Why I had a quota on MBAs

silicon valley

One of the reason I’ve been recruited for multiple startups is not that I’m a top gun engineer, salesman, or marketeer. I’m none of those. But one thing I’m really good at is recruiting: spotting and engaging talent.

I was reminded of all the time I’ve spent recruiting for my startups by the article in Forbes by Sophia Matveeva What Makes Great Startup Teams, And How To Find It

She quotes Sam Altman of Y-Combinator about why startup teams are so different than corporate teams: mediocre people at a big company cause some problems, but they don’t usually kill the company. A single mediocre hire in the first five will kill a startup.”

One of the principles I was taught very early on is that A players hire A players, B players hire C players, C players hire D players… Why is that? Because most people are very afraid of anyone who is smarter or more accomplished than they are – they see very talented candidates as a threat, to their political capital and even to their own jobs. At Software Arts, where I was employee number 12 and one of the very few non-programmers, I quickly learned that I was always the dumbest guy in the room. Virtually everyone had degrees in computer science or engineering, then known as Course 6, from MIT. So why in the world did they hire me? I most certainly didn’t have an MBA from a prestigious school. The reason was simple: I knew how to get things done, and beyond that, which is the key to rising into a director or VP position, I knew how to get things done through and with other people. Professor Wendy Deutsch, professor of entrepreneurship at the University of Chicago Booth School of Business points out:

MBAs and corporate managers can overvalue strategy at the cost of execution, because they think strategy is a job in itself. “At startups, you have to pick one strategy and move forward to test it. It is no one’s full time job to do strategy at a startup .”

Once I recovered from having to learn how to use VisiCalc, the first electronic spreadsheet that Steve Jobs credits with driving the sales of the Apple II, emacs, Scribe and various other arcane programs that were used by all the programmers to communicate and create documents, I was quickly tasked to start hiring.

Despite the fact that the co-founder of Software Arts, Dan Bricklin, had an MBA he had no bias for hiring MBAs and I soon learned that MBAs did not fit into startup culture. Sophia Mateeva certainly agrees, despite having an MBA herself: Experience has taught me that metrics that attract corporate employers, such as a track record at prestigious companies or a top-tier MBA, are not predictors of whether someone will be a great startup team member.

I learned further that experience at large tech companies like Hewlett Packard or IBM actually had a negative correlation with success at a startup. Ok, so what did I look for and what should you look for? Both successful entrepreneur Beth Haggerty and Sam Altman agree: the most important thing to gage is not the competency of an individual, but whether they are well suited for a startup environment. That applies whether they are in engineering or marketing.

Altman’s criteria are very similar to mine:

  • high intelligence
  • a track record of accomplishment – they get things done
  • and someone I’d enjoy spending time with

Attitude trumps experience. In fact I found that candidates from large companies had the expectation of all sorts of company support from their own secretaries and administrative assistants to the green light to hire someone else when they ran into problem. As Professor Deutsch points out:the more senior people become at a big company the further they move away from execution, which can make the adjustment to startup life impossible. This is why people earlier on in their career tend be better at the corporate to startup adjustment. After hiring one or two people with senior experience at a big company who washed out I soon learned that lesson for myself. Startups are all about execution.

I quickly learned to read a resume to determine the candidate’s trajectory: were they on the way up, down or had they flatlined? What I looked for was people who had a great deal of initiative, they were self-starters, problem solvers and thrived on being challenged. You may think that like Microsoft and Google we had a strong bias towards hiring young people and we were in fact probably biased that way simply because young people hadn’t learned all the bad habits of a large bureaucratic company. But I still remember a middle aged fellow named Jack McGrath whose application to Software Arts consisted of a postcard! I forget what was written on that postcard, but it got Jack an interview and he turned out to be a real go-getter and a favoriate of Dan Bricklin’s as Jack truly understood how VisiCalc could be used.

I also learned that help was needed in the hiring process. I would screen resumes and sometimes do phone interviews before bringing in a candidate. And once I felt that person met our criteria I didn’t stop there, but put together a team of my colleagues to also interview that person. It was not unusual for someone to have three or four rounds of interviewing with half a dozen people. The lesson learned: hire slowly, fire quickly. Beth Hagerty says that it takes an average of 6 months to fill a position – I’m glad to see that my experience last century still holds up today. She adds, You are always in hiring mode if you are growing. Always think two steps beyond. Have a pipeline in your head: who will you need in 18 months? This is why talent tracking which I posted about previously is so important. Recruiting is just like sales, but instead of selling a product you need to realize you are selling your company. Any great candidate will have multiple job opportunities. I soon learned I needed to sell these hot shots on why they should come to Software Arts. If that didn’t work they wouldn’t have been a good hire anyway! Just like in sales you need a pipeline of candidates and you must qualify them before bringing in the closers – the company’s co-founders.

Successful candidates are looking for the following things in a company to:

  • work with other bright talented people
  • be constantly challenged
  • have the resources to get the job done
  • have the opportunity to be promoted based on achievement, not political capital
  • see their work have an impact on customers lives

I still remember Ray Ozzie saying that at Data General, where he had worked for several years before joining us, that he had been on several product teams and none of those teams ever shipped a product! Don’t underestimate pride as a key driver for teams.  Top guns want to work in rapidly growing companies and see their products in use by thousands if not hundreds of thousands or even millions of people.

I quickly learned how to interview. One tactic I learned was to quiz the candidate on all of their decisions: why did they choose that particular school to attend? why did they decide to work at company X? Why did they leave? What did they learn there? I had a whole host of standard questions. But great answers were a just starting point, not the finish line. My second round with a candidate focused on what I called the case method: putting the candidate into in typical problem we might have as a startup and asking them how they would act. These cases, like Harvard Business School cases, didn’t necessarily have a right answer. It was how a candidate would react to be thrown into a case and what their thinking process was that were important. Interestingly Professor Deutch says:

interviews are not enough and advises startups to use the case method to see how someone would deal with a real problem in your business. “This is where you can spot red flags. If you ask ‘how would you solve this problem?’ and their answer is suggesting to hire someone for it, then you know they are the wrong person.”

Finally as Sam Altman points out, in a startup you don’t rely on ads on Facebook or Craigslist or headhunters, you rely on your own personal networks and the networks of your colleagues. Altman says that most great tech companies have been built by referrals, at least for the first 100 employees.

So what are you waiting for? If you haven’t started already start talent tracking and milking your colleagues network for great candidates!

Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

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