by Elad Gil
5. University programs. Given the specific timing and cadence of new graduate and intern hiring, some companies will specialize sourcers and recruiters specifically for coordination and hiring of new grads. When your startup is still small, instead of hiring dedicated university programs people, you can have your existing recruiting staff pivot to cover this area for the few months when it is most relevant.
Executive hires: Retained recruiter
For executive hires, a retained search using an executive recruiting firm may work well. While you will continue to mine your investors and employees for leads, specialized recruiting firms have networks tailored to fill your general counsel, CFO, or other role that may simply be outside of your founder network.
For a retained search, you may pay an external recruiter some upfront fee or retainer to find candidates for you. In general, these sorts of searches work best if you are hiring an executive for the company versus an individual contributor. One reason is that executive hires may be outside of your core network, or that executives may be more willing to talk to recruiters from a brand-name firm than to someone from a less well-known startup.
There are a number of brand-name executive recruiters your angels, VCs, or advisors can connect you to.28
Employee onboarding
Many companies make the mistake of spending months building a pipeline for recruiting the very best people, but then spend little time actually onboarding them to make sure they are successful.
Here are some simple ideas your office manager or head of people can try as you onboard new people.
Send out a welcome letter
Send a welcome letter to the new employee—and cc all the teams that person will be working with closely. The letter will explain the person, their role, who they will report to, what their goals are for the quarter, as well as potentially one interesting fact about them they are willing to share. The idea is to ensure each new person has a clear role and responsibilities, and that the rest of the organization is aware of these things. The interesting fact creates an ice breaker for their coworkers to be able to start a conversation with the new hire.
Welcome package
Create a checklist of items that each new person receives as they show up for their first day at the company. This should extend beyond the utilitarian items of laptop and email address. Include a book on management the company aspires to emulate, a T-shirt or hoodie, and if they have a newborn leave them a onesie. You can also have a handwritten (or signed) note welcoming the individual to the company.
Buddy system
High-growth companies tend to have their own jargon, internal tools, and random processes that are unique to them. Pair a new hire with a “buddy”—someone who is not in the reporting chain of command with them who can take them to lunch, introduce them to people, and importantly answer any “stupid” questions they may have. Buddies tend be paired for one to three months.
Make sure they have real ownership
The biggest obstacles to happy employee onboarding tend to be (1) a bad manager/employee relationship, and (2) a lack of feeling of ownership for the area they were hired to do. The prior owner of a project may linger longer then is needed in order to get credit for the prior work done. Acknowledge their work but ramp them down as quickly as is reasonable so the new employee can find their legs. If it is a short time window (two weeks to launch) you can have the original owner launch the product or do the work. If it is a longer timeframe (two months) you should transition the project.
Set goals
Each manager can set 30-, 60-, and 90-day goals for new employees. This gives a sense of direction, context, and structure for the new employee. It also emphasizes what is important to get done and that individual’s priorities.
Old-timer syndrome and early employees
Some of the most valuable long-term employees of a high-growth company join early on. These employees often have earned the trust and admiration of the founders and CEO, and they have the cultural context and long-term mission of the company in mind, which enables them to achieve outsized things in a high-growth startup. Examples like Susan Wojciki (Google employee #16 and eventual CEO of YouTube) and Google and Chris Cox at Facebook (who joined as an engineer in 2005 and is now chief product officer) come to mind.
Unfortunately, some early employees also dramatically overstay their optimal tenure at a company as it scales. They may have gotten too rich and lost their hunger, or simply not scaled their skill set and mindset along with the company. Some cling to the past when they had lunch every day with the CEO and had input into every company decision.
Early employees that scale
Early employees that can grow and scale responsibilities within a company are invaluable. They can channel the mindset of founders/CEO (and therefore get quick buy-in for their teams), have the trust of the executive team and their peers, understand internal processes and jargon, and have a deep understanding of the company operating procedures and culture. Their “old timer” status allows them to challenge convention (or provide context on it) in ways that enable them to reshape or remove rules or old processes.
While many early employees may lack deep functional or industry expertise, the trust of the CEO allows them to hire, manage, and learn from more experienced industry executives. Early employees who are humble enough to realize they can learn from fresh blood can grow with the company and use it as a personal platform for their own learning and impact. Some early employees will stick with a breakout company for decades and their personal story arc mirrors that of the company. These employees tend to be hungry to learn from others, understand that the company, their role, and its culture will inevitably evolve, and are open to change.
A common sign that an old-timer will work out is their eventual acceptance that their role and influence at the company will shrink in the short- to medium-term as the team scales, but that it will expand with time as they continue to learn and the company continues to scale.
Old-timers that should move on
In contrast to the early employees that scale, there are also a set of old-timers that should probably change roles, quit, or be managed out. Often the temptation is to keep giving early employees chances or to move them to a spot that they are not hyper productive but is “less important.” Usually this suggests that the fit between the employee and the company is not a good one. Often the employee will be happier to leave the company but feels obligated to stick it out due to loyalty to founders or the company.
When dealing with an early employee who is failing to grow with the company, you can take the following steps:
1. Identify the problem and whether it is solvable. Potential issues may include:
Does not evolve with the company. Some early employees fight cultural, organizational, product, or other changes to the company. They may fight against the hiring of a sales team, the professionalization of staff, or the sun setting of an increasingly irrelevant product or strategy.
Cannot scale into the role they want. Early employees are often the first or only person in their functional area. Your first marketing person may not be the right long term VP marketing, and your first engineer may not make sense as your CTO. Individuals may lack the skill set, experience, or maturity for certain roles. Given their early tenure at the company employees may nonetheless ask for roles that are beyond their capabilities. Founder CEOs will often put up with poor functional or team leads who cannot scale, but who have deep founder relationships and trust.
Feeling left out. When the company was 12 people the early employee had lunch with the founders every day and had the chance to give her opinion on all major company decisions. As a company scales, most early employees no longer have as strong of a voice or influence. Some of them may start to act out by blocking new projects or inappropriately escalating to founders they still have relationships with.
Inappropriate exertion of power. Some early employees or founders may have a large title as a
historical artifact but little influence. The person who was CTO at 10 people may still be CTO at 1,000 people, despite not having any reports or real responsibilities. This is even stronger with cofounders, who will have strong influence at a startup whether they are still active with the company or not. Some cofounders or people with fancy titles may lobby or push parts of the company to do things they want even if they are not supposed to. Often, the other employees do not realize the cofounder or titled employee is acting out of band with the rest of the executive team.
Getting too rich. Due to secondary stock sales and tender offers it is possible to partially cash out. Some employees may suddenly be liquid to the tune of tens of millions of dollars and get distracted by travel, buying houses and cars, or other issues.
“Early employees who are humble enough to realize they can learn from fresh blood can grow with the company and use it as a personal platform for their own learning and impact.”
—Elad Gil
2. Put emotion aside and understand if there is a problem. As a founder CEO you will feel you owe the early employees for their early work and dedication. People may come to you with issues around a person that you will ignore or defer. This will create a bad environment for everyone including the early employee. It is best to understand the situation and then act quickly and decisively.
3. Address the issues head on. As a first step, you should discuss the issues with the early employee. Sometimes the issues are addressable and the frank conversation with the employee turns things around. If there is a fundamental mismatch between the role they have and their skills, it is best to move them to a place of good fit. This may lead to a demotion and the departure of the employee. It is okay to discuss this frankly and explain why you are making the change, and whether they will be happy or thrive with it. As an early employee they are likely a large equity holder in the business and should act with you to maximize equity value. Often, CEOs try to find early employees a place where they won’t do much harm, versus a place they will excel. If you find yourself thinking this way, 99% of the time the right answer is to part ways with the early employee. You can let them go with grace and they may be relieved to be free to do something new.
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26 See https://www.paradigmiq.com/blog
27 Link on eladgil.com. [https://paradigmiq.app.box.com/s/bpk3v4umfbj8dkakepwvqpqt79y87tyt]
28 Thanks to Ardy Daie and Chris Shaw for comments and feedback on this post.
CEO GROWING PAINS
An interview with
Sam Altman
Sam Altman runs Y Combinator. He was cofounder and CEO of Loopt, which was funded by Y Combinator in 2005 and acquired by Green Dot in 2012. At Green Dot, he was the CTO and is now on the board of directors. Sam also founded Hydrazine Capital. He studied computer science at Stanford, and while there worked in the AI lab.
Perhaps the biggest innovation in venture investing of the past decade is Y Combinator and the early-stage revolution it engendered. Since 2005, YC has funded over a thousand startups, including AirBnB, Dropbox, Gusto, Instacart, Reddit, Stripe, Zenefits, and others.
Since Sam Altman took over as President of YC in 2014, YC has launched a growth-stage fund, expanded the type of companies YC invests in, and established a nonprofit research lab. In parallel, Sam has coached and mentored many of Silicon Valley’s smartest high-growth CEOs, drawing on both his experiences as founder and CEO of Loopt (funded by YC in 2005, and later acquired by Green Dot), as well as his time working with many rapidly growing startups as an investor.
Sam and I discussed an area he has thought deeply about: the role of the CEO, and the hurdles that most often trip up leaders at high-growth startups.
Elad Gil:
You mentioned that staying focused as a CEO—how to distinguish between things that seem important but aren’t and things that don’t seem important but are—is top of mind for you these days. What do you see as the role of the CEO, and what are some common mistakes you’re noticing?
Sam Altman:
The role of the CEO is basically to figure out and decide what the company should do and then make sure it does that. Many CEOs try to outsource those things. Sometimes they want to hire a VP of product or hire a COO and make him or her do everything. But really the CEO has to drive the company’s overall direction. There are a few other things that only the CEO can do, or that the CEO at least has to be heavily involved in, like recruiting and evangelizing the company to new hires, major customers, investors, whatever. And there are some jobs where people only want to talk to the CEO; fundraising is a great example.
But really the only universal job description of CEO is making sure the company wins. And so deciding what the company is going to do and making sure the company gets that done—that’s the most critical part of the job.
Elad: And that statement, if you unpack it, contains a lot of the sub-pieces you hear a lot: Make sure you don’t run out of money, make sure that you’re allocating resources to the right spots, make sure you’re all moving in the right direction.
Sam: The hard part is that most people want to just do the first part, which is figure out what the company should do. In practice, time-wise, I think the job is 5% that and 95% making sure that it happens. And the annoying thing to many CEOs is that the way you make it happen is incredibly repetitive. It’s a lot of the same conversation again and again with employees or press or customers. You just have to relentlessly say, “This is what we’re doing, this is why, and this is how we’re going to do it.” And that part—the communication and the evangelizing of the company vision and goals—is time-wise by far the biggest part of the job.
Elad: As companies scale, I’ve seen people run into the fact that they end up with a lot of overhead. The bigger your company gets, the more time you end up spending on process: Figuring out your sales comp plan and how it should be structured, getting involved with certain aspects of customer support and exception handling, and all that stuff. A lot of people start to lose track of that bigger picture, of where the company should be heading. Are there key approaches to avoiding that trap, where CEOs end up on all the tactical stuff and forget to pull back out?
Sam: Everyone wants an answer like, “Well, you should not do any of the tactical stuff,” but actually a lot of it is really critical. The hard part—and this takes most first-time CEOs a while to figure out—is determining which is which. What is the tactical stuff that seems like a waste of time but is important, and what seems important but is a waste of time?
For example, I do think figuring out compensation structures is really important and something the CEO should spend time on. And it’s something that most CEOs don’t. You’re building what the company measures and what salespeople get paid for, and that’s one of those counterintuitive areas that I do think is really important.
The trick to being effective at this is that you have to get really good at saying no and just not doing things. There are a lot of things that are urgent but not important. The hard part of being a good CEO is that you have to be willing to let some things fall apart. You don’t have enough time to do everything well. And in practice, what that means is that there are some urgent things that you just don’t do. Getting comfortable with that takes a long time. It’s hard.
“You have to get really good at saying no.”
—Sam Altman
Elad: What are some examples of things you think are often urgent but don’t necessarily merit time if you’re scaling like crazy and just trying to keep up with everything else?
Sam: I saw one kind of crazy example recently, a founder from a company that YC is an investor in that is not doing particularly well. I was talking to him about how things aren’t going that well, and he said that one of the mistakes he made is that he has 74 investors. But he was really proud, because for those 74 investors, he responded to every annual audit request. They told him that he was one of the only CEOs that responded right away. He was really proud of this. And
I said, “Look, this is a crazy thing. Your company is on fire. You got one not-important tactical thing done while the company is failing, and you feel great about that. All your investors, no matter what they tell you, will be far happier with a big return than you responding to their annual audit request.” And he kind of got it in that moment. But it was this thing that people told him was really important, that he had to do. He felt good that he was doing that, even though he wasn’t doing all these other important things—like, you know, getting users and getting revenue.
The hard part of getting users and getting revenue is that it means spending your time building stuff and talking to users—and the implication is you should do nothing else. That’s not entirely true, of course, because there are things—we just mentioned employee comp structure—that are really important. But there are all these other things that seem important, like responding to investors’ audit requests, that you can just not do.
Elad: It sounds like you just answered the question, but I’ll re-ask: What are the things that you think people should stay focused on as a company scales?
Sam: If the CEO disconnects from the product, that’s usually bad. And that is something that you see happen to varying degrees as a company scales. There are a lot of CEOs that say, “Well, I want to just go think about strategy all the time. I’m really tired of managing people.” Because managing people is hard. And so a lot of CEOs have tried a structure where they bring on a COO (that’s a good idea) and then stop going to the executive team meeting (that’s a very bad idea).
