Musings of a VC in NYC

MBA Mondays: Where To Find Strong Talent

One of the most vexing problems entrepreneurs face is where to find strong talent for their companies. The kind of people you want to hire for your company are in short supply and they are rarely out looking for a job. You have to go find them and recruit them to join your team. But where to look?

Here are some suggestions:

1) People you know and people your team knows. This is the most obvious but also often the most fruitful source of talent. I know an entrepreneur who asks everyone he hires this question on their first day on the job, "who is the most talented person you have ever worked with and whom you would love to work with again?." He then adds that person's name to his list of people he is trying to recruit to his company. It is that kind of dedication to sourcing talent that is required to build the strongest team.

2) People who work for your competition. I often tell entrepreneurs that they are overly focused on their competition and that they should spend less time watching the competition and spend more time focused on their own game plan. But there is one place that watching the competition closely pays off. If you find a sales talent who keeps winning deals from you or a product talent who is making your competitor better, you should see if you can recruit them to leave your competitor and join your team. There can be issues with non-competes but the truth is that non-competes are often unenforceable unless they have been properly structured and most are not.

3) Companies that have been recently purchased. When a company is sold, the team is in play. Buyers know this and structure the deals to lock up key employees. But the combination of having had a decent payday on the purchase, having to wait a bit for the stay package to pay off, and the dread of working for a big, slow, bureacratic company is often enough to cut them loose. When a company sells, find out who the stars are on that team and go after them. It might take a bit of time to get them, but keep trying. They will free up in time.

4) Other parts of the country and the world. This is particularly true if you are operating in a hypercompetitive talent hub like NYC or Silicon Valley. The best talent is often locked up by the big companies in the neighborhood. I have seen our portfolio companies do incredibly well by locating super talented folks working in other parts of the country or the world and relocating them to NYC of SF. They find these folks on places like Stack Overflow, Behance (both are USV portfolio companies), Dribbble, and GitHub. Relocating someone from another part of the country often means making their relocation painless with financial incentives and also things like helping a spouse find a job. Relocating someone from another part of the world means all that plus navigating the immigration system. It is painful to do all of this but it is often worth it to get the right type of person for your company.

5) Colleges. You cannot fill your entire company with young folks graduating from college. You will need people with experience and management skills on your team. But you can supplement senior talent with people just starting out in their career. And the one pool of talent where everyone is looking for a job is the senior class at a college campus. I had an investment in a company back in the 90s that had a high paid sales force that wasn't getting the job done selling the company's product. The CEO fired the entire sales force and replaced them with an army of smart, inexperienced college grads who were hungry and scrappy and sales took off. That move won't work for everyone but it sure worked for that company. It is often surprising what young folks right out of school can do with the right management.

If you want to focus some of your recruiting efforts on college grads, I would encourage you to set up an internship program for students to work at your company prior to being hired. There are all sorts of ways to do this. One of our portfolio companies offers seniors in college the opportunity to work for them 10 hours a week during senior year. They then offer the best ones full time jobs upon graduation. There are also programs like HackNY that can bring great summer interns to your company.

6) The big companies in your market. This one is a little dangerous because you can find a lot of people "resting and vesting" in big companies and you don't want to hire that kind of talent. But the fact is that when companies like Google, eBay, Yahoo, and yes, even Facebook, get big, they become the wrong place to work for the scrappy fast moving entrepreneurial types. The early employees get itchy and can be cut loose. Focus your recruiting efforts on folks who have been at these companies three years or more because at that point they will have vested into the majority of their initial stock grant and will have weaker "golden handcuffs."

7) Your investors. The truth about venture capital firms is that as much as anything else, they are recruiters. I don't think a day goes by in our firm where someone isn't doing some form of recruiting. People who want to get their "resume on the street" will often come by and let us know they are looking around. We get tips from all across our network that someone is good. We reach out to them, take them to lunch, and get to know them. And then we route all of the talent we are seeing to the places in our portfolio where they are the best fit. If your investor isn't helping you find talent, then they aren't doing their job.

So those are some places to go to in order to find strong talent. Don't expect that you will be able to find people easily. Recruiting is a full time job for many people. Even if you can't make it your full time job, you must work on it every day, and be thinking about it all the time. You need a strategy, a process, and a committment to the process. It will bear fruit over time if you are patient and committed.

Twilio's Nine Things

In the last MBA Mondays post talking about company culture, I wrote:

It helps a lot to have a one pager that outlines the core values of the company. I just saw our portfolio company Twilio's version of that. They call it "Our 9 Things." I wish I could publish it here but I don't have permission from Jeff and so I will resist the urge. It has things like "think at scale" and "be frugal" on it. You get the idea I hope. This "guiding light" is a framework for the culture and values of the organization and each new hire should be assessed against the framework to make sure the fit is good.

Well it turns out that Twilio published their "9 things" on their website this week and so I can now publish them here.

I like that they published them in the form of a telephone dialpad. For those that don't know Twilio makes telephony work easily in web and mobile apps. Putting the 9 things in this format makes a statement in itself about their culture.

These need not and should not be your company's values, although it is likely that you may share a number of these values with Twilio. The point is to articulate what your culture is about and put it front and center so that everyone knows what they are.

Nicely done Twilio.

The paidContent Interview

It's memorial day weekend. We are at the beach with our family and I am taking it easy after a hectic week.

I did a bunch of interviews and talks last week. It felt like I was in front of an audience at last a half dozen times in the span of four days. So I am going to take a short hiatus from writing this weekend and run some video here.

We will start with the interview I did with Mathew Ingram at the paidContent 2012 conference. Mathew focused the conversation on the challenges that traditional media/entertainment has had in working with the changing technology landscape and the tech community. I don't think I said anything that the AVC community hasn't already read or heard from me before. But I do think we did a decent job of framing the issue and laying out some likely paths forward from here.

Fun Friday: Routines

Someone suggested to me in the comments this past week that this fun friday be about Routines. If I could recall who it was, I would give them credit. Maybe you can identify yourself in the comments. (update: it was Tyrone. thanks Tyrone).

In any case, we are going to talk about routines today.

Every weekday that I am in NYC, I start my day at 5am. I get up, walk upstairs to my office, take my synthroid, put on some music (turntable or tumblr/ex.fm mostly), read the morning news (twitter #discover, techmeme, hacker news), and then open up Typepad and start writing about whatever comes into my head. When that is done, ideally by 6am, I post a song of the day on tumblr, and then do some email.

On tuesday and thursdays I do yoga from 7am to 8am, and I try to get out on my bike a few days a week as well. I mostly ride up the hudson river park bike path but sometimes I will ride down.

When I am not exercising, I wake Josh up at 7:20am and then head downstairs to eat breakfast. My breakfast staple is Kashi Cinnamon Harvest Shreaded Wheat with a sliced banana on it.

Then I get on my Vespa and ride to work. If it is too cold to ride the scooter, I walk to the L train and take it to Union Square. I like to stop by Tarallucci and get an espresso at the bar Roman style. Then I go to work.

Work is usually 8:30am to 6:30pm. It is meetings back to back to back to back.

Then at 6:30pm, I head home, either by scooter or subway, and have dinner with my family. I don't work after dinner. I will do homework with my son or watch sports with him (or both). I am in bed by 10pm. I might read a bit on the iPad or Kindle Fire but I am almost always asleep by 10:30pm at the latest. I will make an exception these coming weeks to watch the Thunder hopefully beat the Spurs and the Heat.

That's my routine during the week when I am in home in NYC. I stick to it. I am not an organized person. But I am a disciplined person. My routine is the key to me getting things done.

What are your routines?

Open Garden

I was on the panel of judges yesterday at TechCrunch Disrupt to select the top startup of the conference. The finalists were a very impressive group:

gTar, OpenGarden, UberConference, Ark, Babelverse and Sunglass.

The winner was UberConference. gTar came in a close second. Both of those companies are impressive and I support the wisdom of the judges:

Fred Wilson, Roelof Botha, Marissa Mayer, Mike Arrington, Chris Dixon, Eric Eldon and Chi-Hua Chien

The choice of the winner and the runner up was almost unanimous except for a lone nutjob who liked a different one.

My favorite was Open Garden. By a long shot. Because what they are doing is the most worthy of the conference name, Disrupt.

Open Garden is a free app for windows, mac, android, and soon iOS. What is does is connect all of your data services on your various devices (and your friends and family's devices) into a single network that all of the devices can access at the same time.

It allows you to create your own mesh network and provision it to the people you want on it.

This is a big idea. And I don't know if they have nailed it. I have just downloaded Open Garden onto my macbook air and my android phone. I will let you know how it goes.

If you want to watch their initial pitch (not the pitch we got yesterday afternoon, I have embedded it below).

 

 

Mastery And Mimicry

The Internet is an amazing place. Last weekend an email arrived in my inbox with the subject line "Hello From MIT". That got me to open it. Turns out it was from Sep Kamvar, a faculty member at the MIT Media Lab, and before that the Stanford computer science department. I don't know Sep and was not familiar with his work. I am now.

Sep pointed me to a series of essays he has written called Mastery and Mimicry. He describes them as:

In this series of vignettes, I describe some design principles for technologies that follow nature. In short, such technologies would be self-limiting, accessible, cyclical, and purposeful. My hope is that technologies that follow these principles will lead to a greater unity between art and science, between intuition and reason, between nature and machine. Each would nurture the other.

I am particularly fond of a principal Sep calls cyclicality:

Every tool should nourish the things upon which it depends.

We see this principle at varying levels in some of our tools today. I call them cyclical tools. The iPhone empowers the developer ecosystem that helps drive its adoption. A bike strengthens the person who pedals it. Open-source software educates its potential contributors. A hallmark of cyclical tools is that they create open loops: the bike strengthens its rider to do things other than just pedal the bike.

Cyclical tools are like trees, whose falling leaves fertilize the soil in which they grow.

I read all of Sep's essays this weekend. It didn't take me long. But they have touched me and stayed with me. They speak to me. Maybe they will speak to you too.

I emailed Sep back and thanked him for his work. He replied and called USV a "cyclical VC firm." That's quite a compliment in the context of his work and it made my day, week, and month.

Setting The Record Straight

The new media world has its pros and cons. The pros are that I've got a blog to set the record straight and that everybody is recording everything. The negatives are that bloggers don't feel compelled to write accurate headlines and twitter can amplify the inaccuracies when those headlines get tweeted and retweeted.

Let's take the interview I did with Mike Arrington yesterday to kick off Disrupt NYC (starts at 51.09 in the stream). We had a great chat. Mike asked a bunch of interesting questions and I tried to answer them honestly and openly.

As I was heading back to the office, I saw this tweet in my timeline:

 

Google Missed The Boat On Buying Twitter. “Hasn’t Been Interested Since They Committed To Google+” Says Fred Wilson tcrn.ch/JgLVod

— TechCrunch (@TechCrunch) May 21, 2012

 

I thought "Hmm, did I really say that?" Fortunately they recorded the entire interview and through a cool feature called snapid, you can go watch the exact one minute sequence where Mike and I discussed this.

As you can see, I never suggested that Google missed the boat on buying Twitter. Google is focused on G+ and Twitter is focused on building its business and staying independent. That's what is going on and that's what I said on stage.

MBA Mondays: Culture And Fit

Kicking off our series on People, I am going to talk about the importance of culture and fit in the hiring process. What I have to say on this topic is mostly aimed at companies that are going from five employees to five hundred employees, but I do believe it is applicable to companies of all sizes.

I want to start with something I wrote in another MBA Mondays post, on the management team:

Companies are not people. But they are comprised of people. And the people side of the business is harder and way more complicated than building a product is. You have to start with culture, values, and a committment to creating a fantastic workplace. You can't fake these things. They have to come from the top. They are not bullshit. They are everything. There will be things that happen in the course of building a business that will challenge the belief in the leadership and the future of the company. If everyone is a mercenary and there is no shared culture and values, the team will blow apart. But if there is a meaningful culture that the entire team buys into, the team will stick together, double down, and get through those challenging situations.

So this is what you want to create in your hiring process. Some entrepreneurs and CEOs buy into "hire the best talent available" mantra. That can work if everything goes swimmingly well. But as I said, it often does not, and then that approach is fraught with problems. The other approach is hire for culture and fit. That is the approach I advocate.

Hiring for culture and fit does not and should not mean "hire a bunch of white guys in their late 20s and early 30s." Diversity should be a core value of the team building process. There are many reasons for this but most importantly you want a diversity of thought, experience, mindset, and angle of attack.

Don't hire a token woman. Hire as many women as you can. Don't hire a token person from another country. Hire from all around the world (and become an expert in our bullshit immigration system). Don't hire a token "gray haired" type. Hire up and down the age and experience spectrum.

But most importantly, hire people who will enjoy working together, who fit well together, who will make each other better. This is what hiring for cultural fit means. You start with the founding team and build on top of that. If your engineering team is serious and likes to work until midnight every day, you want to consider that when hiring new engineers. A new engineering team member who wants to go out drinking after work every night is not going to be a good fit on that team.

You also don't want to create silos in your organization. I see companies where the engineers sit on one side of the office and the sales people sit on the other side of the office. And it is like two different companies. That can create issues and cultural divides. It is tempting to set things up like this because sales teams are loud and animated and engineering teams tend to be quiet and serious. But try to connect these different parts of the organizations in as many ways as you can. Make sure everyone is on the same team and enjoys working together.

So when hiring, you must start with what you already have. Take measure of the vibe of the company, the work habits of the company, the strengths and weaknesses of the current team. It's like a jigsaw puzzle that is only half built. You are looking for the next piece that will fit nicely into what is already there.

This jigsaw puzzle analogy is why it is hard and a bit dangerous to hire up super fast. You can fit one new puzzle piece into an existing puzzle fairly easily. But if the puzzle is a moving target because so many pieces are coming in at once, it gets a lot harder. And it is likely you will make a bunch of bad hires who don't fit well into the organization. And when they leave the company, it will be your fault, not theirs.

It helps a lot to have a one pager that outlines the core values of the company. I just saw our portfolio company Twilio's version of that. They call it "Our 9 Things." I wish I could publish it here but I don't have permission from Jeff and so I will resist the urge. It has things like "think at scale" and "be frugal" on it. You get the idea I hope. This "guiding light" is a framework for the culture and values of the organization and each new hire should be assessed against the framework to make sure the fit is good.

You, as the founder and CEO, can drive this for a bit. Maybe up to the first twenty or thirty hires. But you are going to need help as the company grows because this is hard, really hard. So getting a person hired onto the team who is totally focused on the team and team building is critical. And make sure they are a good cultural fit when you make that hire. Because they are going to be the torch carrier for your culture along with you. It will be among the most important hire you will make in you startup. More on that to come as this series develops.

Disrupt Hackathon

Two years ago Steve and Jared spent a couple days hacking at the Disrupt Hackathon and ended up with GroupMe which went on to great success and an eventual sale to Skype.

For the past 24 hours, developers have been busy hacking away at Pier 94 trying to do the same. The demos will take place at Pier 94 from 11am until roughly 2pm, when the awards will be given out.

If you have a few hours free today and can resist the Party In Prospect Park or some other outdoor event on a beautiful spring day in NYC, you should head over to Pier 94 and check it out. Attendance is free but you do need to register on eventbrite.

The Darwinian Evolution of Startup Hubs

This weekend finds NYC in between Internet Week (which I largely missed because of my London trip) and Disrupt NYC (which I will be at on and off this coming week). So the development of NYC as a startup hub is very much on my mind. And so I thought I'd post about the development of startup hubs.

This theory, which I like the call The Darwinian Evolution of Startup Hubs, is not new and I certainly didn't come up with it. But I think it is important for everyone to understand and so I'm going to blog about it.

If you study Silicon Valley, what you see is something that looks like a forest where trees grow tall, produce seeds that drop and start new trees, and eventually the older trees mature and stop growing or worse, die of disease and rot, but the new trees grow up even taller and stronger.

In my mental model of Silicon Valley, the first "tree" was Fairchild Semiconductor (founded in 1957) which begat Intel (founded 1968) which begat Apple (1976) and Oracle (1977), which begat Sun (1982), Silicon Graphics (1981), and Cisco (1984) which begat Siebel (1993) and Netscape (1994), which begat Yahoo! (1995) and eBay (1995), which begat Google (1998) and PayPal (1998), which begat YouTube (2005), Facebook (2004), and LinkedIn (2003) which begat Twitter (2006) and Zynga (2007), which begat Square (2010), Dropbox (2008), and many more.

If I left out important foundational companies of this mental model, please forgive me. That was not meant to be a comprehensive history. It was meant to illustrate how this evolutionary scenario plays out over time.

If you drill down a bit deeper, you see that the founders, investors and early employees generate a tremendous amount of wealth from these big successes. The later employees don't make as much wealth but they do learn a ton and make enough money that they don't need to work for someone else and so they strike out on their own and are often funded by the folks who made the big money in the prior startup. That's how the seed drops from the tree and starts a new tree growing. This continues on and on and on.

If you look at that history of silicon valley, you see that in the forty year history (since Intel's formation), there have been close to ten cycles of maturation and new company formation, and those cycles are getting shorter and the number of important foundational companies that are formed each cycle are increasing.

That makes total sense since this darwinian evolutionary model is non linear. One company begets two and those two companies beget four, and so on and so forth. Of course there are exogenous factors that also play out, like technology changes, financial market cycles, and the availability and cost of talent, and they impact how fast the startup hub economy expands.

This darwinian evolutionary model of startup hub development is not limited to silicon valley. We have seen it play out in other places, most notably Boston, and increasingly in NYC. It is also playing out in markets like Boulder Colorado and Austin Texas and many other parts of the US and many parts of the world.

When I look at a startup hub, I like to figure out what the "Fairchild Semiconductor" of that market was and when it got started. That tells me how far along the development cycle that startup hub is. In NYC, that was Doubleclick which was founded in 1996, the same year as my first venture capital firm, Flatiron Partners, which was founded on two premises, that the Internet would be big and that NYC would be an important locus of Internet innovation. We did not invest in Doubleclick (sadly) but we did invest in a lot of interesting Internet companies in NYC in the late 90s.

So NYC's startub ecosystem is 16 years old now. And we are two cycles in. The companies that are getting started and funded right now in NYC are akin to the Apple/Oracle stage of silicon valley. If you want to push, you could suggest that we are three cycles in now and the companies that are getting funded right now are akin to the Sun/Silicon Graphics/Cisco era. That might be right.

But in any case, NYC's tech sector is not anywhere close in terms of fertility to silicon valley. It will be there in another 25 to 30 years. And silicon valley will be even further along. 

Unless, of course, something else happens.

The technological revolution that preceded the digital revolution was autos and airplanes. They were invented in the late 19th and early 20th centuries and the first commercial startups emerged in the first decade of the 20th century.  The auto/airplane revolution played out until the 1960s/1970s. That suggests that a technology revolution lasts around 75 years.

The transistor was invented in the late 1940s and by 1958 we had commercial startups working on the technology. So if this revolution is anything like the last, the next big thing will be invented any day now and within a decade or two we will be on to the next technology revolution.

And in that case, all bets are off. Silicon Valley could become the next Detroit and who knows what will be the next Silicon Valley.

But of course, all of this is conjecture. History doesn't repeat itself. But it does rhyme. That comes from Samuel Clemens (aka Mark Twain). One of my favorite people ever.