The 5 Keys to improved hiring in startups

Hiring is one of the most important things you’ll ever do.  Whether in your own company, someone else’s or a large publicly traded company.  The biggest difference though for a start-up is the wrong hire can literally kill your company.  While other companies that are larger can put low performers on performance plans or transfer them to other departments in a start-up you’re stuck.  You’ve just wasted 3-6 hiring them, several months getting them up to speed and now you have to start all over again.

Over the past 10+ years I’ve built teams for 4 very different companies both in Europe and in the US and seen a lot about what works and what doesn’t.  If I had to start over, and I probably will at some point, here are the 5 most important things I’ve learned in the process:

1. Hire A teams:  Never, ever, no matter how much pressure you’re under hire anything but the best talent you can get.  I’ve seen first hand at Google what the impact is of hiring great people.  They learn faster, solve problems more quickly, identify and fix problems without being asked, are hungry, ambitious and want to get things done.  The flip side is they are typically more demanding, more critical and more difficult to manage.  My team at Google is probably the best I’ve ever managed but they also require the most management and are really challenging.  Lastly, the great thing about hiring top talent is they will push you to be your best day in day out and at the end of the day we all want to get better or we wouldn’t be doing start-ups would we?  Lastly, don’t be afraid to hire people who think very differently to how you do (avoid group think!) and also hire people who complement your skills and are even stronger than you are in their respective areas of expertise.  
2. Hire generalists: One of the biggest mistakes I’ve seen people make, and I’ve made it too, is to focus on hiring exactly for the job description I’ve outlined.  While this may be critical for some roles that are really technical in nature often times you might miss some really amazing people.  The great thing about amazing generalists is exactly that:  they are generalists.  They are flexible, you can move them around and you can always find things for them to do.  For example, I’ve worked with customer support people that turned out to be great social media marketers.  Why?  because they understood how to talk to consumers and they understood the need for great customer service.  I’ve hired marketers that turned out to be great sales people.  They were creative, charismatic, enjoyed being with people and just naturally understood how to sell.  Once we hired a former executive recruiter to do sales.  I was against it.  I was totally wrong.  His empathy with people made him a hit with customers.
3. Don’t hire just based on skill but on cultural fit:  This is especially important in start-ups but it’s something that’s also really important at Google.  You may find an amazing coder, a person of pure genius who can program blindfolded, one handed and without sleep for 48 hours straight but...if he’s unmanageable and can’t work with others and makes your life a living hell over time he may do more harm than good.  That kind of attitude breeds resentment among others, it may affect their work, they may become demotivated and you might even lose some of them.  The small companies that really thrive also do so because of the culture they build and that culture is product of those who work there.  Everyone contributes to it.  One test I’ve always liked is the 2 hour plane test.  If you are hiring someone ask yourself whether you could sit and make small talk with them for 2 hours on a plane and whether other key people they’ll interact with could.  If the answer is no you have your answer.
4. Interview exhaustively and interview smartly:  A friend of mine at Google who’s been around once mentioned he went through probably 10-12 interviews before getting an offer.  My own experience wasn’t too dissimilar and it was long, challenging and somewhat painful.  But in truth it works and contributes to the amazing culture Google has today.  First,  make sure any and all relevant stakeholders that are going to work with this person spend a few hours with them.  I can’t stress this enough.  The folks who will work day in day out really have to sign off on the candidate and more importantly will be able to identify and pick-up on many things you might miss.  Second,  use real life case scenarios when interviewing.  Back at GetJar I used to ask 2nd round marketing candidates to write a marketing plan for me and then come and present it to me and the sales teams.  Putting candidates in real work situations gives you an opportunity to really see them in action and keep them on their toes.  Lastly, interview them in different contexts.  For example if the role is critical enough you might want to invite them for dinner with a few colleagues and see how they behave and react after a few beers and in a different environment.  I once inherited a guy who couldn’t hold his alcohol in public.  He went on to insult our biggest customer and we had to let him go.  Context can be critical.
5. If the role is critical call in the hunters:  yes, we know you’re a start-up and you need every penny.  But the truth is human capital is your most valuable asset.  Everything else you have or own is replaceable or can be obsolete in 6-9 months time including your technology if you’re not paying attention.  I’m not saying not to use your network or Linkedin.  These can be invaluable and if you can save the money that’s great but in my experience good headhunters can save you time, money and a lot of headache.  The key is to hire the best folks in the business.  I recommend you use the best you can find.  If you’re VC funded asked your board to recommend someone, if not and you have the money firms like Riviera Partners, The Cole Group, Ignition Search Partners are among the most respected.  Other more traditional firms like Korny Ferry and Egon Zhender may on occasion do start up assignments but they typically will work with larger, more established companies.   One thing I’d recommend though is to do some background on which partner you will work with.  Like anything, the firms is only as good as the people who work in it and you want to get the best people within the firm conducting your search.  Look for partners who really understand your space, have experience and a vast network in it and preferably have placed people in your field in the past 3-6 months.  Finally, the key to using executive search firms is to a) properly brief them, b) give them time (the process can take easily from 3-6 months typically) and c) really pay attention to what they are telling you about candidates and the market.  Jeff Markowitz at Greylock has a great article which is a must read if you’re going to go this route which you can find here.

Anyway, i could write volumes about this and have some great stories on the subject but hopefully these tips will be helpful.  Maybe for my next piece I’ll pen something on how to manage those great people or the 5 tips on what to do if 30 days in you realize you’ve made the wrong hire.  Happy hunting!

The Wii-U: Nintendo's last gaming console?

This past week Nintendo announced the merging of its console and handheld business units (read more on this here).  This follows the December launch of Nintendo TVii which allows consumers to watch TV, sports and movies on TV using their console.

But is this really enough to bring the gaming giant back to its glory days of 2007?  Not very likely.  The original Wii revolutionized the gaming industry with it's energetic and fun approach to gaming, unique motion sensing controllers and cut rate price.  The Wii was not only the best selling game console of all time with nearly 100M units sold by September 2012, it broadened the gaming industry by making console gaming social and proved that gaming didn't have to be expensive or dedicated to hard core gamers alone. Games like Wii Sports and Wii Golf were quirky, intuitive and fun.  They got gamers off the couch swinging, batting, bowling and jumping like never before.  More importantly, the Wii was significantly cheaper than its competitors the PS3 and Xbox 360 since its focus wasn't on high end graphics but on gameplay.  That said, the FT reported in 2008 that despite its low price, Nintendo actually made an average profit of $6 per unit due to supply chain efficiencies and the enormous economies of scale it drove by producing over 1.8M units a month.  Nintendo's all time high stock price? $78.50 on Halloween 2007.

Fast forward to last months launch of the Wii U.  Despite robust sales and retailers running out of stock, Nintendo announced that it sold 400k units in its first week of sales.  That compares to 600k units of the original Wii during its first 8 days of sales back in 2006.  Despite lots of buzz, an enormous marketing campaign and a more powerful device complete with a unique tablet controller the magic simply isn't the same.

What's changed?

First, the device is simply not as revolutionary as the Wii was back in late 2006.  The addition of the tablet controller is nice but it's more of a gimmick.  It doesn't fundamentally change gaming or encourage people who don't play to want to play games.  The tablet provides some element of convenience by allowing people to continue to game from TV to tablet but this now seems obsolete given Google's announcement back in October that Android 4.2 will include Miracast technology by default which will allow consumers to screencast the content on their phones / tablets directly to their TV's using Miracasts peer-to-peer technology over Wifi.  At CES I saw a number of companies already displaying the use of this technology to show apps, TV shows and music being streamed to smart TV's.

Second, the device is simply too expensive.  The base version is over $350 for the 8GB version and more than $430 for the 32GB version.  Not to mention that you still have to shell out $50-60 per game in addition to the cost of the console.  This comes at precisely the time when most people in Europe and the United States are still careful about spending and might think twice before spending that kind of money on something that could provide gaming as well as much more than that.  Nintendo gaming has always been about mass market casual games but if you're now able to buy pretty good Android tablets starting at $199 with games ranging from $.99 to $8.99 the value proposition just doesn't seem as compelling.  

Nintendo's last challenge is simply the dynamic of the console industry itself.  Which is the third key problem.  The video game market has completely changed right under Nintendo's nose.  The typical console life cycle is 6-7 years but in the past 6 years we've seen the launch of the iPhone, iPad and a dizzying assault of Android devices like the Nexus 7, Samsung Galaxy SIII and recently Nvidia's Project Shield.

All these devices are capable of providing consumers with a pretty decent gaming experience.  Though Nintendo's CEO Satoru Iwata has often derided mobile games as degrading the gaming industry and cheapening gaming altogether, mobile games are on track to generate over $11 billion in revenue by 2014 according to gamesindustryblog.com.

So where does Nintendo go from here?

Nintendo has been written off many times over the past few decades. Each time the company has re-invented itself.  Personally, I'm not betting against them.  They have fantastic IP, great games and solid hardware.  But to me it's clear they can't continue to be successful while trying to do all these things and more.

Nintendo has already taken the first meaningful step:  to consolidate its handheld and console divisions.  But I think the other two steps they must take will be much harder on the company philosophically:

1.    They need to embrace mobile and make their great games available on other platforms such as Android and IOS.  The reality is this is where consumers, particularly casual gamers, are spending a lot of time.  Not embracing this platform means potentially loosing a whole generation of new gamers recently coming of age.  The key to building and sustaining great brands is distribution:  if Mario, Zelda and Pokemon aren't available to IOS / Android gamers there is no guarantee - especially given the current generation of hardware - that these gamers will ever embrace Nintendo's titles

2.  Abandon their own proprietary OS for their devices in favor of an open standard that is current and will not drain the company of much needed resources it needs to be successful on HW and games.  Nobody is saying Nintendo's own software is bad but it's not cutting edge either.  With Android, IOS, Windows Phone and other OS's receiving at least yearly upgrades, Nintendo needs a cutting edge platform to stay relevant.  This isn't just about games:  it's about the complete experience consumers now expect on their devices (email, social, search, games, movies, music...)

What do I think Nintendo will do?

If I take out my crystal ball and peer into the future I don't think the company will make any bold decisions in the next two quarters.  That said if the Wii-U begins to loose steam quickly and requires an early price cut  the company may be left with little choice.  With Nvidia's decision at CES to enter the handheld space - using a device powered by Android 4.2 no less - Nintendo faces direct challenges on all fronts.  By E3, Nintendo's competitors will likely make announcements of their own and given Microsoft and Sony's obvious leanings I think it's fair to say we'll see significant features that enhance their console offerings by tying them closely to mobile.

Life is certainly going to get harder for Nintendo before it gets better.  Than again, Mario's creators have always found a way to change his look and make him contemporary and relevant.  Maybe he just needs a new wardrobe...