Looking at the rain outside my posh Sand Hill office, my co-founder Jay Bhatti and I wondered how we could assemble the right team to build the company we had envisioned. Every entrepreneur confronts this challenge. The vision, in my opinion, is the easy part. Getting it done is a lot harder. My experience in venture capital had taught me first-hand that building a market leading company requires a great team and a great company culture. That is what separates winners from also-rans! But it’s also a lot easier said than done.
Every founding team brings different skills to the table. Knowing your strengths and weaknesses is really important. Jay and I were past our productive engineering days, and were now business guys. As a VC at Clearstone, most of my current network was other entrepreneurs, execs, and other VCs. Jay, an exec at Microsoft, was moving from Seattle, and didn’t bring too much local engineering talent to the table either. But we had great chemistry, and trust, dating all the way back to B-school. And that was a great start.
The first move we made was put together a strong advisory board. We looked through our network, identified the strongest people we knew, and began pitching them. We realized that some got the vision instantly and some didn’t.
I have noticed that in technology we’re surrounded by very smart people. IQ is virtually a commodity. However, there are those who are analysts – can ask 1 million questions, and be skeptical of everything; then there are doers, people who apply their intellect and resourcefulness to find solutions. Find those people and keep them close to you. Stay a 100 miles away from the former.
We got Siva Kumar, serial entrepreneur, who had started 8 companies not only to advise but also take a board seat. We got Suneet Wadhwa, also a serial entrepreneur, and a friend to encourage us, and push us to to think more deeply about the user, and what problems to solve first.
Being at Clearstone was also a strong asset. Clearstone’s David Stern and others there were active and helpful in introducing us to well connected people. However, our engineering network was weak! We knew no great search guys personally.
Therefore, Jay and I next set about becoming full time “head hunters” – calling all the engineers in our network and asking them to recommend others. We got some leads, some relevant people, but not everyone is into taking risk. They loved the concept but didn’t want to leave their cushy jobs, especially when we’d raised no money.
Just like any large endeavor in life, we set up a process, and fine-tuned it over time. Pushing our contacts and cold calling people become the tasks of the day. We used LinkedIn, and Google, both great resources, judiciously. Each person, and each email was researched and personally crafted. Soon we began to build a large pipeline of qualified talent. Our advisors became a great resource not only to interview candidates, but also introduce us to others.
Siva introduced us to Jeff Winner, a well known VP Engineering with search and consumer background, who was sought after by every VC on Sand Hill Road. We knew we couldn’t close him right away, so we enlisted his help in interviewing candidates. This was a perfect arrangement for both parties. Try before you buy.
In a matter of 60 days, we had contacted over 200 engineers, spoken to about a 100, interviewed 40, and got 7 good guys who very interested. Hongche Liu was the star. He was a hands-on engineering manager and superstar at Yahoo!, a PhD with 10 years of complex IR product experience, in addition to research. Most importantly, he was excited about doing a startup and had a great work ethic and attitude. We put all our force into convincing him to forget his high paying job, de-prioritize his wife and 3 kids, and take a whopping $90k salary!
Vision and concept aside, Hongche, like most engineers who aspire to join startups, realized that the risk of not joining a startup was way greater than being a cog in the wheel at a large company. His learning and therefore value would be a lot greater by being a key member of a venture backed team.
We got lucky with our next hire. Wayne, a teenage entrepreneur, who had built dawsonscreek.com in high school, with over 2m page views a month, was at Microsoft working on the undo button in Powerpoint! He was aching to get back into the web, learn Ruby, and apply his energy while having fun. He blew us away within 15 mins of interviewing; he signed an NDA; 15 minutes later he was blown away by the service Jay had mocked up in Powerpoint.
Wayne was very smart and decisive, and so joined us after his two weeks notice. I realized that the most valuable people are those who are decisive, smart, and have a great attitude. Wayne had all three. Jay calls this the BAD principle – Brains, Attitude, and Drive.
The one thing that frustrated me was that I’d find Jay searching Craigslist for engineers and sending email upon email, with no responses. I pleaded with him not to waste his time doing “stupid” things. I called it adverse selection. I was proven to be the idiot!
Jay found Sam Williams, a young Caltech CS guy, who had goofed off two years in Europe, but was a Ruby on Rails star. Jeff interviewed him, and within 30 mins he walked into my office and said, this is one of the smartest guys we’ve interviewed. He’s a consultant but loves the Spock idea and can start immediately. Like Wayne, Sam was smart and decisive. The only difference was that he started in two days.
Meanwhile, Jeff Winner was spending more and more time with us. He helped us interview and hire. He began to spend more time architecting the product, and in the process began to evolve our product concept. He was also now fully sold on the vision and the team (that he had helped hire). He threw in the towel, and joined full time.
We were now a very strong 5-person core team. On the way we had raised $1m from my colleagues at Clearstone, and were off to the races. Today we have 16 full time people, have raised $9m, and get over 50 resumes a week.
As a VC, I had seen my investments do well when the teams were outstanding and the culture was great. But having gone through it myself, I realized the vast difference between analysis and doing. I have now internalized a few key lessons:
1. Find good co-founders, people you trust. Don’t be greedy. In my venture and entrepreneurial experience, many people mess this up.
2. Have an exciting vision. It’s the only thing you have to offer. If you’re not super stoked, nobody else around you will be either.
3. Have conviction and be passionate about your vision especially in the face of adverse feedback. High IQ analysts are a dime a dozen, and will raise a million exceptions. Ignore them; both as employees and as advisors.
4. Get the best and most experienced advisors around your company who share your passion. If u don’t know anyone, cold call until you find them.
5. Have a very high bar for recruiting, both talent and motivation. Don’t let fear and temptation get the better of you. It’s easy to convince yourself that the person has worked at other places and is probably good enough. Good enough is not good. You’ve got to be excited. Remember Jay’s BAD principle.
6. Pay lower than market in the early days; it’s a great filter.
7. Age is not a factor but motivation is. People who don’t work hard, will never be the key drivers in your startup. Perfection comes from hard work.
8. Don’t undervalue engineers from top schools. We got guys from Berkeley, MIT, Stanford, Caltech, etc. and they are all really good. There are lots of great engineers from average engineering schools (like myself) too, so don’t over-emphasize school either. It really is about talent, hard work, and great attitude.
9. There are those who look for problems and those who look for solutions. This becomes clear in interviews very quickly. Hire people who look for solutions.
10. Grow a thick skin for rejection.