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guy kawasaki’s hit parade

the top 10 lies of entrepreneurs and other lists for startups

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the top 10 rules in the war for talent

          Speech number three is called “The War for Talent,” and I'm a little nervous about giving it because our Director of Human Capital is in the audience.  She's going to tell me all the things I said wrong.  If you have questions about this, I'm going to refer to her.  Have you ever heard the joke about the chauffeur and the physicist?  This chauffeur is taking this physicist around the Bay Area to do a bunch of lectures, and he goes to every lecture and listens to the physicist over and over again.  The physicist has slides and keeps giving the same speech.  At the last one for the day, the physicist says to the chauffeur, “I'm really tired,” and the chauffeur says, “You know what?  I've watched this thing 10 times.  I'll give your speech.”  They reverse places and the chauffeur gives the speech. Everything is going great using the slides and the canned speech, but then he finishes early and the moderator says, “Let's take some questions.”  He gets one or two questions he can handle, but the third question is really hard, so he says, “You know, this question is so stupid and so easy I'm going to let my chauffeur answer it.”

          So, if the questions get really stupid and easy, I'm going to let my chauffeur answer them.

          In today's fund-raising environment, the way the war for talent works is that if you get the talent, you get the money.  This is very different.  It used to be that you got the money, then the talent.  Today, you have to get the talent first.  You may logically ask, “If I don't have money, how do I get talent?”  Welcome to the big leagues.  The way it works today is that one of the big tests of the viability of a company is the CEO's ability to recruit without money.  Anybody can recruit with money; that's how the big, dumb companies do it.  The test is whether you can recruit without money, so here are the Top 10 things about recruiting in the war for talent today.


Recruit 24x7.

Like PR, recruiting is not an event, it’s a process.  Recruiting is not something that you leave for your human capital department to do from 8:00 to 5:00.  If you recruit that way, you will never build a world class team.  You need to be recruiting 24x7, at every cocktail reception, with every email, at every meeting you have.  I have recruited people when they came to pitch us on being a vendor, and when they wanted me to be on their advisory board.  This is a true story.  A woman came to us, told me about her company and said, “Guy, why don't you join our board of advisors?  What's your advice?”  I said, “You really want me to tell you?  This my advice.  That market is too crowded and there's no business model.  Your company is not going to make it.”  I asked about her background, and she said it was in telephony.  I said, “If you really want my advice, you should quit that company and join ours, because we need telecom expertise.”  She did.

          The point is that you have to recruit 24x7.  Always.  There are only two states¾you're asleep or recruiting.  That's it.


Kiss a lot of frogs.

You kiss a lot of frogs because many times a company is tempted to go with that first or second resume they get, that first or second applicant, because they're so desperate.  You're growing so fast, you have this $10 million and the venture capitalists are telling you to scale¾well, maybe this is last century advice.  They're telling you to scale, so you're thinking that you have to get a bunch of bodies right away and you take first applicant that comes in who looks reasonable.

          You know what?  Don't do that.  You need to kiss a lot of frogs.  You need to kiss 10 or 20 frogs before you find a prince.  Don't be tempted by the first or second or third resume.  Discipline yourself.  Kiss a lot of frogs before you decide on one.


Use all your weapons.

Again, lots of companies look at human capital recruiting as a specialty that's done by special people from 8:00 to 5:00.  You must use all your weapons, specifically your board of directors.  Your board members should be looking for people they can recruit for you.  You should also use them and your Chairman and your outside advisors to sign these people up once you've recruited them.  When you have an illustrious board, say a Mario Morino or a Steve Case, you need to take candidates to them and say, “Listen, can you help me recruit this person?”  Most candidates will be so flattered to meet them that they will bend over backwards to join your company.  Use all your weapons.  You have outside advisors and directors; help them help you recruit.  That's one of their moral obligations.  Use your CEO; I don't care if it's for a receptionist job.  Use your CEO to recruit.



Trust your gut.

Trust your gut means that sometimes you're in such a rush that you look at the resume of someone you've spent 15 minutes with and think, “This person did work for Oracle, ran an engineering department and seems to know Oracle and big databases.  He looks right; let's hire him.”  But your gut is saying, “You know, this guy is a bozo.  He's wearing an Armani jacket and he has Brut on.  What's the deal here?”  Your gut is telling you not to do it, but your mind is saying, “We have to get somebody in this CTO position.  Venture capitalists are telling us to scale.”  Trust your gut.  No matter how good a person looks on paper, if something tells you not to hire him, don't hire the person.

          The flip side is that if your gut is telling you to hire a person despite her lack of background, also trust your gut.  I made an amazing transition once in my career.  To give you a very quick overview, I was an undergraduate at Stanford and got a BA in psychology because, frankly, that was that easiest major at the time.  After Stanford, I went to the University of California at Davis for law school.  I stayed in law school for two weeks and quit.  I think that’s inherent proof of my intelligence because most people practice law for 20 years and quit; I quit after two weeks.  I'm a hundred times smarter than most lawyers.  After that, I worked in Hawaii, then I came back for an MBA at UCLA.  While I was at UCLA, I worked for a jewelry manufacturer counting diamonds.  That was my first job, counting diamonds at a small jewelry manufacturer.  From counting diamonds I fell in love with computing when one of my friends at Stanford showed me an Apple II and then a Macintosh, so I went to a small software company called Peachtree Software Services which was acquired by MSA in Atlanta.  The people in Atlanta wanted me to move there when they acquired the company.  I went to Atlanta, and there were two reasons why I could never move there.  One is that every street is named Peachtree so you can never find your way, the second is that they asked me what I would like to eat and, when I said sushi, they took me to a bait shop.  I said forget it and chose not to move to Atlanta.  I was recruited by Apple, and the only reason I got hired there was because I roomed with the person who was hiring me.  It was pure nepotism because, if you looked at my background¾psych and counting diamonds¾that was not exactly the spec you would set for the software evangelist upon which to bet all Macintosh software.  So, I am living proof that when people trust their gut you can succeed.  Steve Jobs trusted his gut about me and that's why I became what I became.  You need to trust your gut, both negatively and positively.


Sell all the decision-makers.

Many times, when you recruit a person, you think it is that person you have to convince, so you throw your directors and advisors and your CEO at the person.  You think you have the decision absolutely wired shut, you negotiate in good faith, you talk about it, you come to agreement, you send the offer letter, everything is going great and you don't sign the person.  Later, you find out that this 28-year-old who you really thought you had nailed shut is living with her parents and her parents told her, “In this economy, maybe you shouldn't go to work for a startup in high technology.”  Should you have known that this person's parents were going to help her in that decision?  That's debatable, but I guess you should have because you needed to sell all the decision-makers.  It is not simply the candidate, it is the spouse, the parents, the grandparents, the boyfriend or girlfriend, everybody.  You have to sell all the decision-makers, not just the employee.


Recruit outside the lines.

This sort of goes with trusting your gut.  Many people recruit only inside the lines.  Here’s a very funny story about Apple.  Macintosh was introduced in 1984.  In 1986, when Apple was recruiting, I remember seeing ads that said you needed five years of Macintosh programming experience.  The math didn't quite work.  If you recruit only inside the lines, if you say the only proper candidate for running software evangelism at Apple Computer is a person who has worked with software development for five years, Guy Kawasaki, diamond counter, never would have been hired.

          You need to look for talent.  This is a war for talent, and, if you restrict yourself only to the people who appear to be right on paper, you will not make optimal hires.  Go outside of your industry.  Go outside of your geographic area, recruit outside the lines.  The point is to hire the best person, not the best person who meets spec.  There's a very big difference.



Wait to compensate.

Many companies decide in advance that, well, a VP of Marketing is $150,000 with 1% of the company; a Director of Engineering is $95,000 with 0.5% of the company; etc.  You set up these barriers for yourself, so you avoid great candidates.  The way you should compensate is to pay whatever it takes.

          I'll tell you a story about our Director of Human Capital.  About a year ago, we decided that we wanted a headhunter on our staff who would do nothing but recruit for our clients.  We were discussing this internally and thought we should get a person like this for about $85,000-$100,000.  The President of knew Amy Vernetti and he saw her one day.  Amy was at Heidrick & Struggles from which we rescued her.  We had a relationship with Heidrick & Struggles, so he went to her and said, “We're thinking of hiring a headhunter and we'd like to pay that person between $85,000 and $100,000.”  Little did we know that Amy Vernetti was interested in working for us, but when she heard the President spec the job in that range when she was making multiples of that, she eliminated herself from the candidate pool.  Our President made a mistake; he didn't wait to compensate.  He specified what the compensation was, and, by doing so, he negated one great candidate.

          Now you ask yourself, “How come Amy is working for us.”  It's because Amy and I play basketball together at 5:30 in the morning Mondays, Wednesdays and Fridays.  One day I told her that we were looking for a headhunter.  This was after the conversation with the President.  She asked, “What are you going to pay?”  I said, “Whatever it takes.  Headhunters can make half million dollars.  Whatever it takes.  We don't exactly have half a million dollars, but we have boatloads of equity and we're pre-IPO, so whatever it takes.”  I pulled her out of the muck of Heidrick & Struggles, rescued her and changed her life, and it was because I didn't set a cap.  If I had told her the most we would pay was $100,000, we never would have gotten her.  You need to wait to compensate.  You need to wait to find the right candidate, then do whatever is necessary to get that candidate.  Do not set yourself up for failure by specifying a range in advance.


Pay for what you get.

Be willing to pay for what you get.  I think that for a startup CEO you need to pay about $250,000 with 5-10% of the company.  That's the ballpark.  You need to pay for what you get because you'll never get what you pay for if you don't pay for what you get.  Be willing to step up to the bar.  A world-class CEO will help you get funding and increase your market cap.  Pay for that.  It is better to pay $500,000 and 10% of the company for a world-class CEO if the company increases in value, than to steal one at $75,000 and 1% of the company.  Frankly, if you can get a CEO for $75,000 and 1%, you don't want that CEO.  Pay for what you get.  


End with the offer letter.

Many companies also make this mistake.  They're going along great with the candidate, completing each other sentences like Steve Jobs and John Scully, and what happens?  They say, “Wow, let's just fax over an offer letter as a first attempt.  We'll sort of set the stage for the negotiations.”  They send over an offer letter that is so insultingly low that the candidate gets completely turned off.  The way it really works today is that you meet with the candidate, you come to some verbal agreement, the candidate knows exactly what you're going to do, you know exactly what the candidate will accept and, at the very last moment, you send the offer letter.  You do not send the offer letter early in the process to set the stage for negotiation; all negotiation is done in advance.  The offer letter is merely the written confirmation of something you've already agreed to orally.  Send the offer letter as the absolute last step, okay?  End with the offer letter, don't begin with it.


Never assume you're done.

It used to be that you could assume that once you got an offer letter sent, you got the person.  Then it became that when you got a signed acceptance of the offer letter you had the person. Then it became, when the person quit their old job you had the person.  Then it was that when the person quit the job and started with you, you had the person.  Now it's: person got the offer letter, signed the offer letter, returned the offer letter, resigned, started at your company and has stayed six months.  That's when you truly have the person.

          Let me tell you a story.  A few months ago we hired, or we thought we hired, a Vice President to run one part of our company.  This person was working for an investment bank.  We went through protracted negotiations in which we finally came to an oral agreement.  We gave the person the offer letter.  The person then resigned.  The company he was working for countered our offer, so he came back and said, “Maybe I'm not so sure.”  We're kind of used to this, so we went back with another offer, and that person resigned again.  At this point, his current employer is offering him $7 million a year, guaranteed.  Trust me when I tell you we weren't offering him $7 million, so it was offer letter, counter, offer letter, counter.  We still got him to quit, okay?  He joins us.  He works for five days and one day he leaves a voice mail for me saying that he's not returning to the investment bank.  He's going to be CFO at his friend's company because that company is just about to do a secondary and he sees this as a quick flip to get a lot of money.  This is after he's been working for us five days.  He left us and went to work for his friend’s company.  About a month later, he left that company and went back to the investment bank.

          That's the nature of the business today.  Until you really have the person, until that person has started¾and even starting is not good enough, the person has to be engaged by your company¾that's when you're done¾engaged by your company.  It's not the offer letter, it's not the acceptance of the offer letter, it's not the resignation.  You assume you're done when the person is truly, truly engaged and contributing to your company.  That's when you're done.

          Those are the Top 10 things about the war for talent.  That's speech number three.


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