Category Archives: Recruiting

Mission Accomplished – StartupVisa Canada

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Remember back in 2011 when I was xenophobic and wasn’t supporting Startup Visa? To the credit fo the incredible StartupVisa Canada Initiativea team, which I was lucky enough to join and support, the Federal Government is launching a new class of immigration visa with the participation of CVCA and NACO. Check out Christine Dobby’s summary from the press conference (it’s where all my statistics and data are from). Go read Boris Wertz’s story about Summify founders and the impetus for Startup Visa Canada.

“We believe startups to be the driving force behind job creation and prosperity,” says executive director Richard Rémillard. “We need to be pro-active in attracting foreign entrepreneurs.”

The new visa is replacing the old “entrepreneur class” visa, which required the applicant/immigrant to hire one person for one year. In 2011, the federal government issued approximately 700 of the old entrepreneur class visa. The government is making 2,750 visas, issued to immigrants based on selection and funding by venture capital investors. Immigrants receive immediate permanent resident status. Looks like a pilot program with a 5 year lifespan, with the opportunity to make permanent depending on uptake.

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Thinking by Zach Aysan

My issues back in 2011 and previously, were not with the intent of the program. But in the proposed implementation details. One of the biggest assets, in my not so humble opinion, is the population diversity, with 46% of Toronto’s pouplation being foreign born. It is the creative tension between differing viewpoints that makes Canada an amazing place. The implementation of startup visa makes Canada an even more attractive place to recruit foreign born scientists, engineers and now entrepreneurs. I love it!

Firing People

I hate firing people. It’s the worst part of my job. Even after all these years I still spend days or even weeks agonizing over a decision to let someone go. I feel absurd complaining about this, given that of course it’s a hundred times worse for the person being fired than it is for me. Still, I hate firing people.

My first firing at Top Hat was our VP Sales. He was employee number two, he joined right after we raised our angel round. In retrospect it was doomed from the start, and it was entirely my fault. I had no idea what I was doing when it came to building a sales organization and brought him into a role that didn’t make sense (read about the lessons learned in building a sales team). It took me 6 months before I finally pulled the trigger. In the end, it was undoubtedly the right decision and set the company back on track. But at the time it was an extremely tough call. It was admitting failure – to myself and to our investors – that this first major hire was a mistake. I felt  ashamed about it for months and kept convincing and re-convincing myself that we could still make it work.

As a general rule once you’ve lost faith in an employee, things rarely get better. You can sometimes fix a skill-level problem by giving someone time to grow, but you can never fix a personality problem. If you’ve identified that someone isn’t a fit you need to move on it quickly and decisively. The longer you wait the worse it will be for both parties.

Firing is an essential part of running a successful company.

In a narrow way, it’s actually more important than hiring. You could, in theory, use a shit-against-the-wall style hiring strategy and as long as you filter out the bad apples quickly enough you’ll be able to build up a functional team over time. Of course that’s probably not the best approach.

The reality is that even the most effective interviewers are rarely more than 70% or 80% accurate. The average interviewer is quite a bit worse than that and isn’t much better than chance – often even worse, because the naive approach just selects people who are great in interviews, which disproportionately selects for bullshitters. However, even if you’re some kind of super-human talent screening machine with a 95% success rate, that 5% will accumulate and degrade the culture until you’re surrounded by bozos.

The Best Firing Process is a Better Hiring Process

Of course the best “firing process” is not to have to fire people, which can only be done through effective hiring. That being said, not having an effective firing process is like not having an immune system – the first cold will eventually kill you.

It’s fairly common knowledge these days that A players only like to work with other A players. A slightly more subtle observation is that someone’s status as an A player isn’t fixed. Bringing a weak player onto a team has a tendency to poison the culture and downgrade the rest of the team (especially if that weak player has a shitty attitude.) This bad apple syndrome has been observed to happen fairly reliably in studies on organizational dynamics.

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The Bad Apple Syndrome

We’ve experience this at Top Hat a couple of times. One of the most instructive was with our inside sales team. Early on when we were in a pinch to fill the team we lowered our standards and brought on a few people that we should have passed on. The results were disastrous. The quality of the team degraded and eventually hurt not only the inside team but also other parts of the company that came into contact with it. It took nearly a year of solid effort to rebuild the team. For a time it seemed hopeless. No matter what changes we put in place, no matter how much talent we threw at the team, the cancer of negativity and poor morale just wouldn’t go away. The most profound mistake we made in the process of trying to fix the team was to keep those who were performing well but had a negative attitude.

There was a pattern we observed a few times: we’d put a new person into the team, their performance would be great and they’d be super enthusiastic. Then like clockwork after a week or two their numbers would slowly drop, and they’d become engrossed in the culture of negativity and gossip. It was only after the cleared out the ringleaders who were perpetuating the negativity (who happened to have decent performance numbers!) and put in strong positive management that things finally began to change. The most amazing thing is that many of the people who were B or even C players when the team was dominated by negativity shot up to solid A player status. The overall output of the team per person went up by nearly 300%. In addition it seems as though life was trying to setup a lab experiment for us to prove just how much things had improved – we had a person who had left the company a few months prior re-join the team. His feedback was that he was blow away, he couldn’t believe it was the same team.

Lessons Learned

The first lesson we learned was that no matter how strapped for manpower you are, no matter how much it seems like the world will end if you don’t fill a position, compromising on the quality of talent will surely be more damaging. Second, we learned that in fixing a damaged team the key is to identify the cultural sources of the underlying problem and focus on those. Finally, we learned to use a divide and conquer approach – we would pull all the top talent into a separate team while rehabilitating the broken remaining team separately – it really helped prevent the “negativity cancer” from spreading while we were fixing things. These are simple things in retrospect, but it took a while to pull it off.

One of the most revealing questions I tend to ask when interviewing potential managers is whether they’ve ever had to make the decision to fire someone. The answer and subsequent discussion usually tells you two things: first, it tells you if the person has ever had to deal with the most difficult problems in management, second it tells you if they know how to handle those problems through the process they followed. Assuming the person has ever had to hire and manage a team of a decent size for any length of time, it’s almost certain they’ve made hiring mistakes, and their answer tells you that they know how to detect and correct these mistakes. If the person simply walked into a mature team, or has had HR handle all the hiring/firing decisions for them, then they’ve been living on easy street.

The process of firing someone is always somewhat unique to each situation. That being said there are some basic principles that you should always follow:

  1. Give people plenty of notice and regular feedback. Give people several chances to improve. The actual firing should never be a surprise – if it is then you almost certainly did something wrong in setting expectations. Depending on the role the whole process should take 1-2 months (longer for senior roles.)
  2. Try to be generous with severance and leave the person in a good spot to find their next employment. I know it’s not always possible in a startup, but do what you can. It’s the decent thing to do.
  3. Take time to reassure the rest of the team and explain (with discretion) the process that was followed and why the decision was made. Letting someone go is always a huge morale hit (even if the person wasn’t well liked, it still scares people.) You need to make people understand that their job is not in danger.

Firing someone is always a brutal experience. Anyone who says otherwise is either lying or is a psychopath. That being said, it’s unfortunately a necessary evil and understanding when and why it needs to be done is essential to the success of any business.

Hiring your first sales rep: 10 tips and common mistakes

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How many times have you been at an event and met someone who gave you the pitch “I have this great idea, I just need someone to build it for me” or some variation of that?

This has become such a cliche in startup circles that it’s almost cringe-worthy. If all someone has is an idea then they’ve basically got nothing. As the old Edison quote goes “genius is one percent inspiration and ninety-nine percent perspiration.”

That being said, the other side of this pitch doesn’t get a ton of attention even though the problem is just as common.

There are lots of startups that build pretty solid products but never end up getting traction because they don’t figure out the sales and marketing side of things.

You don’t see a lot of technical founders searching for business development help, mostly because many engineers don’t even know they have a problem. They spend a year in their basement building the most amazing solution to a problem nobody has. When they do finally surface they discover that 6 of the 10 assumptions they made were wrong, and usually give up soon thereafter.

I’m an engineer, and I’ve seen this problem come up first hand. One of the most basic ways to avoid it is to start focusing early on customer validation. What that means in the most basic terms is to not write a single line of code before you talk to a few dozen customers who tell you unequivocally that they will buy the thing you’re thinking of building.

As you talk to customers tweak the pitch until you have 9 out of 10 potential customers telling you that they will pay money for what you’re planning to build (hint: 8 of them are lying.) This is your first step towards developing a sales process.

You (or your co-founder) need to learn to sell. Frankly, it’s not that hard and it’s mostly about persistence when it comes to getting a few pilot customers – they’re going to be early adopters, they won’t expect a polished sales pitch. It’s essential that this basic sales and marketing expertise lie within the core team. Which brings me to the first tip about hiring your first sales reps:

1. Learn how to sell and develop a basic process.

The most common mistake technical startup founders seem to make is to try and cop out on the sales part of the business. They feel they don’t know how to sell and are worried that people won’t take them seriously because they don’t have grey hair. So they hire an experienced sales guy (a friend of a friend,) give him ownership of all sales and just sit back and wait for the deals to flow in. It seems like such a plausible idea (it’s exactly what I did with Top Hat Monocle) and yet I’ve never once seen it work out. You need to learn to sell. It’s actually a skill very similar to raising money, so it’s something you’ll need to do anyway. Learn to sell just well enough to close the first few customers and develop a basic process that you can plug someone into.

2. Find reps who have experience with the same deal size and sales cycle as your product.

If your product costs $200 per month and has a 1-2 week sales cycle, don’t hire some with enterprise experience who’s used to closing three $500k deals a year, it won’t work out. A match on deal size and sales cycle is probably the best predictor of whether the rep will be a good fit.

3. Experience within your industry is useful but not essential if your product isn’t too complex.

Focus on item 2 above. Unless you’re selling a very complex product with a long (6 month+) sales cycle, don’t worry about industry experience.

4. If it’s a technical sale, tech savvy matters.

Don’t hire someone who barely knows how to use a computer to sell a software product. Frankly in general you should only hire people with basic technical literacy because otherwise you will be explaining to them how to use the CRM and your webinar software 5 times a day.

5. Sales reps are great bullshitters – ignore their words.

Only look at verifiable track record to assess the rep. This means getting a printed record of their quota attainment at every sales job they’ve had, then verifying that record with their supervisor. Anyone who hasn’t consistently blown away their quota at every job is a risk.

6. Place minimal value on prior contacts and rolodex.

The rolodex runs out after about two weeks. After that it’s all about prospecting and hard work. Don’t ever overlook a lack of experience or cultural fit because you feel the rep has a rolodex of clients they claim they’ll bring with them (they’re probably exaggerating anyway, see #5 above.)

7. With personality, focus on work ethic and motivation.

Sales is repetitive hard work. When hiring reps look for work ethic and drive. Look for people who need to earn a certain amount of money to maintain their lifestyle due to financial obligations – a big mortgage is the best motivator to hit quota.

8. Over time start to specialize your sales team.

Lead generation and research. Appointment setting. Follow ups and closing. Each is a separate role. You should segment by task and eventually by customer size or market. It may not even take that long for it to make sense to do this – we started specializing at Top Hat Monocle when we had just 3 reps.

9. Sales reps will maximize their paycheque above all else.

At least the good ones will. You need to ensure your compensation plan incentivizes sales and has relatively short term rewards. This typically means at least 50% of overall earnings should be from commission and there should be a monthly performance based commission payout. Don’t try to hire people on 100% commission, because you will likely only attract flakes who waste your time and never deliver.

10. Metric everything. Obsessively.

How many calls per day does each rep make. How many emails. What is the conversion rate on email responses. How many meetings does each rep go on per day. How many inbound leads are being generated. What is the time from inbound lead to follow-up. How many foliow-ups does each rep do per day. What is the mean time between follow ups. Everything. Metric everything.