VC Cliché of the Week

The sports world is a rich source of cliches and this week's cliche comes from the draft process.

Many teams believe that instead of drafting players to fill holes they should simply draft the best available athlete. And I've argued plenty that entrepreneurs and CEOs should do the same when hiring, particularly early in the developement of their company.

We've all known that person growing up that was good in every sport; fast, agile, coordinated, strong, could play forever without tiring. It used to burn me to invite a friend to play a round of golf with me, a game I've played without mastering for thirty years. And they'd be as good as me even though they rarely played. But I've come to understand that some people are just natural athletes and I am not one of them.

The same is true in building companies. There are people who have great range in business. They can manage, they can sell, they understand technology, they can plot strategy, they can do most any job well. In one of my portfolio companies, we have a guy who was CFO. He was a great CFO, but he wanted to do more. The CEO promoted him to COO and he now runs all operations and technology. He could run strategy too, if he was asked. That's what the best available athlete does. Whatever the company needs at a particular time.

And in a company that is young, that is particularly valuable. Because things change quickly. Gaps don't last long. They get filled one way or another. But talent is hard to come by and really gifted people are few and far between.

So that's why I most often recommend hiring the best available athlete. If you build a team full of people who can play any position, you are going to do really well. I am sure of it.

Comments

[Keshava Dasarathy]

Does this mean you should be willing to hire someone that doesn't have direct experience in the role you need filled immediately? What's the trade-off between a great "utility" manager, and one that is a specialist that can hit the ground running?

[charlie crystle]

This is a big issue for us now, Fred. We're in that awkward stage that comes between 12 people and 25 people (17, no venture!), and we are approached regularly by really good people for whom we have no specific roles, but could excel at a number of things. Just yesterday I had the 8th interview of a customer who wants to join us (our 4th customer hire) to talk about our plans, strategy, etc, and figure out where he would fit.

With certain hires, we want people with specific experience--channel marketing, business development, mass-market software marketing. It's a lot easier when someone doesn't have to spend 3 months learning the ropes and another 6 mastering them. In Lancaster, though, that's what we've got for now--given no budget for growth hires. And it's working out pretty well, though I'd really love some of that specific experience right about now!

[tobias]

There are similar thoughts, of course, in Jim Collin's Good to Great, etc ("getting the right people on the bus"). I've worked at some fantastically successful and innovative companies who apply this maxim (netdecisions, a UK investor in tech-enabled businesses is one). But there does come a time when the need to specialize is apparent, certainly in the world of software products – perhaps this is when you "step up" from being a start-up to being a serious concern. To get over that tipping point requires faith from investors, because specialists cost...

Best athletes are great to have onboard early on. But I’ve also been in companies that have grown to a point where the willing and able all-rounder is not quite good enough in a room of specialists. Things can get messy at that point – unlike smarter sports stars, the best corporate athletes don’t always know its best to retire at the top of their game.

BTW – to watch the best athlete theory dissolve in front of your eyes in a real sporting context, tune into England’s next World Cup Soccer match. We have four of the best midfielders in the world… who can’t figure out how to play in a coherent system together and up end up making a right mess of things…

[Charles Smith]

It’s critical to acknowledge when you’ve hired this type of employee as their shelf life can be limited. When the company is small, they thrive and are able to fill gaps and contribute across the board. When they have to specialize and play within the system and actually DO one particular thing well all the time, they can get bored and drive everyone around them crazy poking their head in where it doesn’t belong. They often don't communicate well across the company simply because they never had to before. Founders/CEO's too often hesitate in getting rid of these employees because they were so valuable filling gaps and getting everything necessary done to make the company grow. The CEO should be very aware of the DNA of the hire and determine if outside training in a particular area is worth an investment for these employees as the institutional knowledge they hold is extremely valuable.

[Charlie Crystle]

and loyalty be damned?

[Charles Smith]

and loyalty be damned?

Sometimes yes. It is the responsibility of any manager to see that loyalty is rewarded- in this case by identifying a potential HR issue in advance and setting a positive course. Many of the positive attributes for this employee in a young company can become negative as the company grows larger- address them early and everyone wins.

[Jason Wood]

Great point Fred,

In reading Xooglers (the great blog by the ex-Google crew), it resonates that Google built itself up in very similar ways. They hired rocket scientists, neurosurgeons, structural engineers, math professors, guys that ran manufacturing companies...basically they focused on the underlying skills and let the roles develop somewhat organically.

As a VC though, do you find sometimes your portfolio companies confuse "personal comfort" with "best available?" In other words, a startup CEO has a guy he knows and trust for ages (maybe they went to school together and were in each other's wedding parties), but never had the chance to work together before...so they bring them aboard in some undefined role. I could see CEOs confusing this kind of move as a "we're bringin in the best athlete" when in fact they're really bringing in the "most comfortable athlete."

[Jing]

I agree with Charles. Once the organization, whatever it is, grows past a certain size, the 'culture' at the organization changes. An early stage guy might be the worst person to have onboard when the company matures. What percentage of early stage founders are still running the show once their company has grown to 1000+ employees? Sure, there's probably a few you can rattle off, but they would definitely be the exception, not the rule. Too often, I've seen companies flounder because when the founders should have brought in professional management, they didn't. Being able to acknowledge where you fit in the organization's development is critical to maximizing the chances for long term success.

[charlie crystle]

I hate the myth--and it is a myth--that founders and professional management are naturally at odds, and that founders and early employees have no value to a growing organization. If founders don't have operational experience or relevance, you can create a startup within the org for the founders to drive vision and forward thinking. As soon as venture money comes on, orgs get very risk averse. They seek the rewards of others' risk, but unwisely (and often unnecessarily rudely) discard the geese that lay the golden eggs. Instead, they should nurture the risktakers, and create a postiive, contributory context within the evolving organization.

[Jing]

To clarify, the problem isn't when the founders are wise enough to bring in professional management. The problem is when particular founders who have no operational experience and happen to have marginal talent at it, insist on maintaining that level of control, when the organization has grown past their capabilities to handle. And unfortunately, there are countless numbers of companies that have floundered due to the founder's trap.