David Cummings on Startups

Tag: Leadership

  • Recruiting on Non-Recruiting Work Trips

    Recently, I was catching up with a friend, and she shared a story that stuck in my mind. A friend of hers has a nephew who’s an undergraduate studying AI at one of the prestigious state schools in the Midwest. One day, out of the blue, he received an email from the founder/CEO of a famous AI company (you can guess which one) requesting to meet. Not thinking the email was real, he initially didn’t respond. After a day, he thought, “Well, what if it is real? I might as well respond.” So he responded, and the CEO replied that he would enjoy meeting at a certain date and time, leaving it up to the student to share whichever place works best for him. The student threw out a place and set it up.

    Now, he expected the CEO to roll in with an entourage, team members, and a whole experience. Instead, it was just the CEO, and they had a great one-hour conversation, marking the start of a relationship. For many entrepreneurs, recruiting and building a team is one of the most important parts of the job. For first-time entrepreneurs, it takes time—and sometimes even years—before it clicks that the recruiting function needs to happen in parallel across many different positions and well in advance of needing that hire.

    One way to make this actionable is to build a list of potential hires and roles the organization will need in the next 12 to 24 months. With this list in place, start sharing it with friends, colleagues, investors, and partners, working to build a pre-pipeline of potential candidates. Taking it one step further, with this example from above, every time you visit a city to meet a customer, partner, or investor, make a point of reaching out to three to five potential candidates in that market and work to get at least one in-person meeting with them. While this does take a lot of work, building a team is as important as it gets.

    The next time you hear an entrepreneur lament how hard it is to fill a role, remind him that 10 to 20% of his time should be spent on recruiting—both for roles open today and roles that will be open tomorrow.

  • Double Revenue With No Additional Employees

    For the first 10+ years of my entrepreneurial journey, I was too focused on the number of employees as a key measure of success. When meeting other entrepreneurs, one of the first questions I asked to gauge the size and scale of their business was, So, how many employees do you have now? While that question is still relevant today, it is much less so than in the past.

    Productivity per employee has increased tremendously. The ability to leverage software and other systems for scaling has improved dramatically. The nature of work has also evolved, with more remote and hybrid work arrangements and a greater reliance on contractors and freelancers. My previous belief that W-2 employees were a key proxy for success no longer holds. In fact, many predict that we will see more billion-dollar companies in the future with only a small handful of employees.

    Last week, I heard an entrepreneur say he wants to double the size of his business without increasing headcount. This doesn’t mean keeping the exact same team but rather using AI to boost productivity, outsourcing more functions, and recruiting higher-skilled employees when attrition occurs. The key idea is that as teams grow, management and leadership demands increase, and the organization tends to move more slowly. In this case, the entrepreneur operates at considerable scale, and there is also a focus on increasing annual recurring revenue per employee as a key metric for business health. The goal isn’t to build the largest team possible—it’s to build the most efficient and successful one.

    Entrepreneurs in the growth stage would benefit from considering how they could double their revenue without adding new headcount. What positions would remain? Which ones would be outsourced? Which roles would need to be filled by more experienced hires? What would be the advantages and drawbacks? Entrepreneurs should evaluate the relationship between in-house employees and scale earlier than they might have in the past.

  • Align Interview Questions with Core Values

    Last week, I was talking to an entrepreneur, and the topic of corporate culture and core values came up. We spent some time diving deep into lessons learned, and I shared one of my favorite best practices around the interview component of the hiring process. Of course, there are numerous great books and blog posts on hiring well, including Geoff Smart’s book Who (more notes on Topgrading) and First Round Review’s post titled 6 Must Reads for Hiring Tactics that Break the Mold. 

    In a startup, it’s assumed you’ve already defined your core values, as outlined in books like Good to Great. Once you’ve defined these values, an important element is aligning interview questions with them. Naturally, if a core value is something general, you can’t simply ask, “Do you have integrity?” during an interview. Yes or no questions don’t work. The key is to create stories and scenarios that allow candidates to share their experiences, and then listen for how well those experiences align with your core values.

    For example, one core value I highly appreciate is positivity. Some call it being “glass half full,” others call it an optimistic outlook. Regardless, does the person have a positive attitude? Again, during the interview process, you can’t simply ask, “Are you a positive person?” Instead, take this core value and design a series of interview questions around it. Here’s how we do it:

    Question 1: For your current employer, what are two or three things they do well? What are two or three things they don’t do well and could improve upon?

    Question 2: For your current manager, what are two or three things they do well? What are two or three things you don’t like?

    In this example, we’re looking for thoughtful answers about the current employer and manager. The first question—”What do you like?”—is meant to warm up the conversation and gauge how the candidate presents positive qualities. The real test, however, comes from the second question. Everyone has issues or things they don’t like about their employer, especially with their manager. What we’re listening for here is how they present those issues. 

    Do they make statements like, “This is terrible, they’re not good at their job, and I really don’t like working for them”? Or do they say, “Here are some areas where we don’t see eye to eye” or “Here are some areas where I would appreciate more give-and-take”? The big idea is to assess how they present negative aspects—do they do it in a way that feels constructive or destructive?

    In this example of aligning interview questions with core values, we took one value I care about and organized a series of common questions around it to assess how the candidate responds and presents their answers. Entrepreneurs would do well to enumerate their core values and ensure that, during the interview process, they have a series of questions for each core value and a rubric to score responses accordingly.

  • The Buzz of Daily Check-ins

    For 2009 we started a new strategy of daily check-ins from the bottom up every day in the office. This means that every department does a scrum-like daily check-in answering the following questions while standing in under 10 minutes:

    • What did you accomplish yesterday?
    • What are you going to do today?
    • Do you have any roadblocks?

    Then, the department leader asks if there are any ideas for improvements as well as any heroes to recognize for outstanding work. We do this every single day! People that telecommute (we have a one day a week telecommute policy for everyone) dial in to a conference number.

    This is a bottom up daily check-in as everyone does at least one and up to three of these in a row in the morning. It works as follows:

    • 9:30 – Managers with direct reports
    • 9:40 – Managers of managers
    • 9:50 – Leadership team

    This way, any issues are immediately propagated across the organization and can be worked through by the leadership team within 20 minutes of finding it out.

    There’s an awesome buzz of noise every morning when this takes place. I’m a big fan of it.

  • Recommended Leadership Books by Patrick Lencioni

    Leadership and managing people is something that you really need to work at and consciously look for ways to improve. For any new managers, as well as seasoned managers, I recommend reading the following books by Patrick Lencioni in their entirety:

    • The Five Dysfunctions of a Team
    • The Three Signs of a Miserable Job
    • The Four Obsessions of an Extraordinary Executive
    • Silos, Politics, and Turf Wars
    • Death by Meeting
    • The Five Temptations of a CEO

    Patrick Lencioni is, in my opinion, the leadership guru of the 21st century. Check out Amazon.com for these books.