Category: tech

Aug 07

Top 10 Myths of Silicon Valley

This summer I visited Russia, Thailand, the Philippines, Indonesia, and Mexico to see different markets and entrepreneurial perspectives. While I learned what it’s like to be a tech entrepreneur in other markets, I also realized I was frequently dispelling a lot of myths about Silicon Valley, the VC ecosystem, and the American tech industry. With the summer wrapping up, here are my top ten myths and counter-arguments from those recent travels:

Myth #1. Technology Makes It Possible to Start a Company Overnight

Technology is cheaper and more pervasive than ever. However, launching a product is just the beginning. Though you can build a product overnight, it takes about 18 months to become a market player — finding a problem worth solving, educating users, building traction, developing a viable business strategy, training a sales team, and securing long-term funding takes time. We started Meebo in 2003 and spent 18 months building entirely different products (online backup, document sharing) before we built the online instant messenger that launched in 2005.

Meebo’s story is far from unique. Twitter, PayPal, Instagram, and Pinterest were once Odeo, Confinity, Burbn, and Tote and required an average of 17 months of development to become today’s recognizable products. It always takes longer than anticipated. Though technology has become far more accessible and though there are countless 48-hour hackathons, company’s just aren’t built overnight.

Myth #2. You Only Pivot When Your Idea is Bad

A fast-paced market means there are more opportunities but it also means that the race doesn’t end once you launch. The Internet reinvents itself every two years. Even if you are successful today, technology changes so quickly that you can lose success just as quickly as you gained it. You may need to pivot proactively to stay relevant.

One of the hardest aspects of a startup is thinking long-term. There are so few resources that the bugs, meetings, and people issues tend to overshadow long-term innovation. It’s easy to seduce yourself into believing that explosive success is just one feature push away instead of surveying the market and developing a broader plan of attack for the future. Even when long-term innovation is a priority, you can conversely fall into the trap of pivoting, pivoting, pivoting until the funding runs out without giving any single pivot a long, hard, fair shot.

CEOs are defined by their long-term strategy. Is a CEO focused upon a singular vision and stubborn to a fault? Or is the CEO forever inventive, swinging on a whim between industries and praying something sticks? The average startup CEO’s tenure is only five years which means that most CEOs only get 2-3 market plays to find out.

Myth #3. Being a Founder is Glamorous

From HBO’s Silicon Valley, you’d think that being a founder entails VCs fawning over you and brogrammers over-thinking their dating odds. I haven’t seen the entire season but most of what I have seen rings true except that it omits what founders do most — hiring.

A VC once told me that most founders spend 40% of their time hiring. Looking back, that was conservative. Hiring is the cornerstone of culture. Founders dedicate absurd amounts of time to mundane interviews because they aren’t just building a team, they’re architecting a culture. During the hiring process founders tune the recruiting process, double-check how managers identify talent, articulate the organization’s values, detail how the team operates, and defend the company vision. Even once they’ve hired new team members, it takes the new folks 6-12 months to become dependable interviewers. Realistically, founders can’t loosen the reins until they’ve hired and trained the first 50 team members. Team-building takes a lot of time and as I’m sure HBO would agree, job interviews make really boring television.

Myth #4: Founders Don’t Have Bosses

Who doesn’t dream of living free of a boss by their own rules? Surely an entrepreneur gets to make the calls! Sadly, it’s just not true. My co-founder and CEO asked me for my annual self-review out of the blue and my dreams of never again penning a resume or performance review were crushed. Even outside the founding team, entrepreneurs are also accountable to the Board of Directors who determine whether the founders are fulfilling their roles.

More importantly, there’s one boss that trumps everything that no one can escape. Founders are always accountable to the market and the market is the craziest, most irrational, and unfair boss of them all. The market tells you when an earnest team member’s skillset is out of date. The market dictates when a downturn in the economy makes it difficult to give your team deserved raises. The market prefers your competitor for the most fickle reason. Even if entrepreneurs don’t have a traditional boss, they are still pawns of the market. That’s not fun.

Myth #5. The Best Product Wins


Peanut, the winner of the 2014 World’s Ugliest Dog Contest at the Sonoma-Marin Fair in Petaluma on Friday, June 20, 2014. (Rachel Simpson/For the Argus-Courier/Press Democrat)

Product design can be a formidable advantage. But if you introduce something people really want, you can get away with product murder. Twitter’s fail whale initially eclipsed its bird logo. Facebook’s photo uploader & tagging features are still iffy. And when was the last time that Apple launched a major product without an antenna, map, or battery snafu? If you’re in second place, you have to do everything right and more to catch up. But if you’re #1 with product-market fit, users are surprisingly tolerant and excited to be part of the new, shiny thing.

So why focus on product? First, there are different types of companies. Companies that differentiate primarily on product are usually higher-end companies like Apple, BMW, Square, Nest, or Dandelion Chocolate (<-- yup, shameless name-dropping). Getting the product right is an essential part of these brands and customers expect a curated experience. But these companies are the minority.

Most companies excel at experimentation rather than product execution. For instance, Rovio, the creators of Angry Birds, recently expanded into book publishing. Other gaming companies have a strategy of immediately copying popular games and letting others do the product experimentation. And then there's Amazon who does everything from MyHabit to Kindle to AWS to Amazon.com. Amazon does an amazing job stretching themselves across different genres and while they have good UX, it's not their core differentiator.

The product can't be neglected all together however. If you dominate the market with a half-hearted product, users will eventually feel exploited. Though their usage might continue, it’s only because there’s no alternative, not due to loyalty. Users are savvy enough to pick up on exploitive monopolies and to know when innovation is overdue. Why were Uber and Lyft able to gain traction so quickly? How long had it been since users felt any Yellow Cab love? Yelp, OpenTable, LinkedIn, and other companies built a decade ago by locking in the market — watch out! When network effect companies crumble, they crumble fast!

Myth #6. VCs Throw Money at you


Image courtesy flickr: Cayusa.

Even in a frothy environment, you have to break a sweat fundraising. VCs differentiate themselves through investing strategies such as big markets, strong founding teams, product execution, technological innovation, and industry genres. When there are more VCs, there are more meetings to identify the VC where your startup fits their strategy.

Entrepreneurs outside the U.S. envision VCs sprinkling money on American entrepreneurs like fairy dust. But the average American startup team reaches out to approximately 60-120 VCs and angels to raise the first $1M. That’s work! There’s no doubt that it’s harder to raise capital outside of the United States but some VCs also look abroad to emerging markets where they don’t face such stiff competition.

Myth #7. An Acquisition Means You’re a Multi-Millionaire

Founders don’t pocket the incredible dollar figures in headlines. It’s possible for an acquisition in the hundreds of millions to leave nothing for the founders depending upon how much has been raised, how much was allotted to employees, the number of founders, whether the exit included stock or cash, and the liquidation preferences.

Given how important they are, it’s surprising that liquidation preferences aren’t discussed more. Liquidation preferences have two variables: 1) the multiple and 2) the preference type (preferred, non-preferred, and capped). When a company folds or is acquired, liquidation preferences protect the investors’ investment. At minimum, a liquidation preference simply specifies that the investors receive their money back (1x non-participating). At the other extreme, investors might have a 2x multiple (meaning that investors want double back) and if there’s anything left over, they are also entitled to a cut of the remainder based upon their ownership (2x participating).

With a 2x participating liquidation preference, it’s possible for a company that raised a total of $50M for 50% ownership to sell for $100M and for the team to have nothing. Participating also means that the investors always get more than just 50%. When the exit is huge, the liquidation preference matters less. But huge exits are rarer. Sometimes headlines will speculate on the company’s valuation but news reports never mention the liquidation preference.

As an entrepreneur, it’s easy to get squeezed: work hard, have a modest exit, have no substantial upside, and lose the loyalty of a team that you might have worked with again.

Myth #8. Raise as Much Money as You Can

Any business can succeed if given enough time. Why wouldn’t you raise as much money as possible to stay afloat as long as possible?

When you raise money, you’re expected to spend it. VCs want to put cash infusions behind companies with potential reoccurring revenue, not to pay for a company’s rainy day fund or creative projects. If you haven’t vetted a product or figured out a core business model before taking funding, you’re trading flexibility for cash. Meebo’s first product in 2003 tackled online backup. After spending a year building the product, we realized how much capital we’d need to raise to build out an untested idea. We switched to document collaboration and another year later, to online instant messaging. If we’d taken cash upfront, we wouldn’t have had that kind of flexibility or we would have been diluted later. It’s easier to change a strategy and experiment when you’re smaller and don’t have promises to keep.

Second, a big bank account changes the way you operate. When your team knows that you have money to spend, they ask for more. When contractors know you have funding, they don’t grant favors. When patent trolls look for companies to target, they sniff out money trails. Frugality is frequently a characteristic of great businesses. The easiest way to be frugal is to only take the money you need (with some cushion) to prove the next stage of your business.

Myth #9. If You Do Everything Right, You Will Be Successful


Web 2.0 companies that are alive or have exited as of today

There is no magic formula. Many smart startups will fail and many foolish ones will somehow succeed. Luck plays a huge hand in a startup’s ultimate outcome. What determines whether a company has a billion-dollar exit or a modest success frequently falls far outside the company’s purview to timing, perceived competitive threats, even executive vacation schedules. When companies exit for huge figures, folks flock to reverse engineer the acquiring company’s process and then extrapolate what they need to change to bolster their own acquisition odds. It’s an interesting thought-exercise but many companies just get lucky. It’s far better to continuously plan for the long-term and if the stars magically align for a favorable acquisition, consider yourself very lucky (not necessarily gifted).

In 2013, 37 out of 511 YCombinator companies were worth more than $40 Million. That suggests a 93% failure rate. Within a startup, instead of hoping for success, you are constantly mitigating potential failure. There are a few practices that help (great team, frugality, strong brand) but the most important factor is sheer resilience.

Myth #10. We’ll Always Have These Opportunities


Desert Bus, a reality-based driving mini-game circa 1995

Technology changes. It means computing today but it meant steam engines, Hollywood films, agriculture, industrialization, and printing presses in the past. While I’m optimistic that technology will continue to present more opportunities for everyday folks to change the world, I don’t take it for granted. The economy, government regulations, access to capital, and what society needs will evolve. Who knows whether a new wave of robotics, biotech, 3d printing presses, or new energy storage mechanisms will be nearly as democratic as computer programming?

Even when the odds are stacked against the entrepreneur, I can’t imagine a better time in history to be alive and to have the chance to change the world at such scale. Even if it may not last forever, it’d be such a shame not to try.

Final Bonus Myth! Only Crazy People Do Startups

Tricked you! This is absolutely true. Most entrepreneurs are a little (or a lot) crazy. And sometimes that prerequisite craziness makes it especially hard for entrepreneurs abroad to garner support from their communities. Some Asian cultures ask family members to support their elder’s later years. Taking a financial risk to be an entrepreneur can seem disrespectful to their family. And some European communities aren’t terribly forgiving of failure. Being an entrepreneur is a tough slog and doing it without a support network is absolutely brutal. I cringe a little when VCs and entrepreneurs assume that entrepreneurs abroad are lacking know-how or bravado. It’s far more complex. The entrepreneurs I see abroad may not be as loud and boastful but they’re plenty talented and self-assured.

Albert Einstein coined insanity as “doing the same thing over and over and over again and expecting different results.” For me, that’s the definition of a startup. You’re continuously adapting to a mercurial market with no promise of a successful outcome — that’s a little insane. There are thousands of better ways to make a more dependable income. If anyone embarks on a startup solely for monetary gain, they’ll quit when they realize what a crazy, unpredictable journey it is. You have to be an entrepreneur because you believe that if you don’t solve a problem, no one else will.

Aug 07

the best recruiters – followup

the best recruiters

Of the 530 emails directed to Pete London, there were a few standouts. Thirty-seven emails contained personalization, role, and company information but within that group, just 5 recruiters went beyond an occasional detail and spent a minimum of three paragraphs explaining the team’s priorities, charting the company’s trajectory, and describing why Pete’s background set the perfect stage for a new opportunity.

The best recruiters

According to these metrics, the extraordinary recruiting folks who represent that top 1% are:


Andrea Canova

Bill
Umoff

Brad Fuellenbach

Ronda Woodcox

Tony Lindley

what’s their secret?

I’ve re-read Pete’s emails multiple times and analyzed the best recruiters’ tips and tricks. Here’s my attempt to articulate the unspoken rules of a fantastic recruiter email:

2nd person

Tip #1. You, your, and yours

The most common mistake a recruiter makes is framing the opportunity from their perspective instead of the candidate’s: “Hi, I’m a recruiter, I’ve got a great position for you. We’re doing amazing things. Call me!”.

Ronda and Brad’s brilliant emails stood out for one simple thing — the predominant use of the second person. Instead of selling the company and listing its virtues in “I, me, we” language, they paint the position from Pete’s perspective with “you, your, yours” language:

“This opportunity would take you more in the direction of new media… it would give you the opportunity to really stretch your skills… you’ll have the chance to learn SproutCore directly from the guy who developed it…”Ronda Woodcox

“Specifically I have you in mind as Software Engineer for our Application Development team which is responsible for building and scaling innovative features for <company>. You’d be responsible for seeing projects through from inception to development, production, and rapid post-production iteration. You’d be working on UI to the meaty challenges in back-end scalability, optimization, and performance primarily in Javascript and PHP…”Brad Fuellenbach

By adopting the second person, the potential benefits to Pete are more apparent and the recruiters become a storyteller instead of a salesman.

robots

Tip #2. First impressions…

Though everyone wants their emails to stand out, most email openers fall into one of three categories: 1) 35% “Hi, I am a recruiter” 2) 22% “I came across your profile and was impressed, and 3) 7% “Sorry to bother you but…”

email greetings

None of these greetings is ideal. The most common introduction, “Hi, I’m a recruiter, ” or “Hi, my name is and I work with…,” seems like a harmless and polite opener, but it’s not necessary (your name is already in the to header) and it immediately puts the focus on your status as a recruiter instead of the candidate’s potential opportunity.

The second category, “I came across your profile and was impressed,” isn’t specific and once you’ve received 100 recruiter emails that are similarly impressed, the flattery falls flat.

And finally, the apology. There’s no reason to apologize for being a recruiter or for a cold email. An organization is nothing without its people and your role is to leave no stone unturned on your quest to match an opportunity with an ideal candidate. If your email is strong and well-written, there’s no need to start your outreach from a weak and tentative position.

For contrast, consider these approaches:


1) “I’m reaching out to you given your strong front-end development experience, particularly with Javascript.”
2) “Your unique mix of front-end and back-end knowledge and experience really caught the attention of our current Web Developer manager.”
3) “I see that you have experience with large scale software development involving distributed systems that lines up nicely with the work being done in our Cloud Technology Team”

In all three cases, the author’s recruiter role is implied, the flattery is specific, and the critical opening sentence is not wasted on frivolous social niceties.

Of the five top emails, only one began with a “I saw your profile and was impressed.” The other four began with a specific compliment or a non-standard opener.

follow-up don't spam

Tip #3. Follow up; don’t spam

Within the 172 organizations who reached out to Pete, 44% of those emails could have referenced a previous email or colleague, “Pete, I wanted to reach out again…” However, the actual number was much lower – just 12%.

email greetings

When recruiters reference previous emails, they maintain the conversation and history. When a subsequent email is sent without referencing the previous outreach, it’s worse than starting over. The ignored history implies that regardless of what the recruiter says, the candidate is unmemorable and the recruiter’s words read insincere.

And beyond mentioning a personal follow-up, just 1 recruiter picked up the torch for their team member by name, “It’s been a few month since my colleague, Thomas, reached out to you.” Teamwork brownie points go to: Ryan Eriksson (Expanxion).

blah blah blah

Tip #4: The limelight belongs to the candidate

External recruiting firms and VC’s are especially likely to justify their outreach by talking about their firm, their firm’s specialty, years of experience, previous LinkedIn testimonials, etc. A laundry list of credentials doesn’t prove you are a great recruiter — the proof is in the email where the focus should be on the candidate’s qualifications, not your own.

The top five recruiters take a different tact and show a friendly, insatiable curiosity to learn more about Pete while never mentioning anything about their role or title:

“From what I gather, you’re a JavaScript and front-end expert, having worked on web applications that scale to millions.  I also noted, however, that your skills go beyond front-end work, demonstrated by your experience at Plaxo in C/C++ (and even violin!).  What I take from this is that you are really an engineering generalist, although maybe having some obvious strengths and likes, with a clear understanding of the web.  I thought I would get in touch with you in hopes of learning about your situation and sharing some info from my end.”Bill Umoff

“…I am extremely impressed with the experience you’ve gained from Meebo, Plaxo and Disney … but primarily your passion of “scaling applications to millions, and pushing the bounds of what’s possible on the Web” … Well, I’d love to learn some more about you and your interests and am curious if you’d be open to having a chat with us here at <company? either tomorrow or Wednesday…”Brad Fuellenbach

summary

One last tidbit, recruiters don’t read blogs. Surprisingly, Pete’s inbox has continued flowing since the initial honeypot email post — roughly one ping every 31 hours — with no signs of dwindling. While the field attracts a wide range of talent, this shouldn’t detract from the amazing recruiters who are getting recruiting right.

A special thanks to Bill Umoff, Brad Fuellenbach, and Ronda Woodcox for allowing their non-anonymized emails to be reprinted.

Happy team-building,
-Elaine

Jun 26

the recruiter honeypot

In late 2009, I created an online persona named Pete London – a self-described JavaScript ninja – to help attract and hire the best JavaScript recruiters. While I never hired a recruiter from the experiment, I learned a ton about how to compete in today’s Silicon Valley talent war. Based upon two years of non-scientific research, here’s what you should know…

The Recruiting Crisis

In late 2009, my desk was piled with JavaScript resumes. Our homegrown JavaScript framework edged us over competitors but maintaining our technical advantage meant carefully crafting a lean, delta-force Web team. Though I averaged two interviews a day, we had only grown the team by three-four engineers each year.

However, in 2010, that had to change. It was our first year with a real revenue target and also the first time we planned to pivot from our original IM product. We charted our end-of-year goals, quarterly milestones, and eventually backtracked to our team and hiring priorities. To meet our 2010 goals, I needed to double the JavaScript team in just one quarter. If I didn’t, innovation would stall and without revenue, our business would be in serious jeopardy.

I had very little more to give. Over the previous four years, I had already spent my personal networks, seeded every nook of the Web with job descriptions, and experimented with guerilla recruiting tactics like hosting JavaScript meetups across the country, planting hand-written congratulatory notes on the seats of CS Stanford students who’d just finished their finals, coding a spidering engine to find online JavaScript resumes, and even buying Google AdWords for relevant terms like xmlhttp, opendatabase, and localstorage.

But then my recruiting problem went from serious to heart-stopping dire. In the final months of 2009, every female on Meebo’s recruiting team became pregnant within a month of each other. Our expectant mothers were searching for contract replacements but as winter crept closer, finding someone who could temporarily step up to our extraordinary JavaScript challenges during our most critical hiring quarter looked unlikely. I was truly on my own.

PETE LONDON IS BORN

I needed amazing recruiters desperately. After the third expectant mother relayed her good news, I sunk into to my chair overwhelmed with urgency and stared blankly at my monitor thinking over and over, “Oh my god, what do I do now?” My first impulse was to look at the recruiters in my Inbox – specifically those who had pinged me for a Javascript role and presumably had prior Javascript recruiting experience. However, I also needed a recruiter who was smart enough not to poach a founder.

The honeypot idea emerged slowly, “If only I weren’t a founder! Which recruiters would have contacted me as an engineer?” I stewed on the idea of posting my resume online with a fictitious name for days and then one sleepless night, without telling anyone, I woke up and posted a small three-page website with an about page, resume, and blog for a supposed Pete London whose interests and engineering persona mirrored my own except he wasn’t a founder. I swapped out my post-graduate experience with my husband so it wouldn’t be too easy to trace back to me. I returned to bed with a small glimmer of hope – I had been hunting for recruiters for months but now the recruiters would come to me!

pete london website

LAST RESORT – LINKEDIN

My hopes sank pretty quickly. PeteLondon.com sat alone in Internet ether for weeks with absolutely nada activity. I was about to pull down the entire site when I thought – I’ll just post the resume on LinkedIn as a last resort.

Bam. It was as if I’d finally stumbled upon the door to the party.

On December 10th, 2009, the first LinkedIn message arrived from Google. Mozilla followed on December 15th. Ning and Facebook followed in January. Since then, Pete averaged a recruiter ping every 40 hours and saw 530 emails from 382 recruiters across 172 organizations.

recruiting activity

* Q1 2009 and Q2 2012 data are not complete. Data collection began December 10th, 2009 and ended June 1, 2012

WHAT I LEARNED

After two and a half years, I learned less about recruiting recruiters and more about recruiting engineers. Here are my eight biggest take-aways to finding the best talent online…

Lesson 1: Recruiters rely exclusively upon LinkedIn

You might be thinking, “Really? This is obvious!” But understand the context. I was interviewing tech recruiters who said they had “moved beyond LinkedIn.” LinkedIn was a “crutch for everyone else” but them. When I asked what techniques they used to fulfill JavaScript roles, they’d describe complex Boolean queries, highway 101 billboards, and obscure search engines. I ate it up! But at the same time, I wondered, “Wait, if this is all true, why hasn’t anyone found Pete London yet?”

To further my confusion, LinkedIn wasn’t how Meebo found its initial superstar JavaScript team. From 2005-20011, only one JavaScript team member was hired via LinkedIn – the rest came from personal networking, meetups, blog scouting, and other guerilla recruiting approaches.

Recruiting Method for Meebo's First JavaScript Engineers

I also assumed that a professional who made their living from recruiting, would want to optimize their response rate and would seek out ways to contact Pete London beyond LinkedIn. Though Pete London’s website and personal email address were just one click from his LinkedIn profile page, the majority of emails still arrived via LinkedIn – especially from larger companies.

linkedin vs personal email

Surprisingly, very few recruiters tried more than one communication channel.

TIP #1: If you’re a start-up who always feels like you’re scraping the bottom of the LinkedIn barrel, you’re probably right – LinkedIn is incredibly competitive. Recruit latent talent off the grid.

TIP #2: Recruiters flock to LinkedIn first, if not always. To increase your personal opportunities, join LinkedIn.

Lesson 2: Fear the Silicon Valley long tail

When I wrote to potential engineers, I always imagined my email landing next to recruiting giants like Google or Facebook. As a result, I was careful to emphasize Meebo’s unique start-up learning opportunities, amazing culture, and the opportunity to make impact.

However, my strategy was misguided. The Silicon Valley companies that drew TechCrunch headlines from 2010-2012 (i.e. Adobe, Amazon, AOL, Apple, Facebook, Google, LinkedIn, Netflix, Microsoft, Mozilla, Skype, Twitter, Yahoo, Zynga) only represented 15% of the landscape.

Recruiter Landscape

But I should have been more scared than I was – the emails from start-ups and mid-sized companies sounded nearly identical (my own included), “We’re a fast-growing start-up disrupting a lucrative space where your talents will shine and your efforts will be amply rewarded.” By emphasizing the classic start-up experience, everyone sounded exactly the same:

Start-up in Mountain View: “We’ve assembled a world class team. Our monthly uniques have already exceeded [###] million and continue to trend higher at a rapid pace. We’ve reached an inflection point where we’re looking to scale, and with your background I wanted to speak with you about our engineering hiring.”
Start-up in San Francisco: “There are a variety of interesting technical challenges in front of us including scaling for millions of users, developing applications, building a sophisticated data platform, securing user data and, most importantly, ensuring an incredible experience for our users. Aside from our plethora of awesome technical projects, this is also a great place to work. Everyone on the team benefits from free meals and tremendous organizational transparency (weekly all hands, daily stand ups, etc.)”

Larger companies employed an entirely different strategy and anecdotally, I saw more terse, canned emails from larger companies than start-ups. To quantitatively compare strategies, I went through all emails and noted whether the recruiter included role details, company information, or if the email was personalized specifically to Pete. I was incredibly lenient and gave points whenever I could. By almost every metric, the larger companies performed weakest: smallest word count (114 vs. 148 words per email), least likely to describe the company mission or personalize email, and least likely to use a personal email address. However, large companies hired triple the number of recruiters and made up for their shortcomings in volume. Pete heard from an average of 1.4 recruiters at each start-up and 4.6 recruiters at each large company.

Recruiter Landscape

You might assume that with more internal recruiters, big companies would do better than start-ups who depend more upon external recruiters. After all, big companies have had more time, resources, infrastructure to make this a key strategic asset. But it turns out you don’t want to emulate the big guys and you also don’t want to assume they are your stiffest competition.

TIP #3: Your real recruiting nemesis is the start-up down the street. Pitch your job opportunities with more specificity than “fast-paced, innovative startup.”

Lesson 3: The recruiting landscape isn’t just filled with recruiters

Only 97% of the recruiting emails can be attributed to traditional recruiting. So who represents the remaining 3%?

Surprise! VCs – specifically early-stage angel investors.

Recruiter Landscape

* Q1 2009 and Q2 2012 data are not complete. Data collection began December 10th, 2009 and ended June 1, 2012

Though they are a small lot, they are a super lethal bunch with an eye on your jugular artery – your revered first engineers who built your system from scratch. The charming VCs know that your prized engineers could fulfill a similar role at their future portfolio companies and set their hooks early. In most cases they don’t have a specific company or role in mind but are just proactively networking and hoping to be top-of-mind in the future. Given how interconnected and fast-moving the start-up world is, this might be inevitable but woah! good to know.

“I’m with [a VC firm] and my charter is to build out their talent services capabilities. What that means is we are looking for high caliber individuals that would be interested in potentially exploring opportunities with our portfolio companies.

Your experience is exceptional and you have the type of background that should be apart of the network. If you are interested in learning more I would love the opportunity to speak with you in more detail. What we are looking to establish is a “go to” network of top notch individuals that would be a value add to our portfolio of companies. I hope to hear from you soon.”

TIP #4: Keep your engineers happy (i.e. free food, great people, & amazing challenges). When the VCs come knocking, make sure your MVP’s are glued in.

Lesson 4: Can a start-up rely upon external recruiting?

As a start-up, you are inevitably resource-starved. When you have the good fortune to gain traction, you have the setback of suffering infrastructure growing pains while realizing the only way to get ahead is to find time to recruit, interview, and close candidates. In the early days, external recruiters appeared on Meebo’s doorstep and promised to screen and pass along qualified candidates so I could turn my attention back to Friday’s release – it seemed like a dream come true!

However, the first people you hire set your engineering and cultural DNA for the lifetime of the organization and while you desperately need to hire well, can you depend upon external recruiters to step up to the task? Once the scaling challenges strike, does it make more sense to proactively hire a superstar in-house recruiter or to rely upon external recruiters to scale the engineering team?

The answer is surprising – external and internal recruiters perform similarly in start-up environments. Internal recruiters are 14% more likely to describe the position but 14% less likely to personalize the email.

However, larger companies don’t have a viable external recruiting option. External recruiters at the top companies were much weaker overall – 340% less likely to include a description of the role, 140% less likely to personalize their email, and 88% less likely to include detailed company information. Though larger company recruiters were relatively weak overall, in-house recruiters are their only viable option.

Internal vs. External

Given this significant performance difference, it’s no surprise that larger companies also employ far more internal recruiters than start-ups.

Internal vs. External

TIP #5: As a start-up, you can sleep easier knowing that external recruiters are a fantastic resource. Find your superstar engineers first and your superstar in-house recruiters second.

TIP #6: Contingency recruiting farms are financially incentivized to hire for less selective companies. For difficult roles, a dedicated contract recruiter may be your only realistic option.

However, before you get too excited about external recruiters, read further…

Lesson 5: Be careful whom you invite into your house

Unfortunately, it’s not all about the numbers. Though external recruiters perform well for start-ups, there’s another side to this story. It pains me to write this but I think it’s important to share…

Meebo employed lots of external recruiters when we were getting off the ground. We had standard 18-month no-poach restrictions with all of our contractors that specified that those recruiters were not allowed to contact Meebo employees within 18 months of our contract expiring. Most of those contracts expired in 2008-2009.

However, every recruiter and firm we’d worked with who was still in the recruiting business tried to poach Pete London.

Every single one!

It’s impossible to know whether our former recruiters were pinging employees during the no-poach period prior to 2009 but I wouldn’t be surprised. However, I doubt they were being malicious – it’s more likely they were just disorganized and didn’t communicate an off-limits list to their staff.

In addition to pings from too-familiar recruiters, there were two cases that left me especially uneasy. In the first case, a former recruiting agency tried to poach Pete London and then 15 minutes later, wrote to me offering recruiting services! I was being pulled on both ends! When I didn’t respond, they repeated the stunt again six weeks later. I got wind that they’d sent recruiting emails to everyone on our Engineering teams and I called them on it (without referencing Pete London). I never heard from them again.

May 13th, 2:20pm

“Hi Peter,

I am a recruiter who works with high-growth, top-tier start ups and industry leaders. I came across your information and was impressed with your background. I’m guessing you may not be actively looking for a new job right now, but I’m sure you plan on continuing to advance your career in the long term, and would be open to hear about opportunities that may accelerate that advancement.

I’d like to get a better idea of your interests and goals, so that I can identify and present to you a few of the most attractive opportunities in the market both now and in the future. You may be pleasantly surprised at what is out there for you. Let me know a good time and number to call you…”

May 13th, 2:35pm (15 minutes later)

“Hi Elaine,

I’m a recruiter… We specialize in the placement of technology professionals. I’ve been working with many excellent candidates from the space and researching companies for them. meebo came up in my search as a good company to consider, so I’d like to present some of these candidates to you for interviews.

Please call me or email me a good time and # to reach you…

Thanks and I look forward to working with you!”

The second case that made me uneasy involved a contractor recruiter who worked from Meebo’s office for nearly a year. During this time, the recruiter went to lunch with the team, participated in hackdays, and became close with many folks. Two years later, that recruiter poached Pete London and a few hours later, showed up at Meebo’s informal Friday happy hour! I was definitely in a queasy gray zone where there wasn’t a strong divide between our personal and professional relationship. Technically, it was hard to nail down any real grievances, but I was certainly aware that our teams were constantly under former recruiter attack.

External recruiters are an inevitable necessity for start-ups. But after seeing all of the emails that those external recruiters generated in subsequent years, I wish Meebo had switched to in-house recruiting sooner.

The external recruiters you work with today are good but they will learn your strengths, your team, and you’ll probably be uncomfortably top of mind later on.

TIP #7: External recruiters are a mixed blessing – be selective and switch to internal recruiters as soon as you can.

TIP #8: Push for at least 18-month no-poach policies with external recruiters.

Lesson #6: The most common little white lie is…

With very few exceptions, recruiter emails were well-written, smarmy-free, and didn’t smell of phishing. I expected far worse. However, if a little white lie is going to sneak into an email, it’s going to look like this…

“I was referred to you as a possible source for a position I am working on here” – Large company
“I previously worked with [Bob] & [Andrew] and have heard great things about you and feel you’d be a great fit…” – Startup
“I understand that you may not be actively looking at this point, but we have heard that you are very good and wanted to see if you might consider looking into a position with [us]” – Startup
“I’m reaching out to you because I’ve been an admirer of your work at Meebo and believe you could be the perfect founding engineer to lead front-end engineering for our product.” – Startup

Little white lies appeared across all recruiting groups and generally took the form, “I was referred to you” or “I’ve heard very good things.” While even unfounded flattery feels good, I learned to be suspicious of vague recruiter compliments.

TIP #9: Flattery will get you everywhere! Take recruiter praises with a healthy pinch of salt.

Lesson #7: It’s time to buy more hoodies

If you are a JavaScript engineer, you know that the talent market is increasingly competitive and you are inevitably feeling the pull of San Francisco. The demand for engineers has intensified over the last two years and recruiting activity has exploded in the foggy north.

geography
* Q1 2009 and Q2 2012 data are not complete. Data collection began December 10th, 2009 and stopped on June 1, 2012

It’s impossible to ignore the momentum that is growing in San Francisco. If I were a start-up getting off the ground today, I would start in San Francisco. In 2011, Meebo saw more of its JavaScript engineers hailing from SF than from Mountain View for the first time. While it’s exciting that there are more geographic options to start a tech company, it’s also time to recognize that companies need strategies for geographically dispersed teams and for recruiting from different areas of the Peninsula.

TIP #10: As the city of Palo Alto or Mountain View, I would make sure that resident tech companies are happy and that public transportation is a top priority.

TIP #11: When writing to candidates, specify where your office is located – it’s no longer assumed that an opportunity is south of San Mateo unless otherwise specified.

TIP #12: The entrepreneurial epicenter is no longer Palo Alto. If you’re south of San Mateo, figure out your SF strategy now.

Lesson #8: Who’s the best in the valley?

You are.

There were 19 emails from managers, execs, founders, and board members who presumably had no professional background in recruiting. However, those non-recruiters collectively outperformed every other professional recruiting segment – scoring just as high or higher by every metric: email quality, outreach technique, and word count. No matter how many recruiters you hire, there is no substitute for a heart-felt note from a future manager.

recruiters vs managers

word count

word count

However, managers have responsibilities beyond recruiting and it’s not realistic to spend eight hours a day reading resumes and penning candidate emails – professional recruiters are a necessity. However, most managers probably hope to hire a recruiter who does the job better than themselves. Of all of the emails Pete received, only 40% of the recruiter emails scored better than the average manager who actively sought out Pete London. And within this top 40%, there were proportionately more start-up recruiters than any other segment.

TIP #13: Look for recruiters with start-up backgrounds rather than large companies.

TIP #14: Hire the best recruiters and treat them like gold. If a product is only as good as its team, then the product is only as good as its recruiting team.

SUMMARY

Of the 382 recruiters, there was only one recruiter who actually figured it out. To do so, he did one thing that no other recruiter did – picked up the phone and called someone who should have been connected to Pete to ask for an introduction. And that’s where the ruse unraveled. If there were one recruiter I would have partnered with during my toughest hiring crunch ever, it would have been him.

However, that recruiter had also recruited for Meebo the prior year and he shouldn’t have been poaching Pete London from our team. He apologized. In the end, the honeypot ended up identifying the one amazing recruiter I already knew about but couldn’t justify working with again.

Ultimately, our recruiting challenge was solved by hiring more JavaScript managers who could help recruit too.

In the next blog post, I’ll examine the “best recruiters of silicon valley” more. With their permission, I’ll list the top five recruiters and a few email snippets.

Stay tuned!

Feb 16

armed and dangerous in silicon valley

Last weekend I took an Adobe InDesign course at BAVC and was surrounded by Sales & Marketing start-up folks taking classes so they didn’t have to bother their busy design and engineering teams with small requests. I had to restrain myself from recruiting every single one of them (especially the one who brought donuts in the morning).

Becoming armed and dangerous in Silicon Valley is easier than most people realize. There are amazing tech classes in the Bay Area that don’t require technical degrees or taking a sabbatical – they are just a little hard to find:

  1. BAVC – offers an exhaustive selection of video production courses as well as Adobe, HTML, CSS, JavaScript, Flash, color, and typography workshops. If you’re a start-up, you might even qualify to take classes for free.
  2. TechShop – offers electronics, machining, and other workshop classes. Right now, Autodesk provides Autodesk Inventor workshops for free (for members). Or prototype that electric gizmo you’ve been dreaming about with the Arduino series. The TechShop’s laser cutting and etching course is far and away their most popular course. The TechShop also has three locations in San Francisco, Menlo Park, and Mountain View.
  3. Stanford Continuing Studies – offers nearly everything from language development, liberal arts courses, writing workshops, lecture series, to professional development. The Personal & Professional Development Series offers financing, leadership, PHP, entrepreneurial, public speaking, and Web design courses. I took a public speaking course with Matt Abrahams. The writing workshops are also highly regarded. It’s also worth mentioning that many of the Art and Archaeology instructors offer international trips to excavate or study art in-person.
  4. UC Berkeley Extension – offers back-end computer science courses such as System Administration and Networking as well as front-end classes like Web development and graphic design. Some classes are available online.
  5. California College of the Arts – offers Web and graphic design classes such as Adobe Creative Suite bootcamps plus other hard-to-find courses such as creating interactive ePubs for your iPad, Cocoa Touch programming, or a how to use a Wacom tablet.
  6. BioCurious – this up-and-coming Biotech workspace in Sunnyvale offers a complete working laboratory. Learn how to do genome sequencing and cloning with their weekend workshops and then start your own genomic experiment – no prerequisite experience necessary!
  7. SFSU Extension – SFSU’s quarterly programming and design classes include jQuery, HTML5, Mobile UI design, ActionScript, and WordPress. Many of the classes are available in weekend workshops.
  8. Digital Media Playground – teaches digital photography and video production so you’ll no longer feel guilty about carrying around a camera you don’t know how to use. It’s also one of the few places that regularly teaches food photography.
  9. The Crucible – prep for Burning Man in no time. These friendly folks offer every Industrial Arts class you can dream of including welding, hula hooping with fire, neon sign making, blacksmithing, and electronics.

If someone’s snickered at your purple comic sans e-mail signature, consider a typography classes. If you are a Project or Product Manager who isn’t totally fluent in geekspeak, look at the Berkeley, SFSU, and Stanford computer science courses. If you are a Sales or Marketing professional who wants to tweak brochures for conferences or start a company blog, take a WordPress, HTML, Photoshop, or InDesign classes. And if you’re a hardcore computer geek, maybe you crave working with something tangible – you’ll love the TechShop and Crucible.

Enjoy!
-Elaine