Sunday, June 29, 2008

Wooing a Smart Employee?

Trap the Ocean in your Puddle.

Wooing a smart employee away from a large company to join your startup can be tough, challenging but rewarding. This is how you should go about it.

In the early 80s, Steve Jobs asked John Sculley, the then president of PepsiCo, whether he wanted to continue selling sugared water all his life or change the world. Jobs was looking for a man to run his little computer company. He saw a man with the skill set needed to market his dream and he went all out to get him bite the Apple. All big companies are full of people who are firmly ensconced in fancy positions but are thirsty for a bigger challenge. The extreme comfort at the top of the corporate ladder can sometimes be suffocating to entrepreneurial people. They are looking for one chance, one compelling argument and one opportunity to create something from the ground up and they’ll quit their jobs.

On the other side, is the startup business that has a wonderful idea that is beginning to work. Now is the time to scale up and manage growth. It needs top-notch managers who will own the company’s fate and show enough dedication to stay with it irrespective of the modest initial benefits.

Put the two together and a success story unveils itself. But a startup has to be careful not to bite what it can’t chew. Done carefully, the hiring can be rewarding to both sides. The very first precaution, of course, is not to choose the wrong guy. An unfit candidate who can’t adjust to a startup environment can actually prove downright fatal for the small company. A venture capitalist, who did not wish to be named, drew from his experience and said, “We once hired a highly qualified and extremely focused CIO for one of our companies. In fact, he was so focused that he was a bad team player. He would end up working alone a lot. A lot of people started quitting because they just couldn’t work in that environment. And they would tell us, during the exit interview, very candidly that it was the CIO’s fault. So not only do you have a senior person who is not performing, but you also have performers who stop performing.”

Sanjay Anandaram, a founding member of Jumpstartup and adjunct professor at INSEAD, Singapore, points out that there are certain attributes needed for any position — team spirit, integrity and relevant skill sets. However, a small company identifying a candidate in a large company must check if the person has the self-confidence to give up the comforts of the large organisation. S/he also must cherish the operational freedom the small organisation allows and s/he has to be able to make do with less as the smaller organisation will have a lot less resources at their disposal.

A person who recently made the move from handling a large-scale operation to a company with revenues a tenth its size, is Manoj Dawane, the current CEO of Mauj. Until earlier this year, he was handling Bharti‘s telecom operations in western Uttar Pradesh and Uttaranchal. In that region, over 2,000 people reported to him in some way or the other, while in Mauj, the number tightens to a mere 150. He says, “The biggest comfort that you leave behind in a large well-oiled company is the systems that are in place. Here the systems need to be created.” The comforts of the club privileges that his former employer provided were also left behind.

He says he gave these up for a fresh dose of adrenaline that can come only from growing a small company. He got his first fix of this earlier this decade when he ran a company called Net Decisions. He adds, “Even if it is a general managerial role with a large breadth of operations, in a large organisation you are put into a matrix-like structure.” He says that with a company like this, he gets to run a business end-to-end.

Given that the smaller company would have far fewer people than the previous employer, the candidate needs to ready take on jobs that one performed at the beginning of the career. As s/he grew within the organisation, s/he will have to take on work that got delegated to juniors. “It is important that the candidate fits into the ‘execution’ mindset as opposed to the ‘managerial’ mindset. They now have to take on a contributor role more than the managerial role,” says Manik Arora, managing director of IDG Ventures India.

This means that the candidate needs to be ready to work the 15 hours a day that they did when they started out, as that is the attention a start-up needs. Considering the high stress-levels of the start-up, very few who have crossed age 40 take it up. VCs and entrepreneurs say that the ideal age for a potential core team member is from their late 20s to their mid 30s. “Sometimes we do hire people with over 20 years of work experience. In this case we need to see if they are okay with reporting to a CEO who is younger than them,” says Alok Mittal, managing director of Canaan Partners. In the 40s, the average Indian usually has a family to tend to and is coasting in their careers. There is a need for stability at this point of their lives.

“Sometimes we find a senior person who has nothing to lose as they are in a secure place,” says Rahul Khanna of Clearstone Ventures, adding, “This person is in such a high position that they simply have to oversee the operations. They are not really doing much. These people want to make a difference. For instance, the rush of going from 0 to 40 million users of a cellular operator is high. The rush of taking it from 50 million to 100 million is far less. There are people that you can tip over, but they need to be near that tipping point themselves. It is difficult to approach a person who is in the thick of a battle and woo them out of that.”

People who have always been steeped in a large organisation as an employee are highly unlikely to leave their current set up for a start-up. These sort of people are also lower down on the preference list of VCs and headhunters. “In my experience, we look for people who have worked in large as well as small companies. It is preferred if they have been part of a start-up before. If they’ve come from a large company it needn’t have been a start-up, but they should have been part of growing the company significantly,” says Mr Mittal.

Increasingly venture capitalists want to see the potential candidates show their belief in the venture. “One way to test if a person is in line with the vision of the company is to give them equity and have them settle for a lower salary. It is a signal that the person is interested with the long-term success of the company,” says Mr Arora. When a candidate is willing to do this, it is almost a sure shot that he believes his role growing the company, can pay him back greater than a salary could afford.

Mr Khanna says: “The DNA we are looking for is someone who understands the trade-off between cash and a stake.” These sort of people see money as a derivative of their work, and not the other way around says Mr Anandaram.

Seeking out these sort of people can be done through referrals, head hunters, or through ones own phone book. Mr Khanna cautions that many times startups move so fast that “people hastily pull people out of their network of contacts. That’s one way of going about it. The other way, which I feel is the better option, is to write out a detailed job description and look for the person accordingly.” The ideal option is to get someone who has worked with the current team before.

Article Resource:
Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

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