6 Ideas for Finding Great People

Every time I talk to entrepreneur that’s just raised their first institutional round, the topic of finding great people always comes up. Of course, great people are always in high demand, so it’s never an easy process. With that said, here are six ideas we use to find great people:

  1. Startup Specific Job Boards – At the Atlanta Tech Village, we have a healthy job board that attracts people that are interested in startups generally, which creates a nice pipeline for everyone on the board.
  2. Local College Alumni Career Fairs – Schools like Georgia Tech have separate career fairs for students and alumni, making it easy to target different types of positions.
  3. Internal Referral Bonuses – Referrals from existing employees are always the best, and it’s effective to add an incentive like a $2,000 bonus for referring a new hire that stays six months (make it a $10,000 bonus for hard-to-find positions like software engineer).
  4. LinkedIn Targeted Emails – Use LinkedIn to find people that are currently employed and email them directly from the hiring manager (not a from a recruiter) explaining why it’s a great company and that their resume looks like a perfect fit. Also, ask if they know anyone that might be a good fit.
  5. Local Meet Ups – Spend time at the local meet ups for sales, marketing, product management, and engineering (specifically for the role needed e.g. iOS, Node.js, Ruby, Python, etc.) to find people that are actively working to improve their craft, and ask them directly for referrals.
  6. Twitter Mentions – Find people on Twitter that are potential candidates and mention them (or DM them if they’re a follower) saying that a new positioned opened up and if they know anyone that might be a good fit.

Assume 10 – 25% of your time as a leader in a fast-growing company should be spent on recruiting great people. Finding great people isn’t a one-time event, rather it’s a process that needs an on-going commitment.

What else? What are some more ideas for finding great people?

4 Reasons for a Lack of Local Institutional Capital

Continuing with yesterday’s post on Rating the Atlanta Startup Scene, several people have asked how we get more local institutional capital. Institutional capital, like it sounds, is capital provided by institutions like university endowments, pension funds, etc. Generally, institutional capital is a much larger source of capital, as compared to angel capital, and thus an important part of a thriving startup scene, especially for startups that hit the growth stage (see Scaling a Startup is Expensive).

Here are four reasons there’s a lack of institutional capital in Atlanta (and all areas outside the Bay Area, Boston, and NYC):

  • Track Record – New funds are forming all the time but most of them only have high net worth individuals and family offices as limited partners since institutional investors always require an investment track record of one or two funds (e.g. get started with a small fund from personal investors, show great results, and then raise money from institutions).
  • Pedigree/Background – There’s a certain resume and pedigree that institutional investors look for, often including a name-brand college, work on Wall St., etc. that’s not as common outside the money centers.
  • Big Exits – The goal of any fund is to make great returns, and that requires big exits, yet there are so few exits, let alone big ones, that the story of low cost of living and low valuations doesn’t resonate. Meaningful returns and exits resonates.
  • Dot Com Bust – Many regional funds that had institutional capital went out of business after the dot com bust as they didn’t have strong enough returns to raise another fund. A whole generation of funds were wiped out and it’s 7+ years to build a new fund that gets to the point that fits the institutional capital model.

As expected, the answer to having more local institutional capital is to have more successful startups with solid exits that generate returns for first-time funds so that they can then raise another fund with institutional capital. It’s a multi-stage process that requires a decade or more to see results. The best thing we can do as a community is to help produce more successful startups.

What else? What are some other reasons for a lack of local institutional capital?

Rating the Atlanta Startup Scene

Two years ago I put together a few thoughts on the Atlanta startup scene and gave ratings for each of the major components. Well, it’s time for an update. We’ve made good progress in a few areas and moved backwards in others.

Here’s my rating of the Atlanta startup scene:

  • Office Space (A)
    Unlike several years ago, there are a number of great options for startups to find their first office and even grow to 20 or 30 employees. Post 30 employees, there aren’t any turnkey office options and thus the growth stage startups are sprinkled all over the different submarkets.
  • Community (A-)
    Combined with the office space function, there are a number of great startup communities in Atlanta with different focuses like B2B SaaS, consumer apps, etc. One area that needs more attention is scale ups, and that’ll develop with time as more startups reach the growth stage.
  • Exits (C-)
    Things have been really quiet on the exit front for a while. With Cisco’s acquisition of Lancope for $452M and SecureWorks going public earlier this year there’s some minimal activity, but generally things have been much too quiet to be a healthy ecosystem.
  • Angel Capital (C)
    A steady number of angel investors write checks with most of the money coming from the usual sources (local non-tech professionals) and a small handful of successful tech entrepreneurs continue to write invest in 2-3 deals per year.
  • Institutional Capital (C-)
    Deals continue to get done (usually two Series A rounds per quarter and one Series B or later per quarter) and 95% of the institutional capital is from out of state. In the grand scheme, it’s a tiny number of deals but there’s a continual flow of activity.

Overall, I’d give the community a B with a quality foundation and significant room to grow and improve. As a community, the most important thing is to increase the number of startup success stories. Results matter.

What else? How would you rating the different components of the Atlanta startup scene?

Transitioning from Free Flowing to Structured Organization

As a new startup is getting off the ground, and the team is focused on product/market fit, there’s often little organizational structure. Everyone is heads-down focused on building something people want to buy and, with a small team, everyone knows what everyone is working on. Only, as product/market fit is found, and the organization grows, the need for organizational structure grows. Yet, many entrepreneurs, especially first-time entrepreneurs, are so caught up in the whirlwind of the business (especially when it’s going well!) that they don’t step back and start to put in more process and structure. I’ve even seen an entrepreneur scale well beyond the $1M run-rate milestone and not even have regular leadership meetings.

Here are a few thoughts on transitioning from free flowing to structured organization:

  • Implement a Simplified One Page Strategic Plan immediately (even while in the free flowing stage)
  • Don’t add too much structure too early, but do take time to ensure everyone is aligned with the organizational goals or OKRs
  • Consider the appropriate meeting rhythm, and if more frequent communication produces better team results, implement daily check-ins for everyone
  • When the team is the size that everyone doesn’t know what everyone else is working on, more structure is needed

9/10 times when I ask someone in a startup what their company values and goals are, they can’t provide a consistent answer. While the free flowing style works at the beginning, over time more organizational structure and process is needed.

What else? What are some more thoughts on transitioning from free flowing to structured organization?

Building the Talent Pipeline in Advance of a Raise

One of the most common mistakes I see from entrepreneurs that are raising their first institutional round of financing is not building a talent pipeline in advance of the expected close. Meaning, the vast majority of planned new expenses after raising money is to hire more people. Only, if there isn’t a talent pipeline, once the money is raised, it’ll take six weeks to build up the recruiting functions and then another 2-3 months to find great people (hopefully!) such that it’s now 3-4 months from close before the new money is earnestly being put to use.

The solution: build a talent pipeline in advance of a raise. Here are a few thoughts:

Great people are the heart of every successful business. Entrepreneurs need to build a talent pipeline, especially in advance of raising money.

What else? What are some more thoughts on building a talent pipeline in advance of raising money?

Video of the Week: David Skok on the 3 Stages of a Startup

For our video of the week watch David Skok talk about the 3 Stages of a Startup. David is the author of the extremely popular forEntrepreneurs blog and one of the best startup thought leaders. Enjoy!

From YouTube: At the Matrix Partners’ SaaS meetup , David Skok, a five-time entrepreneur turned General Partner at Matrix Partners, gave a few insights on SaaS economics. In his talk, David explained that SaaS businesses are fundamentally different from traditional businesses, and have their own model and metrics. His hour long presentation can be read in detail – the SaaS business model and metrics http://www.slideshare.net/DavidSkok/the-saas-business-model-and-metrics

Platforms and Microservices

Steve Yegge has an epic rant on Amazon being a poor place to work but more brilliant than Google when it comes to innovation at platform scale from 2011. David Skok recently published a post on his blog titled Microservices Essentials for Executives: The Key to High Velocity Software Development. The idea is that tech companies start out building their product as one large, monolithic system because it’s simpler and faster. Then, as the startup achieves greater levels of success, innovation slows down considerably even though more and more people are added to the product team. What gives?

The larger the product, the harder it is to make changes to it due to all the dependencies. Amazon was the first major technology company to realize that Internet scale, and it’s greater levels of complexity, requires a new way of building large-scale systems: microservices. Microservices are simply smaller, self-sufficient special purpose products that form a platform (e.g. tiny apps that are used to make a big app). Amazon went further and built Amazon Web Services (AWS) to make the backend of these microservices even easier to manage and scale, and now AWS is one of the fastest products to $10 billion in annual revenue, ever.

Tech entrepreneurs need to understand the benefits of microservices and start planning them once they hit the growth stage, but not before. All major platforms going forward are going to have some form of microservices underpinning them.

What else? What are some more thoughts on platforms and microservices?