New rules for hiring executive candidates
When Polyvore CEO Jess Lee was looking for a CFO, she found everything she wanted in Cheryl Dalrymple: incredible experience, shared values about how to run a company and immediate personal rapport. Yet, despite both women recognizing they could form a strong team, when Lee offered her the position, Dalrymple decided it was too early in her search and turned down Lee.
For entrepreneurs hiring in the current market, that scenario is probably familiar. As a top executive recruiter who works with our portfolio companies explained, what surprises founders is how hard they have to work to acquire talent at any level.
The best senior executive talent, especially, is being courted by everyone, and candidates have plenty of choices. The amount of time and effort required to close a senior executive is surprisingly high; many founders underestimate this and lose candidates they could have closed. But because hiring a strong executive management team is one of the most proven ways to ensure startup success, it is worth the investment.
At Polyvore, Lee didn’t take no for an answer. Her combination of persistence, transparency about the company’s business model and flexibility around a hiring schedule and the role itself were ultimately what persuaded Dalrymple to join the company.
Closing the right candidate is always about more than checking boxes on a spec list.
“Jess talked me into consulting with Polyvore, and she was trying to close me the whole time. It turned out to be a good move — as I got to spend more time with her and the rest of the company, I saw Polyvore progress with respect to user growth, the business model, and revenue, and ultimately I felt very comfortable joining the team,” Dalrymple explained in a recent conversation.
Dalrymple’s case is a great example of how the fiercely competitive dynamics of the current market have transformed executive hiring. In fact, when it comes to closing top candidates, my partners and I believe that out-of-date assumptions about hiring at startups are putting many entrepreneurs at a disadvantage.
After recent conversations with several entrepreneurs and top executive recruiters — and drawing on our collective experience hiring hundreds of candidates while in operations and in VC — we’ve identified a number of new best practices underlying a successful close.
Always be selling
Closing is about selling, and it needs to start early. Unless you already have a well-known brand, the very best candidates are almost certainly going to need a lot of selling on why they should even talk to you.
Once you’ve done this initial selling work, you have to pull off a tough balancing act: gathering information about them to determine if they are a good fit, while also continuing to sell. The solution to this is to turn the interview into a selling act. This requires that you replace the police investigator type of questioning with a genuine interest in who they are and how their life has progressed.
The conversation has to unfold in a natural way, with careful prompts replacing typical interview questions. Most people like to talk about themselves and their achievements, so this isn’t that hard. The key is responding very positively to elements of their story, with smiles, encouragement and interest.
Make it personal
Now more than ever, hiring candidates is very similar to selling customers. You need to not only understand what matters to them and how they’re thinking about you, but also build a personal connection.
Finding a job is a personal choice — every candidate wants to go to a place where they’re excited to join the team. Personal drivers, family situation, location and other factors always impact a candidate’s decision.
Find out what matters to them: a particular kind of work challenge, the quality of relationship with their boss, the ability to learn something new, time with the kids, a flexible commute, exposure to the board of directors, etc. All of these can be addressed when you know what matters most. And don’t underestimate the role a spouse or significant other plays. If they’re important to the process, find a way to include them.
Because hiring a strong executive management team is one of the most proven ways to ensure startup success, it is worth the investment.
When another Matrix portfolio company was recently trying to close a CRO candidate, the hiring team knew a long commute would be an obstacle. So the offer included a vehicle allowance as well as a monthly commuting bonus and rideshare benefit that the company ultimately decided to extend to all employees. That combination of flexibility and understanding of the candidate’s personal needs was a key factor in the successful close.
When Jess Lee reached out to Cheryl Dalrymple with a second offer, she FedEx’ed the offer letter to Dalrymple’s vacation hotel along with a bouquet of flowers and a personal note. In the note, Lee expressed how much she valued the strong and rare connection she and Dalrymple shared and told her that she was confident they would do amazing things together as a team.
Tailoring the offer and including these kinds of personal gestures can be incredibly powerful in the hands of a founder who is sincere and genuine about them. Yet, in our experience, this tactic is underutilized across all sizes of company.
Go the extra mile
Throughout the interview process, stand out from your competition by showing candidates that you truly value getting to know them and are committed to making your company the best fit for them.
Be prepared to show your commitment by meeting on site and off site, outside weekday work hours and on weekends. Drive to meet them if you need to, and be open to talking over coffee, lunch, dinner or drinks. These encounters outside the workplace allow you to develop a deeper connection and, as a bonus, give you more data on the candidate’s fit with the company.
The current hiring environment rewards startups that recruit aggressively, yet, at the same time, exhibit patience and humility and make an effort to truly understand the candidate’s needs. We know of one leading company where an executive candidate withdrew late in the hiring process to take a counteroffer because his family had compensation and work-life balance concerns. Rather than give up, the CEO drove to the candidate’s neighborhood, hunkered down in a cafe and spent several hours trying to persuade the candidate’s spouse to meet for coffee. When they finally met, the executive was able to talk very openly and convince the spouse the offer would not erode the family’s quality of life, and the company closed on the offer.
Get smart about compensation
How and when you talk about compensation matters. Recruiters often advise companies to early in the process do a gut check on compensation and probe on expectations. For executive hires, this can be a mistake, and can derail the whole process.
Use benchmark data to understand the general bands top executives at startups are earning. But know that the compensation you end up offering will vary significantly based on the individual needs of your candidate. Then make the early interviewing process all about getting to know the candidate and screening for fit.
Once you’ve determined the candidate is the best person for the job, have a standalone compensation discussion. This is not the time to present an offer or negotiate. Rather, let the candidate know that this conversation is about identifying what they need and value most so that you can put together the best offer possible.
Gather information about the candidate’s current compensation, compensation history going back at least two years and expectations for an offer. Probe for what types of compensation the candidate finds most attractive — each person has their own preference for cash or stock options, for example.
You need to be prepared to walk candidates through the specific value of your equity offer.
If you are working with a recruiter, use them as an intermediary to find out what the candidate desires. The recruiter can also be a great person to help move their expectations if they are unrealistic or outside of what you can afford, and they can do some of the negotiations, as well. The recruiter has the benefit of being able to talk about other comparable offers.
When you know your candidate’s expectations and what they value, you can put together a very compelling offer. This also means you don’t have to compete solely on cash and be driven out by a higher cash offer. Instead, you’ll be able to use all the tools in your toolbox.
For instance, sometimes a location allowance, a tailored vacation schedule, flexible work hours, a work-from-home option or a personal gift sent with the offer can mean more than a little more cash or equity because candidates recognize that you truly understand who they are and what they value.
When this process is done well, you will already know before you present the offer that it is going to work, thereby avoiding the difficult situation where you provide an offer that is too low.
Sell with data
You need to be prepared to walk candidates through the specific value of your equity offer. While you understand intimately your company’s value, outside candidates likely won’t.
Don’t be afraid to show candidates the money with pencil and paper — it’s worth them understanding that it’s more complicated than a simple X shares at $Y IPO is worth Z, and they’ll appreciate you sharing details that matter to their decision. In some cases you’ll want to create a spreadsheet for the candidate that details why it’s believable that this grant is going to be worth $X, Y years from now — and what must be accomplished to get there.
What surprises founders is how hard they have to work to acquire talent at any level.
You also need to be ready to address specific concerns the candidate may have. Let’s face it, joining any one particular startup is risky and executive candidates want to be sure they are making the right choice. Great founders use strong arguments and sound data to assuage any concerns the candidate may have about the opportunity cost of making the wrong choice.
“The best founders do what the best recruiters do, which is spend a lot of time war-rooming the potential objections a candidate may have,” explained a top executive recruiter we spoke with. “They create such a compelling, fact-driven vision for their company’s future, they direct the candidate to focus on the value they will be able to create instead of the potential risks.”
How does this “war-rooming” work? Together with your hiring team, list the candidate’s stated goals and desires, and show this job and work situation are a great fit for those. List their potential objections and concerns, and use data to craft counter-arguments. Get specific — draw on market conditions, business and platform opportunities, your company’s financing and why your solution and team will be the one to win — and make the compelling value proposition far more provocative than the downside.
Use your VC
In our experience, your VC can also be really effective in selling your company. Your team and your investors are obviously on the same page as far as reaching a good outcome for your company. Venture capitalists also do a lot of executive hiring — more so than the average executive at a startup — and can offer to candidates an independent view of the company.
Executive-level candidates appreciate this interaction and often feel that having a relationship with an investor board member going in is a huge plus.
Courting your candidate
The close is a critical part of a successful recruiting process. The current hiring market rewards entrepreneurs who understand that closing the right candidate is always about more than checking boxes on a spec list. Take the time throughout the process to show you are genuinely interested in them as a person. Understand your candidate’s personal drivers and tailor a package to their needs. Think of out-of-the-box, personalized touches to make the candidate feel special. Most of all, be prepared to invest the time and effort required in today’s highly competitive environment to get the person you want.
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