Notes to get you thinking about Culture and Hiring

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The reason we think about vision and culture before people is simple: if you don’t know what you stand for and what you’re looking for, you’ll find it very easy to hire the wrong people. But if you’re clear on your vision, values and culture, it becomes much easier to hire the right people and build a team. Hiring is one of the greatest challenges for startups; it’s very rare I attend any startup gathering where hiring isn’t raised as one of the biggest issues.

Start with the foundation analogy. If you build a foundation worthy of what you want to put on top, you’re in a great spot. The opposite doesn’t work: build a great house of many floors without a foundation thinking about how big the building will get, and at some point it runs into all the issues. In a business, that foundation is the culture that selects the right people and empowers them, plus the people who execute on a vision big enough to attract and retain them.

The biggest capital in your business is not financial; it’s human. Human capital is the engine of your business. So any thought about your vision and how to drive toward it won’t happen unless you have that same group of people on the same page driving with you. The lifecycle is: specify, find, hire, develop (coach and mentor), retrain if necessary, and, when it doesn’t work out, fire.

Specify. It’s amazing how many people say they’ve got twenty people to hire but haven’t written a job spec. If two people interviewing aren’t even on the same page about what they’re looking for, you have a problem. It doesn’t have to be fancy, but write down, in black and white, what you’re looking for. If a group can’t agree on what you’re looking for, you’ll never get the right hires; you’ll just get “I thought you meant this and you thought I meant that.”

Find. In small companies the best source is referrals. Aquia pays a $5,000 bounty for a referral once they hire the person. Why? Great people hire great people. It’s not really about saving a recruitment fee; if you’ve already hired the right starting point, the best way to find the next great people is to trust them to find people they’d trust to work with.

Develop, coach, mentor. People come to work to learn, not to stay stagnant. I wouldn’t hire anybody who couldn’t answer, “What do you want to learn?” If they look at you blankly, it’s probably not a great fit for a startup, because you’ll have to learn continuously to make breakthroughs that have never been done before. As Evan at Aquia said, one reason he joined is that you’re not just able to learn, you’re expected to; if he wants to try something new, he’s empowered and encouraged to. Aquia even built programs around this: internships that are meant to be mutually beneficial (give the younger generation a stepping stone, teach them, hopefully hire them full time), and “Aquia U,” where they hire people without a lot of Drupal experience, train them in Drupal, and bring them on full time to help fill market demand.

Retrain. If you’re going to be a company that constantly listens, learns, leads, innovates and pivots, a lot of people will have to move with you and get retrained, sometimes needing new skills or new ways of approaching problems. It’s not just hire, onboard and train for the job; it’s often retraining as you evolve and pivot, or you’re not using your biggest capital.

Fire. When things don’t work out, do not wait to fire somebody. You’re doing them a favor, even though it’s the hardest thing I’ve ever had to do. Two reasons: if they’re not a fit, you help them get to a place where they will be; and the rest of your team needs to get on with their lives without someone dragging them back. The biggest lesson (you’ll hear it from many executives): we usually wait too long. I can’t recall ever hearing an executive say, “I fired that person too soon.” As Noam Wasserman documents in The Founder’s Dilemmas, you will hire people early on who fit the early stages perfectly but don’t fit as you grow; their skills don’t fit at that point in time. So my advice: first, can you retrain or place them elsewhere in the company? Second, if you must let them go, make it about the company, not about invalidating the individual, because everybody is good at something. Handle exits respectfully (help them find their next role, give a reference), because that person becomes an ambassador of your company. The startups that succeed have some of their best ambassadors among people they let go, because they did it respectfully. Treat people with the same respect and integrity you started with, and their best reference will be, “It didn’t work out for me there, but I’d work there again in a heartbeat.”

Who’s responsible for hiring? The CEO. When Tom wanted to be CEO of Aquia, I said he should be, but really the CEO is the CTO: the Chief Talent Officer, the number one recruiter. Tom’s answer to “what are you good at” was, “I’m good at hiring teams,” and he’s hired almost 2,000 people all over the world; if you focus on hiring the right team, good things happen no matter what. The really great CEOs, even at big companies, will get on a plane for a key hire, because that’s what makes the greatest difference.

How does hiring scale? My rule of six (unscientific, just observation). The first six people are usually the founders; I often considered the first six (sometimes even the first thirty-six) co-founders regardless of title, because they’ll just get along around a water cooler and communication flows easily. Multiply by six and you need an exec team to grow. That next multiple of six requires management. The first company I was involved with didn’t hire the right next layer (the people running quality assurance, service and support) and struggled hugely to get through a thousand people, with a lot of staff turnover. The next company did a great job training and developing the rising stars from within, put a leadership program in place, and scaled through a thousand people without blinking, then went public successfully. So the first six are incredibly important, the next thirty-six just as important because they become your critical mass, and if you’re going to scale big, develop your talent internally so you get scale without losing the culture.

Now, what do we typically hire for? Two things: EKS (Experience, Knowledge and Skills) and IQ (the smarts). Perfectly reasonable, and a checklist (“knows Java, maybe PHP, some install experience”) is easy. But EKS and IQ turn out to be among the least important things. I hear “that person is wicked smart, we’ve got to have them.” Maybe, maybe not. What if they don’t fit, don’t get along with the team, have a totally different cultural style or ethics, don’t believe the customer is important, don’t think communication matters, aren’t respectful, are basically difficult to work with? I don’t care how smart they are; I’d never hire them.

So I developed CQ: Cultural Quality of fit. You’ve heard of EQ (emotional intelligence); researchers say EQ doesn’t necessarily impact job performance, so I use CQ instead. Tom defined Aquia’s version as P-triple-I: Passion, Intelligence, Integrity and Initiative. They look for it in every candidate. Passion: they want people who love it (an engineer, asked how work was going after a year, said, “Work? I don’t work; I come here because I love it”). Intelligence: not raw intelligence but doing the right, smart thing, common sense. Integrity: with ourselves, our peers, our customers and our partners. Initiative: they also say “ask for forgiveness rather than permission,” and live it. Using an acronym makes culture easier to talk about as a company. And as Chris, who runs engineering, added, they look for people who work well on a team (no ego, passionate about customers and product over themselves) and who haven’t followed a single track in life; a key question is “what have you done outside the curriculum or outside your work?”, because if you’re not doing anything interesting outside, you’re probably a nine-to-five, one-dimensional person.

Quality control: the opposite of CQ. Ask two questions at the end of an interview. First, is each hire additive or dilutive? Do they bring capabilities, qualities or smarts that add to this team, or, netted out, do they dilute it? (One board member described a sales rep who thought everything was wrong; if you think everything’s wrong, it probably is going to go wrong, so that person was dilutive.) Second, on the CQ front, is each hire multiplying or dividing the culture? Multiplying is great; they reinforce everything. Dividing pulls your team apart, divides loyalties, values and convictions, and causes the dissipation of energy we want to avoid. People instinctively know these answers; if someone says “I’m not sure,” go back around the interview process.

Everybody wants to hire A players (it used to be A players, then Google came along and now it’s A+ players). A’s hire A’s; B’s hire C’s; and C’s you don’t want to know. My top three attributes of A players are three A’s: Attitude, Aptitude and Ability. I put Ability at the bottom on purpose; it’s the easiest to figure out (their EKS, readable on a resume, checkable with references and tests). The two that really make A players, especially in startups, are Aptitude and Attitude. Attitude matters because in a startup there’s so much you don’t know; if your attitude is “if I don’t know, how can I do it?”, you’re in trouble. Great startups make breakthroughs, and “break” means you’ll break stuff and land in unknowns, so you need an attitude that’s comfortable leaning forward into that. Aptitude is your ability to learn and take on new stuff, which matters because by default you’re going into the unknown; it hasn’t been done before.

Then the three pluses (the ”+” everyone wants after Google): things that determine who a person is, not what they do or how they’ve done it. First, self-aware. If you’re not self-aware, you don’t know what you don’t know, so it’s hard for anyone to help you; the best thing you could admit is “I’m not self-aware, I need help with that,” which is itself a good attitude. Second, authentic. If you’re making it all up, it gets exposed quickly; easy to test in interviews (if someone says “I love coaching” but plays no sports and doesn’t like sport, that’s probably not authentic), and especially important when interviewing salespeople, because selling is what they do for a living. Third, athlete: not literally physical, but someone with the desire to perform, adapt, move on and compete, which matters in a startup where you’re usually the smallest guy competing with bigger ones. (I sometimes phrase the last plus as “people like us,” an acid test: are these people you’d genuinely enjoy working with? You heard Tom say “I love coming to work because I like the people,” and if you wouldn’t like working with someone, the 80-hour weeks will be tough.)

All of this comes down to three key questions (which good HR people everywhere use in some form). One: can this person be successful at the job? You’re setting them up for success, not failure, and you assess that through their EKS. Two: will they really love this job? If not, their energy won’t sustain the business; you assess that through their smarts and aptitude, because loving it now and in the future depends on adaptability. Three: will they fit and reinforce the company in its vision, mission, goals and objectives? That’s the CQ fit. If you can honestly answer yes to all three (they can be successful, they’ll love it, they’ll fit), that’s a great hire, and it isn’t thirty questions, it’s three. This is the golden triangle: EQ, IQ and CQ, matched with attitude, aptitude and ability. Get all of it and you’ve made a golden hire. As a live proof, two of the people helping me here, Steve Abbott (the first internal salesperson I hired, at 21) and John Bruce, both became multi-time successful CEOs; the thing I’m most proud of in my career is not what I’ve done but what these golden hires have gone on to do. Dick Costolo, CEO of Twitter, made the same point: the fit between personalities is more important than just finding people who are good. Hire great people for skills and IQ, but if they don’t get along, it doesn’t last two seconds, and the number of times an engineer says “I found the smartest guy on the planet, we’ve got to hire him” without asking whether he can get along with anyone (often he can’t, because he thinks he’s right all the time and won’t listen), and the result is turnover, which takes a company backwards and costs money.

The tools. Hiring starts with listening. On EKS, ask few questions and listen 95% of the time; the biggest thing that goes wrong in interviews is people selling. You can’t sell before you’ve listened, because if you sell the candidate on the company before figuring out whether they fit, you’ve learned nothing about them. On IQ, don’t skip the proof: it’s easy in engineering to give a code test (in open source you can even look at code already out there), and you should, because past greatness doesn’t mean fit for what you’re doing now, especially if you’re migrating them to a new language. On CQ, trust the process; “the deal is the process,” as my partner Rich says. How do they engage when they first get your call? How do they respond after the first interview? Do they take in your questions and respond openly, care when you give feedback, take time to figure out who you are and check out your company, question you enough? Those things tell you a ton about cultural fit. David from Aquia put me through a ruthless process, interviewing me and telling me who I’d be working with; raising money in the dead market of early 2009, Aquia had about seven term sheets and it became their interview of us. And never hire without real references, at three levels: peers they’ve worked with, people who’ve worked for them (which reveals how they treat the organization), and people they’ve worked for. Real references aren’t “here’s my mom, go call her”; the challenge is that people often feel they can’t tell you what they think, so you need trusted connections where someone can be honest without fear of retribution. It’s what I spend most of my time on, and it makes an enormous difference.

Example interview questions (examples, not the questions). For EKS: what experience have you got that is relevant to this job? The key word is “relevant.” People have loads of experience; if they launch into their entire life history rather than what’s relevant, they didn’t do their homework. For IQ: tell me about a situation or problem you’ve solved that’s your favorite. The key word is “favorite,” because it tells you what they’re excited about solving and think about in their spare time, and how they explain it (simply, even in a field you don’t know) tells you they’re articulate and were innovative. (I have a “seven levels of problem solving” sheet: I’ll assess on the spot whether someone is a level one, who can merely identify the problem, or a level seven, who is so far ahead they’re thinking about what might reoccur and how to avoid it in the future.) For CQ: what have you most enjoyed in your previous jobs? The key word is “enjoyed”; you learn what people are interested in and passionate about, and answers like “the ability to learn from these people” tell you someone is inquisitive and growth-minded. Also ask what they value most before telling them anything about your company; if they say integrity, passion and so on, you’re checking off your cultural values. And if I only had one question, it’s this: what are you passionate about? People who are passionate about what they do take pride in their job, and the results and rewards follow. Sometimes it’s the only question I ask, because people who’ve never been asked it reveal so much (I once asked a candidate in China who’d never been asked, and who was so regimented it took her a long time to answer, but she turned out to be a fantastic hire, dying to prove she could make an impact; she just hadn’t known that was possible).

One more thing on the CQ challenge across a big, dispersed organization, as an HR professional asked: how do you impress the golden triangle on hiring managers who are focused on the skills side? Tom’s answer: verify the process. Pull people in early so everyone understands the values, so as you grow and get distributed, they carry those values with them. And even in a turnaround (Tom has walked into struggling organizations across Asia Pacific), you validate by doing one-on-ones with new hires after they’ve been hired; if you find inconsistencies, go back to the hiring people and say, “I’m seeing patterns here I don’t like.” As Jamie, Aquia’s head of HR, put it: never fall in love with a resume and ignore the cultural fit part, because ten out of ten times it will bite you and be an expensive cost.

The physical manifestation and management style also communicate culture to hires, and they should be authentic. Do you have cubes and offices or open plan? That’s cultural. An open environment spreads communication (with less privacy); a siloed one has a very different feel. Neither is right or wrong: a research lab doing bioengineering might want offices so culture doesn’t spread cube to cube, while a social-networking company probably wants to be open. Aquia’s office is laid out like an architect’s studio, with low dividers (people with more phone time get six extra inches to deaden sound); Tom loves it because he can see and greet everyone, and when the sales bell rings, everyone can hear it. The rule is that people with the most direct reports may have offices, for one-on-one meetings, which are a big part of the culture (you can request a one-on-one with anyone, anytime; an engineer grabbed time on Tom’s calendar just before this session to catch up and get mentoring). Management style is a cultural choice too. One private-equity firm’s office was all wood-paneled offices with closed doors and an assistant outside each; that hierarchy worked for them. Tom’s philosophy, drawn from Tom Peters’ Thriving on Chaos, is an upside-down org chart: the most important people are those directly facing the customer, and the CEO is at the bottom, supporting the whole organization. He even likes intentionally ambiguous org charts (a lesson from a McKinsey consultant), because people are more motivated when they don’t feel a hard limit on what they can do; it creates a little more chaos but is far less hierarchical. And Aquia runs customer-service days, four a year (two purely technical), where everyone drops what they’re doing to solve customer problems, set up like a telethon call center with scoreboards, food and screens of customer tweets, to get everyone excited about customer success. Connect people to the values you’re subscribing to, because if someone likes command-and-control and precise org charts, they wouldn’t fit an organization like Tom’s, and that’s the point: define what you’re not so people can self-select.

Finally, teaming: what it takes to make a bunch of individuals execute successfully together. If everyone, for their own reasons (their excitement, their learning, their growth, their experiences, their fun), gets behind the same vision, mission, goals and objectives, and if they’re self-aware enough to support each other (this person’s good here and weak there, and I’m good there, so I can complement them), then everything’s possible. That’s why teaming is so important. A simple question I ask good execs is whether they know the difference between ownership, responsibility and accountability: everybody may “own” and be responsible for keeping customers happy, but only one person should be accountable for a customer being successful. Teaming also requires self-awareness (so you know where to go for support), openness (people who share rather than close in, and can easily admit they’re wrong, as my entrepreneurs frequently point out about me), and the ability to give and receive constructive feedback (the hardest part: helping people understand a problem in terms of what they can do about it and how the team can support them). Chris adds a key teaming test: is this person someone you’d trust to cover your back in a really difficult situation, in the three-week (or longer) battles you’ll go into together? If you don’t trust them viscerally at that level, that’s a key sign.

Startup Secret: Building a great company is not a sprint, it’s a marathon, and great teams break the marathon into relays. On average it takes seven to eight years to build a successful startup outcome (straight from the National Venture Capital Association, and it went up to nine years when the bubble burst after 2001), so be ready for the marathon. What good teams do is break it into a series of relays, handing off to each other: a sprint to get the product out, then a handoff to the people creating product marketing, then to the people who sell it, then to the people who support it, then to the people who upsell it. Suddenly you’re building a company and it didn’t feel that hard, because you’ve got interesting, exciting smaller sprints making up the relay that makes up your marathon, and what seemed like a seven-year stretch becomes a “seven-year overnight success.”

And apply all of this to every stakeholder, not just employees. You will, in a sense, hire your mentors, your investors, your co-founders, your partners and your board members. Every stakeholder is a choice; choose carefully so you don’t have to fire. Lots of people can write you a check, but that doesn’t make them a better investor or a better fit; your initial customers will be demanding because they expect a startup to be nimble around them, so choose them carefully; and if you end up with supply-chain partners you can’t trust, that will bite you when you can’t deliver on customer promises. So choose all your stakeholders using these same principles, because it’s all just as important.