Takeaways from the SVASE CXO Panel: How To Become a Talent Magnet

I spoke yesterday in Palo Alto at the Silicon Valley Association of Startup Entrepreneurs (SVASE) on a panel about recruiting entitled:  How To Become a Talent Magnet.

The event was hosted by Ram Sriram and my fellow panelists were:

The panelists generally agreed that for an early-stage startup to become a talent magnet, it should have these three things:

  • A clear, compelling vision.  The ability to tell your story, quickly and simply.
  • An aura of success.  The overall feeling projected by you, your team, your advisors, that this company is going places.  While you might not feel that way every day, you need to have your game face at all times.
  • An engineer-friendly environment.  Since most of the companies were early phase and trying to attract both the core executive team and their product development teams, this was an important point.  Engineers are good at sniffing out whether the company will be a fun and interesting place at which to work or whether they will be treated like galley slaves rowing the boat.
Here are some the tactics that can help you do that:

  • Get out and about.  “The best entrepreneurs are those that never sleep.”  Go to meetups, conferences, etc.  Meet everyone.
  • Contact venture capitalists early, before you are asking for money.  Get a warm introduction where possible.  They can help guide your vision and potentially help build your team.
  • Get top-class advisors.  Don’t be shy.  Call the “names” in your space and ask them for an hour of time to hear your story.  Ask them if they’d be interested in advising the company or sitting on the board.
  • Remember that recruiting is a dual-selling process.  Don’t be so busy filtering candidates that you forget to sell them.  Don’t be so busy selling them, that you forget to filter them.
  • Remember that engineers can be risk averse.  Help them understand the risk equation.  Once, at MarkLogic, we lost an engineer who refused to leave her “safe job” at Sybase to go work at a “risky startup” only to be laid off from Sybase about 6 months later.  In this case, the little company turned out to be much “safer” than the big one.
  • Remember that your early employees will set the culture and tone for your company.  Filter on this dimension as well.
  • Be open about equity percentages.  Telling someone they are getting 50K shares without telling them the shares outstanding (i.e., FDSO) is like telling someone their salary is 100,000 but without specifying the currency:  dollars, euros, or yen.
  • Give fair/market equity consideration.  Most people take a pay cut to join an early stage startup.  One recruiter suggested post series-A equity percentages that look like this.  CEO 5-10%, CXO 2-4%, VP 1-3%,  key directors 0.5 -1%, independent board members and advisors 0.25-0.5%.
  • Beware that you can’t pay people nothing (or only in shares) lest you be in violation of minimum wage laws!
  • Beware moonlighting employees in the early phases — their IP may be owned by the current employer and not your startup.  Look for moonlighting clauses in their employment agreements and avoid use of their current employers computers and equipment.
  • Beware the sometimes subtle differences between employees and contractors.  The law may reclassify a contractor as an employee if they are low-level, highly directed, using company equipment, and/or long-term.  Beware that you may end up personally liable to the IRS if you don’t take payroll withholdings from such people and they fail to pay taxes.

3 responses to “Takeaways from the SVASE CXO Panel: How To Become a Talent Magnet

  1. It seems you should try to be a polarized talent magnet…

    I recall some speculation when Norm Walsh joined ML as to why he might join a scrappy Bay Area startup; to which his reply was, “it’s a no-brainer, markup is what I do, hence ML is where I want to be.”

    Conversely, when Jason Hunter joined ML, the speculation was more around the disruptive aspect, because, while Jason co-authored JDOM, developers typically associate his name first with his Java Servlet book, and in that sense, this move seems more disruptive.

    Whether or not it is actually the case, the perception was that Norm moved in to fill a vacuum, whereas Jason was pulled away from Java land.

  2. Thanks Piers. I do very much remember the day that Norm joined and I concur with your take. Jason was there before I was so I can’t comment.

    My main takeaway from your comment is that I (and the panel) pretty much overlooked “strong interest in common technology area” in our discussion. I think it’s a great point — perhaps a bit obvious, but it should not be taken for granted.

    It should be step 0. I’d argue I covered it for advisors (“call the names in the space”), but missed it for employees.

  3. I believe you also covered it quite well with:

    >>> Remember that your early employees will set the culture and tone for your company. Filter on this dimension as well.

    But I think it is also valid to say that for early (as well as any) employees you hire, that they be encouraged to bring their existing cultural affiliations along for the ride. It’s easy to say your startup supports a standard when you have employees who represent that standard in an official capacity; it can be difficult otherwise.

    Which in turn promotes an engineer-friendly environment.

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