As an enigma of the business world today, it is notorious for being riddled with sky-high — and logically so — failure rates.
With 12.6% of adults worldwide starting companies and running businesses in the early stage, it is clear that the ‘entrepreneurship is fad’ argument no longer stands. Even with arguments appearing as early as 2013 then resurfacing again in 2016, the rise of entrepreneurs is still going strong today.
A plethora of tech companies who bled money since day 1 are also getting listed on reputable stock exchanges, leaving many conventional entrepreneurs and economists scratching their head. Just last year, there were 190 IPOs, with notable startups like Eventbrite, Spotify, and Upwork.
While you may not need a lot of cash to startup a company, yet, many know that the startup world is often brutally depressing, with a survival of the fittest setting. For the founders, it’s sink or swim, and statistics have shown that most founders do eventually end up sinking. Unfortunately, that is inherent in entrepreneurship, which leaves many founders and co-founders who held C-suite level titles before roaming the land of 9 to 5.
Just like how we seem to see startup after startup raise money on TechCrunch, many often forget the startups that wind down and burn up — and the number of failures is usually a hundred times larger than the number of success cases.
Thus, most former founders wound up working for the dreams of others.
While we laud CEOs and CTOs for their startup achievements, it is often difficult to see the connection between their skillsets and a hiring organization.
For most places, the general employee population is comprised of a non-entrepreneur majority: it is unrealistic to expect a non-entrepreneur to immediately appreciate the founder’s experience.
Hence, hirers often find it difficult to see value in their skillsets and experience, despite having an impressive title in their name. How can companies identify a former entrepreneur’s value to the company as accurately as possible?
Undeniably, entrepreneurship experience is always an interesting topic to have a conversation about. From the hustle to the euphoria after the first paycheck, most of these experiences are usually classified as ‘life experience’ rather than milestones in professional development.
Unless the former entrepreneur is the CEO of a 1000-man company, it is insanely difficult to see a connection between their experience and their potential contribution without having the right context and mindset in place.
Vetting the Entrepreneur
Every entrepreneur has unique perspectives and journeys — albeit there will be overlapping experiences (e.g. manning a booth at startup events, flying overseas for pitch competitions), knowing the quality of their entrepreneurship journey is key to identifying that value.
For instance, a founder who ran a 20-man team at $45m valuation is relatively more impressive than the founder who ran a 2-man team with no clear trend in revenue and valuation.
The onus is on the hirer to deeply understand the former entrepreneur.
Transferability of Role
When a company is looking for a marketer, they is usually also open to other people who never held such roles before but are still in fields closely related. For instance, it can be a branding strategist or a social media manager. While they might suffer a disadvantage, often, what allows them to stand out is their skillset.
Former entrepreneurs usually hold titles that are normally considered unattainable to most corporates. From the VP of Marketing to CEOs, such roles are usually all-encompassing, covering many types of work native to the role. For example, founders who are CMOs are usually heavily involved in marketing copy, social media, branding, design and sometimes even sales.
Companies need to understand how relevant the former founder is to the role. While it makes sense for a company to hire an ex-CTO when they are looking for a senior developer, the relevance of a CHRO for a business development role may be immediately obvious — or extant at all.
While titles have their relevance, understanding the industry that they came from and their relevance to the hirer is key to identifying their value.
Suppose a biotech startup tanked and the CEO is now looking for a job in the biotech sector: it is immediately obvious that the industry is the same. What if the industry sectors are closely related, yet not entirely relevant? For instance, tech to supply chain. AI to IoT.
That’s where companies need to go deeper and look past the industry sector: what is the experience that the former founder has when he left his startup?
Breadth of Experience
During the initial startup stages, it is commonplace for founders to put on multiple hats even if there’s a large team. Typically, founders are juggling between executing and strategizing.
The breadth of experience is especially important when hiring for a senior role. For instance, when hiring a tech lead role, a CTO who had a wide spectrum of experience in software development would fit the role well: the founder has a base technical expertise that occurred without having the company to nurture.
Early-stage startups are always a flurry of activity as the founders hustle and wrestle with the reality of working on their own — we’ve seen that in many success cases: Airbnb started with selling cereals to keep themselves afloat.
Depth of Experience
Having deep expertise in a single field is indicative of a founder’s ability to execute.
Ran social media ads? The difference between a founder who is good at it or not isn’t based on impressions and engagement, but on the conversion to revenue and sales — though that may depend on what the hirer benchmark excellence as in that particular field.
Simply put, it is a great indicator of past performance, which hirers can use to derive future potential by asking pointed questions, such as:
- Did you face any challenge when you’re trying to hit your objective? How did you solve it? What was your thought process behind it?
- What was the best thing you did when you were attempting to reach your goal? What paid off?
- What were some of the mistakes you made? What did you learn from them? Any particularly interesting insights?
While it may depend on what an organization is roughly searching for, having depth is always beneficial: it is indicative of how much the founder understands a specific concept, and how good the founder is at achieving his/her objectives with that particular concept. This can range from developing an algorithm in Python to designing a series of Instagram posts.
Innovative in Nature
Although the advent of technology has made many things fast and convenient, people are always playing the game of catch-up as technology continuously evolves and expands at a frightening rate.
While smaller companies have the flexibility to innovate and expand, larger companies often suffer from their inherent bureaucratic structure, slow pace, and poor communication from top-down.
Hence, corporates are taking the matter into their own hands by choosing corporate innovation, a concept about corporate giants working with smaller companies to innovate on the products and processes they have. While some corporates opt to invest in startups or partner with them, others adopt the intrapreneurship concept — where they have people in the company whose job is to innovate, promote innovation and make improvements on extant processes.
Where else can a company find a nurtured entrepreneur, with assets in the entrepreneurship field?
It is through founders who have had to innovate, pivot out of the current trajectory and do unorthodox things to get what they want for their company. That could even mean grey hat growth hacking to sending 1000 cold emails per week.
It is undeniable that entrepreneurship drives innovation. Companies who find themselves having an individual with such a mindset will experience — if encouraged — a push for innovation, which can especially work well for organizations that underscore continuous R&D, innovation and out-of-the-box thinking.
While entrepreneurship and innovation are often used interchangeably, the key is that innovation is easier when there are people with entrepreneurship mindsets.
Though many argue about the pros and cons of intrapreneurship, it is undeniable that injecting a nurtured innovator into a team that is in dire need of one will be beneficial.
For instance, a team that is composed of passive, accepting employees will not be able to immediately recognize room for improvement or unorthodox solutions to drive efficiency. Injecting a former entrepreneur and then promoting innovation and encouraging such values will see an uptick in, at the very least, the number of suggestions of solution.
Especially for senior roles, former founders are usually to bring in a base of leadership skills that do not require the company to nurture.
For instance, a CEO who managed a 20-man team to a CTO with an 80-man developer team are both leaders who had to execute on their role and also manage their teams to ensure results are delivered.
The key here is to understand the leadership style and whether there is value in that. Hirers can do so by asking questions surrounding the way the former founder manages, such as:
- What’s your tolerance for mistakes in a team? Do you mete out punishments? What did you do when your employee made a mistake?
- Suppose your employee completes a project successfully. Everything is great and the results are what you wanted. What will you do at this juncture?
There are many leadership styles out there: understanding what they are and whether there is a culture fit is what will make or break a senior role.
Like any hire, relying solely on past performance as indicators of future performance will only guarantee a disappointment in results — unless a company gets lucky with their bet, it usually is not the case.
The onus is still on the hirer to assess many less obvious and measurable assets, such as soft skills, culture fit, and personality. However, most of these may be overlooked when the former founder seems to look like a ‘superstar’ candidate. Hence, it is critical that companies:
- Have a former entrepreneur sit in during the interview. Non-entrepreneurs may not immediately see or appreciate the value that a former founder may provide.
- Understand that former entrepreneurs are also human: failing is tough and the transition from hustle all day to 9 to 5 might be jarring to most founders. Deploying patience and empathy throughout the candidate experience, from pre-hire to onboarding, is essential to ensuring that the entrepreneur can reach his/her fullest potential in the company.
- Help former entrepreneurs retain their resilient mindset within the company. Helping former founders reconcile within themselves that they are working for the dreams of others is important.
- Communicate the limitations and differences between the company structure and his previous startup experience. A founder used to drinking craft beer at 2 in the afternoon while replying to emails may not find that same privilege in a company with a formal culture.
- Be clear with expectations: while being a former entrepreneur is great, the reality is that the startup journey has ended. The former founder is now a full-time staff and that means equal treatment with everyone on the team.
- Not exploit a former founder’s connections and networks. Unless the former founder is comfortable and is willing to tap on his/her network, no company should be exerting pressure on the former entrepreneur to use his/her connections for the company’s benefit, even if the founder knows Zuckerberg.
- Use technology, such as surveys, personality tests, and other instruments to help measure certain things that may not be immediately obvious in the former founder.
- While non-entrepreneurs and former entrepreneurs are not the same, they still need to be treated equally.
With a wave of innovation initiatives across every major and minor industry sector, it is clear that former entrepreneurs can provide unique value and contributions to companies seeking to change the status quo.
Rather than expend resources on nurturing entrepreneurship mindsets and encouraging innovation, injecting someone with a base of those within a team would serve as an efficacious catalyst for growth.
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