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I think there’s all kinds of problems that intersect to create the problems we see with these hires: - founders, especially first time founders, often have mid

I think there’s all kinds of problems that intersect to create the problems we see with these hires: - founders, especially first time founders, often have middling experience hiring for any role, and zero experience hiring execs. - the absolute best execs often have no shortage of offers, and hence it can be quite hard to identify and attract these people - founders often don’t want to pay what the really good execs are worth. Not that I’m even “really good”, but there’s a number of startups where I’ve been recruited because things are a disaster, can’t figure out how to scale the business, etc etc, and then after speaking with everyone they turn around and offer half a percent of the company, and act like they’re being generous. - founders want to hire someone who’s the right person for the long haul, because of all of the above pains - except that those people often are accustomed to two stages ahead of where the company is now and may not be prepared for what’s required right now And then, sure, there are the people who have failed up enough, or gotten lucky enough to win the startup lottery, and then coasted from there. But look at it this other way - 50% of engineers are in the bottom half in skill and talent. It’s just that you do your best to optimize for the upper half, and since you’re hiring lots of them, you trust in the numbers to pay off for you. When you are hiring one, and just one, head of sales - the margin of error is really thin.

ospray 4y ago
Sounds like a strong argument for delaying hiring exces till your larger. Unless they have contacts you need to tap.
- tomrod 4y ago
  I interpreted it as "execs are investments. Tread accordingly."
cgio 4y ago
I guess you comment as an exec but this comment does not help make the case. Without being an engineer myself, I would be very frustrated with the last paragraph. It uses a statistically true fact to make a meaningless argument (how is optimising for top 50% different to e.g. optimising for bottom 50%?). Furthermore it demonstrates a view of a team of engineers as a bag of individual contributors. In a team, skill and talent are only one factor in optimising team dynamics. You don’t trust in numbers, you trust in dynamics and collaboration and in people growing within your organisation. I recently hired a PhD and a bored junior admin whose most exciting piece of work was scripting his boring work away at the same day. Also to your core intended argument, you hire an engineer in a couple of interviews, an exec would go through an extensive round of meetings and interviews and therefore you would optimise the process across different dimensions. The margin of error should be pretty similar, given fundamentally organisations have an underlying risk appetite even if it is implicit. The issue is that execs have more experience manipulating your perception of risk and therefore you should go with your eyes open, because this is part of the skillset you are probably looking for anyway.
majormajor 4y ago
"- founders, especially first time founders, often have middling experience hiring for any role, and zero experience hiring execs." These seem like (and this one especially) exactly the sort of problems a VC would be positioned to help solve. So I wish PG would give advice instead of just complaining about bad execs here.
- gommm 4y ago
  Be careful of misaligned incentives though. A PE invested in a company (not a software company) I worked with recently, the PE placed execs and those execs proceeded to: - professionalize the company by switching everything to SAP and outsourcing all IT to India (and from our interaction with that company in India, they didn't chose a very good company) - increase revenue in the sort term by devaluing the brand - lower the quality of products through cost saving As a result after 2 years, the company sold to one of its long term partner for double the price of the valuation the PE invested in. Since the increase of revenue was done though temporarily dumping inferior products, the revenue is now slightly below the levels before the PE investment. Customers loved the company before and would evangelize for their products. Now it's no longer the case, a lot of customers have turned on it and openly criticize it. And most of the execs the PE brought in were either fired by the new acquirer or resigned to move on to new opportunities. So, were the execs the PE brought in bad hires? No, they succeeded in the PEs objectives. Were they good for the company? Not in the long term but, in the short term, they helped the founder get a very good exit (although the founder is pissed because it taints his legacy).

ospray 4y ago

Sounds like a strong argument for delaying hiring exces till your larger. Unless they have contacts you need to tap.

tomrod 4y ago
I interpreted it as "execs are investments. Tread accordingly."

cgio 4y ago

I guess you comment as an exec but this comment does not help make the case. Without being an engineer myself, I would be very frustrated with the last paragraph. It uses a statistically true fact to make a meaningless argument (how is optimising for top 50% different to e.g. optimising for bottom 50%?). Furthermore it demonstrates a view of a team of engineers as a bag of individual contributors. In a team, skill and talent are only one factor in optimising team dynamics. You don’t trust in numbers, you trust in dynamics and collaboration and in people growing within your organisation. I recently hired a PhD and a bored junior admin whose most exciting piece of work was scripting his boring work away at the same day. Also to your core intended argument, you hire an engineer in a couple of interviews, an exec would go through an extensive round of meetings and interviews and therefore you would optimise the process across different dimensions. The margin of error should be pretty similar, given fundamentally organisations have an underlying risk appetite even if it is implicit. The issue is that execs have more experience manipulating your perception of risk and therefore you should go with your eyes open, because this is part of the skillset you are probably looking for anyway.

majormajor 4y ago

"- founders, especially first time founders, often have middling experience hiring for any role, and zero experience hiring execs." These seem like (and this one especially) exactly the sort of problems a VC would be positioned to help solve. So I wish PG would give advice instead of just complaining about bad execs here.

gommm 4y ago
Be careful of misaligned incentives though. A PE invested in a company (not a software company) I worked with recently, the PE placed execs and those execs proceeded to: - professionalize the company by switching everything to SAP and outsourcing all IT to India (and from our interaction with that company in India, they didn't chose a very good company) - increase revenue in the sort term by devaluing the brand - lower the quality of products through cost saving As a result after 2 years, the company sold to one of its long term partner for double the price of the valuation the PE invested in. Since the increase of revenue was done though temporarily dumping inferior products, the revenue is now slightly below the levels before the PE investment. Customers loved the company before and would evangelize for their products. Now it's no longer the case, a lot of customers have turned on it and openly criticize it. And most of the execs the PE brought in were either fired by the new acquirer or resigned to move on to new opportunities. So, were the execs the PE brought in bad hires? No, they succeeded in the PEs objectives. Were they good for the company? Not in the long term but, in the short term, they helped the founder get a very good exit (although the founder is pissed because it taints his legacy).