach/pitch the candidates to interview.
These people usually only really get added to the team as it scales from 100+ to 1,000+ people, and you are hiring large numbers of people in the same role.
4. Recruiting marketing. These are the folks who develop marketing materials, run ads, organize recruiting events, hackathons, website content, etc. to create an inbound pipeline of candidates. At a startup, this is usually driven by someone on the team you are recruiting for (e.g., an engineering manager for engineering candidates). Alternatively, the marketing team at the startup may be responsible for this as part of their overall marketing efforts. Only as a company scales to a few hundred people or more does the possibility of a standalone coordinating recruiting marketing role emerge.
