Seeking Signal: Hiring
What data are you using for your hiring decisions?
This is the first part of a series I’ve titled, “Seeking Signal” (see Seeking Signal: Overview). The purpose of these posts is to help businesses in general from making mistakes based on bad hypotheses.
This post is about acquiring talent…
One of the most difficult parts of being in business is finding great talent.
It’s not just a startup problem. All businesses are “human institutions”… and therefore, it stands to reason, that humans are at the source of everything great, and everything awful, about a business.
What I find insane, yes insane, is that many of the world’s largest corporations don’t look at their hidden hypotheses. Just two prominent examples:
I find it absolutely insane that a retail company with 10,000 sales staff on the floor would never test the assumption that poor credit = poor performance or higher likelihood of employee theft.
Fortunetly, a lot of great companies are looking closer at the hiring question. And there’s some startling insights… like GPAs and test scores are worthless in hiring.
That’s right, I think I need to repeat that: Google has determined that GPAs and test scores have zero correlation to on-the-job success. Apparently, institutional education rewards students who are exceptionally good at school… and not necessarily good at real-life problem solving.
Perhaps this is why Google is looking towards the behavioral interview (“you want people who like figuring out stuff where there is no obvious answer”) and Mark Suster places his emphasis on how a startup develops over time (see Invest in Lines, not Dots) and on the personal qualities of the Entrepreneur (see Entrepreneurshit).
In other words, the only signal in all of the hiring noise is how they behave, and how they make decisions… so you need to give yourself as many behavior dots as possible before pulling the trigger.
Perhaps this is why Google, Facebook and my startup all do something similar in the hiring process:
- Hire what seems to be the best candidate
- Pray he or she pans out
- Get rid of him or her, if not panning out
That’s the only way to get enough real data.
In fact, the problem is so bad, that Yuri Pikover, someone I consider a startup mentor, said (and I’m paraphrasing):
“There’s no secret to hiring. You fire the “C”s, put the “B”s on notice, and keep the “A”s. That’s all there is to it. If you have one A+, you probably won’t make it. Two A+s and you’ve got a company. Three A+s and you’ll really get somewhere.”
So, if you’re a startup with no resources, what do you do?!
You don’t have endless resources to just try a bunch of employees out.
In my personal experience, the best hire we have offered to work part time for free for two months in exchange for equity (that was valued at the startup’s valuation and given to him in accordance with the time he was putting in).
Another good hire was one made based on body language. The developer was extremely confident in his abilities and liked the opportunity to work on relatively difficult problems, but when I tried to commit him to a timetable, he immediately got uncomfortable. In other words, he was comfortable with his abilities, but didn’t want to try and “sell” me his candidacy by making commitments that were even partially out of his control. I respect that.
Whatever you do, get to know your hires in your startup’s actual and real environment as soon as possible without putting yourself in a bind. See how they interact with the rest of the team. How they make decisions. How dedicated they are.
Learn from my mistakes.
I learned this lesson the hard way. I brought on a technical co-founder who got lots of early stock, but was beyond dismal on the job. That person literally almost killed the company… and it took me 7 months to get a signed release.
I knew the person (socially) , he talked a big game and had a great resume. Those are not the data sets you need to make an informed decision.
In retrospect, I only needed two weeks of on-the-job-experience with him to know that we weren’t going to make it together.
Hiring is the most important decision your startup will ever face. If you do it well, you’ll win. If you don’t, you’ll die. Perhaps this is why Chris Dixon also places special emphasis on investing in people.
Don’t F it up.
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On a positive note, there are some interesting startups working on this problem, like Knack and Kenexa.
