CHAPTER TEN

THE HIRING CHALLENGE

Getting a job at Return Path is harder than getting into a good college. We have 400 employees, but we got there by identifying 30,000 potential hires, vetting them, negotiating a deal with the ones we liked, implementing a rigorous, 90-day onboarding process, and capping it off with a 90-day review to make sure that they'll make it over the long haul. All the while, our competitors were trying to do the exact same thing—as were hundreds of other companies drawing from the same pool of talent. It's no wonder that hiring is one of the many full-time jobs you take on when you become a startup CEO.

UNIQUE CHALLENGES FOR STARTUPS

Retaining good people has always been at the top of my list, even in the dark days. But hiring presents some real challenges. Many of these aren't unique to startups—it's always tough to find A players—but there are three things I've observed that are uniquely tough about hiring in an entrepreneurial environment:

• Defining the job properly. Most job postings at growth companies are for newly created positions, and even jobs that are open for replacements have usually changed since the original job was created. A clear, crisp job definition is an essential first step in the recruiting process. But more than just spending the time to write out bullet points for key responsibilities, hiring managers in startups need to do two important things. First, they should recognize that today's job definition may evolve over time, and make a determination about what level of generalist versus specialist makes the most sense for the position. Second, vet the job description with anyone inside the company with whom the new employee will interact, in order to get everyone on the same page with the roles, responsibilities, and the inevitable changes to existing roles and processes caused by the addition of someone new into the mix.
• Finding the time to do it right. Most managers in small companies are at least a little overworked. Most cash-sensitive small companies don't want to hire new people until it's absolutely necessary—or until it was absolutely necessary about a month ago. This mismatch means that the hiring manager is even more overworked than usual by the time the organization has decided to add someone, and can't find the time to go through the whole process of job definition, recruiting, interviewing, and training. This is one of the biggest traps I've seen startups fall prey to, and the only way to break the cycle is for hiring managers to make the new hire process their number one priority. Prepare your colleagues to accept reduced output in exchange for longer-term gains of leverage and increased responsibility.
• Remembering that the hiring process doesn't end on the employee's first day. I always think about the employee's first day as the midpoint of the hiring process. The things that come after the first day—orientation (where's the bathroom?), context-setting (here's our mission, here's how your job furthers it), goal setting (what's your 90-day plan?), and a formal check-in 90 days later—are all make-or-break in terms of integrating a new employee into the organization, making sure they're a good hire, and making them as productive as possible.

RECRUITING OUTSTANDING TALENT

Most of the managers on your team are making tactical decisions that can be forecasted and planned for in advance. This includes hiring: if you're planning to roll out a mobile app in the following year, you need to start recruiting mobile developers 6 to 12 months ahead of time. CEOs, by contrast, focus on long-term, strategic planning. When those plans change or go into a new phase, you'll find yourself needing an entirely new set of talent on very short notice. You can either scramble to find those people at the last minute, or you can go back to a contact you made years ago—just in case.

Staying “In-Market”

For the most part, your managers can focus their recruitment efforts around specific needs: your chief financial officer (CFO) needs a new controller, your chief technology officer (CTO) a database specialist, your head of sales needs two new reps. CEOs have to be engaged in general recruiting all the time.

This is a subset of being “in-market,” and it's just as important as keep tabs on your customers and your competition. If a friend, board member, or colleague recommends somebody, meet with them—even if you don't need someone with their skill set at the moment. If you don't have the time, send one of your senior people. You never know when you'll find a great executive that you want to hire now and find a home for later. This is the same philosophy as Jim Collins's “Get the right people on the bus” theory from Built to Last.

There's nothing disingenuous about taking these meetings even if you're not hiring: when a need arises that this person might fill, you will get in touch. (It's important to be up front about this: don't give people the impression that they're interviewing for an active position if that's not the case.) You're just being honest when you say that you don't know when that will be. We've been able to fill more than a few key senior roles over time very quickly, and without having to use expensive recruiters, by being actively in-market all the time.

Recruitment Tools

In addition to reference from trusted colleagues and friends, there are five major areas you should focus on when thinking about recruitment:

1. Your values. I've already spoken about the importance of using your culture and values as hiring filters: if someone doesn't adhere to your values or fit in with your culture, don't hire them. On the flip side, your culture and values can be a great recruiting tool. If someone is a great cultural fit, they're likely to be as aware of that fact as you are. They're the type of employee you're looking for—and you've founded the kind of company they want to work at. It's a win-win.
2. Your old jobs. The simplest way to recruit is to go back to people you know from prior jobs. Everybody on your team should do the same. Why take the risk of bringing on an unknown entity—and it's always a big risk—when you can recruit people you've already seen in a professional environment?
3. Your team. The bigger your team gets, the more leverage you have in using it to help with recruiting. You don't just have your own former colleagues to call on—you have everyone's. If you've done a good job building a high-purpose and high-performance organization, your employees will want to pull in the best people they've ever worked with at prior jobs. We consistently source between 40 and 50 percent of our new hires from existing employees, which keeps our recruiting costs down, our standards high, and our culture consistent. We pay employees a $2,500 bonus for every successful referral they make (other than executives and direct hiring managers), although sometimes I think we'd be almost as successful in getting employees to refer talent into the organization even if we didn't.
4. Your company's reputation. Nobody wants to work for a company with a bad reputation, no matter how innovative and disruptive their offering might be. Everybody wants to work at companies with reputations as great places to work. (Just ask anybody who's applied for a job at Google.) Return Path has made it onto “Best Places to Work” lists at Colorado Business magazine, Crain's New York Business, Inc., and Fortune. Every one of those commendations has been an amazing recruiting tool.
5. Your sales skills. As I mentioned earlier, when you ask someone to come work for you, you're asking them to spend half or more of their waking hours devoted to your company. It better be worth it! Comp and perks are important, but you also have to sell your vision for the company, why it's important, and how your recruit is going to contribute to its success.

THE INTERVIEW: FILTERING POTENTIAL CANDIDATES

The recruiting process usually focuses on the skills and requirements listed in your job listing. Is this person a good developer? A high-performing salesperson? A talented marketer? Ask a potential hire, and they'll certainly say yes. If you want the real answer, you have to depend on two things: references (both on and off the list provided by your recruit) and domain experts. As Opsware co-founder and technology VC Ben Horowitz once pointed out, you can't determine whether someone is going to be an effective head of Japanese sales if you don't speak Japanese. Find a domain expert, and let them answer that question.

As a CEO, your goal should be to look for cultural fit and engagement—the X factors. The best way to do so is by interviewing candidates yourself.

Two Ears, One Mouth

There's a phrase I'm going to repeat a couple of times in this book, a favorite of our head of sales, Anita Absey: “You have two ears and one mouth for a reason.” You should always listen more than you speak, especially when you're interviewing somebody. Lots of senior people spend all their time talking when they're interviewing a candidate for a job. Maybe they love selling, maybe they just love hearing their own voice. Either way, it's a mistake.

Perhaps the most important interview question you can ask is “What do you think of our business?” If the interviewee doesn't have a cogent response by the time they get to you, you don't want them. And it doesn't matter what job the person is applying for. Why should you hire an accountant who didn't take the time to read your web site or learn more about your company throughout the interview process and develop a point of view on your business? Find the candidate who cares enough to do that. With that question, you're still leading the conversation. For at least half the time you spend with someone, you should let them lead it instead. What are their questions? Are they focusing on the right areas or sniffing after red herrings? Did they show up prepared for 15 or 30 minutes' worth of questions or just a handful of generic concerns? Spend most of the interview listening, and you'll quickly find out.

Whom Should You Interview?

I interview a lot of people: I probably interviewed 60 people last year and will interview at least that many this year. Until the year we hired over 100 people for the first time (which brought our team to about 275), I interviewed everybody. Not just direct reports—or even reports of reports—but every last intern.

Usually, these were on the phone or Skype. In most cases, they lasted for only 15 to 30 minutes. For the most part, I only wanted to meet what were almost certain to be new employees and validate my managers' decisions. It was only in extremely rare cases that I overrode a hiring manager's decision and dinged a recruit. In those cases, it was clear that the manager was rushing the process to fill a seat—which didn't happen often and needed to be stopped when it did.

These short interviews have been great mechanisms for collecting data about the organization, for making a personal impression on the culture, and for continuing to get to know all employees, at least a little bit. Moreover, it was a great recruiting tool: good candidates really appreciate the fact that the CEO is interested in them, even if you give them only 15 minutes of your time.

It was a bittersweet moment when I stopped interviewing everyone: while it was great to be growing fast, I immediately started missing the personal connections with everyone, and it's harder to remember names as I walk through the hallways now.

ONBOARDING: THE FIRST 90 DAYS

The hiring process doesn't end on an employee's first day. It ends 90 days later.

Perhaps the single most important part of the recruiting process is onboarding. Nothing has a greater impact on a hire's viability. Sure, you have to get the right people in the door. But if you don't onboard them properly, they may never work out. This is where all companies, big and small, fail most consistently.

Remember your first day of work? Did you (or anyone at the company) know where you were supposed to sit? Did you (or anyone at the company) know if your computer was set up? Did you (or anyone at the company) have a project ready for you to start on? Did you (or anyone at the company) know when you'd be able to meet your manager? Probably not.

Take onboarding much more seriously, and you'll be astounded by the results. We have a manager of onboarding whose only job is to manage the first 90 days of every employee's experience. You don't need to go that far (and won't be able to until you've scaled well past 100 employees), but here are some things you can, and must, do to ensure a successful onboarding process:

• Start onboarding before Day 1. Just as recruitment doesn't end until Day 90, onboarding starts before Day 1. At Return Path, we ask people to create a “Wall Bio”—a one-page collage of words and images that introduces them to the team—before their first day. It's a quick introduction to our company culture, and something the rest of our team looks forward to seeing as new people join. Your project can be different, but it's important to get new hires engaged even before their first day.
• Set up your new hire's desk in advance. There is nothing more dispiriting than spending your first day at a new job chasing down keyboards and trying to figure out your phone extension. We go to the opposite extreme. When new hires walk in the door at Return Path, their desk is done. Their computer, monitor, and telephone are set up. There's a nameplate on their office or cube. They've got a full set of company gear (T-shirt, tote, etc.). To show how excited we are, we even include a bottle of champagne and a handwritten note from me welcoming them to the company. In the early days of the business, we even had the champagne delivered to the employee's home after they accepted the offer. (That didn't scale well, particularly outside of New York City.)
• Prepare an orientation deck for Day 1. There are certain things about your company that new hires will learn as they go along: nuances of culture, pacing, and so on. But there are some things that should be made explicit right away. What is the company's mission? What are its values? How is the organization structured? What is the current strategic plan? These details are common to every employee, and all new hires should hear them—preferably from the CEO. You can present these details one-on-one to your direct reports or do larger in-office sessions to groups of new hires over breakfast or lunch.
• Clearly set 90-day objectives and goals. Other details are going to be specific to an employee's position. What's their job description (again)? What are the first steps they should take? Resources they should know about? People they should meet? Training courses to enroll in? Materials to read and subscribe to? Finally, and most important, what are the major objectives for their first 90 days? They shouldn't spend their first quarter “feeling around.” They should spend it actively and intentionally working toward a clear goal.
• Run a review process at the end of 90 days. Whether you do a 360 review or a one-way performance review, the 90-day mark is a really good point to pull up and assess whether the new hire is working out and fitting culturally as well. It's much easier to admit a mistake at this point and part ways while the recruiting process is still somewhat fresh than it is months down the road after you've invested more and more in the new hire.

With that, the hiring process is done. Now, repeat.