Advanced Hiring Techniques from an $80M CEO

This next session is with my buddy Ayman Al-Abdullah. He's a former CEO of AppSumo, helped take them from $3 million in revenue to about $80 million a year, and he is now a CEO coach. So this is from our Leveling Up Founders event. It's a private event, live.levelingup.com. Without further ado, let's go into his session on advanced hiring techniques.

Basically today we're gonna be talking about advanced hiring techniques. This is how CEOs create an unfair advantage. And we're going to cover a couple high-level hiring frameworks. We're going to cover a couple mistakes to avoid. And then most importantly, like one takeaway to come from there. So as Eric mentioned, who am I? Many of you don't know me. My name is Eamon. I am a husband, dog dad. But what I'm most known for, for the last 6 years, was as the former CEO of AppSumo. I joined when we were doing about $3 million in revenue, helped them grow to over $80 million in revenue. We were growing 80% year over year. fully bootstrapped. And all of that was built on the back of an incredible team. As Patrick mentioned, it really is all about people and culture. Patrick, what were you saying? It's about 18 months, the average tenure of leadership. My entire leadership team stayed with me for the entire 6 years. And so it's not just the function. This is actually where I was most proud of, where we weren't just the, you know, Built in Austin 2021 best place to work, but we were also voted by the team that stuck around for 6+ years. So Patrick already mentioned why hiring and people is so important. But I definitely wanted to go a little bit deeper into why it's your number one priority as a CEO once you hit about $3 million in revenue, because that's typically when you're doing the transition from being a product-led founder to a people-led CEO. And we can just look at data, look at almost any sports team, for instance. There's a direct correlation between the teams that pay the most for top talent and the ones that win the most. This is the number of World Series championships by team. You can see the Yankees are far and away the winners. And you can see here, when you map the number of wins to payroll, there's a direct correlation. And you're like, okay, that's great about winning, but does that actually have business impact? And when you actually look at the values of those companies, the values of those teams, there's also a direct correlation. The teams that have the highest payroll are also the most valuable. And you're like, Eamon, that's great, but that's sports. Like, what about the business world? And we see that same thing in the business world where Probably even at your own companies, one person is outperforming almost everyone else. And this directly maps to venture capital exits where you have a lot of data. And so there's a power law distribution here where the top 1% are delivering 99% of the value. You know, we've all heard of the PayPal Mafia. How do you build that into your own team? How do you get that going? And the truth is better teams win. And so we want to figure that out. And so the key is before, this is the world that you live in. You're living in this world where you're worried about sales, you're worried about marketing, you're worried about the latest fire drill. But if you build out an incredible team, you could be focused on number one, your zone of genius, really honing there. And then additionally, you could focus on the long-term strategy. And that's really where you're able to get things to the next level. And if you think about it, you as a CEO are really like an investor. But instead of worrying about stocks, crypto, NFTs, shout out Eric, right? You're really worrying about like, I'm gonna do 25%. marketing and I'm gonna do 10% in sales and I'm gonna do 15% in product. And as a CEO, you get to decide where is the ROI gonna come from and are you gonna be Warren Buffett or are you gonna be Jim Cramer, right? So like let's make sure we're getting Warren Buffett level results. Alright, so you know that hiring and people are important. Let's actually go through it. Number 1, understand your process. So I ask many CEOs, what is your process for making money? A lot of times they don't understand how their hustle and actually turns into cash in the bank. And so for AppSumo, we're mapping out our process. I'm reverse engineering what am I doing on a daily basis, and then I'm hiring world-class experts at every single level. I'm hiring the world's best salespeople. I'm hiring the best copywriters. And when you do that, you can't help but print more cash. The next thing is to hire for the stage of company. Oftentimes I see founders and they're doing it all. They're doing sales, they're doing marketing, and they're looking for a second founder to do it all, and they're trying to hire someone for like $15 an hour. You are right now the cheapest employee you will ever hire. You're working 100 hours a week and you're probably doing it for like $4 or $5 an hour, right, when you really map it out. And so you will never find someone like you again. And so understanding the stage that you're at in your business is important. And so step 1 is hiring the generalists, the people that can do it all, the people that can have wide breadth. Then we start hiring specialists to support them. And then eventually those specialists have a breadth and those are the specialists that's going to run the show. The one way to leapfrog this process is if you hire an owner and then have them hire an agency or a consultant to support them. And so like you would hire someone like Eric and you get to leverage his years of experience while having an internal owner that's being able to do it. So then you can sort of leapfrog that process. And so understand where you are on that journey and hire appropriately. The next thing is understand the role. So hire for the role. We use this framework called the Moscow. What are the must-haves, should-haves, could-haves, won't-haves? And it's important for you to not just create a laundry list of the things you want, but also understand what is critical and what is not. This is great for if you're looking for a house, if you're looking for a spouse, or if you're hiring. And so this is really important. You turn this into a mission. So if let's say you're hiring a VP of sales, a bad mission would be VP of sales to grow our team because I hate jumping on sales calls. But it should be numeric and it should be goal-driven. Instead, we need a VP of sales to grow our revenue from $3 to $6 million within 3 years. Whether they hire a team or they do it all themselves is irrelevant. What matters is the results. And if what you do is you take that goal and you map it to their incentive, you map it to their compensation package. Charlie Munger famously said, you show me the incentive and I'll show you the outcome. And this is how you create an incredibly aligned team around the results that you're trying to drive in your business. And so from that mission, you can break it down further into a job scorecard. This is from the WHO framework. So like you write down that mission, you write down the skills and the competencies, and then the key KPIs you're gonna be managing on a daily basis. Once you've done this, 90% of the job is done. It's honestly the hardest part is knowing what you're looking for. Anyone that's bought a house understands you spend so much time going to open houses and realizing like, oh, I don't like this, I do like this, I need the open floor I need the kitchen. But once you know exactly what you want, it becomes so much easier to refine the search. And so then we get into the next stage, which is recruiting. And recruiting is actually at around $3 million your number one job as the CEO. You are now the chief recruitment officer. That's the only thing you really should be spending your time on is building the machine that builds the machine. And Steve Jobs famously has said when they asked him of all of his products that he's built, was it the iPhone, the iMac, which are you most proud of? He said it. The team, the team that built the products is what I'm most proud of. And he went to extraordinary lengths to build that team. When you know what you're looking for, the next step you need to determine is, can we hire internally? Look at your hiring roadmap and be like, if we need to hire a VP of sales a year from now, is there someone already in the company that we could start getting them training, start leveling them up? Because the internal hires are the ones with the highest success rate. They understand your culture, they understand your mission, they're bought in, and they'll be super loyal because you're continually leveling them up. And so if you can, definitely hire internally. That's step 1. If you can't, you gotta go external. And I would recommend if you're hiring more than 4 people a year, you should probably hire a recruiter. Hiring is a lot more work than people think. Writing the job descriptions, putting it on a million job boards, it's a full-time job. And so hire a recruiter. Don't pay them the 30% that they want. Pay them hourly. Be like, I'm only doing hour. Everyone, all the recruiters are getting laid off right now. You can definitely hire them hourly. You pay them hourly, you give them an incredible hourly rate, and you have them basically recruit on your behalf. You give them your LinkedIn login, and you essentially want them to be glorified salespeople, because that's really what they're doing. They're going out, they're prospecting, they're identifying, they're running people through a funnel. The best recruiters treat it like a sales process. And so that's really what you need to look for when you're looking for those incredible recruiters. The next thing is when you go out and you're like, we want to hire a VP of sales, as an example. Don't go and try to recruit VP of sales. How many times have you gone out and you go and recruit, and all you're doing is sliding into DMs of existing people that already have the same title? If someone's been there, done that, already grown the team, why would they want to jump ship to do the exact same thing? Why were they going to make a lateral move? But yet I see this happen all the time with CEOs. They keep trying to recruit people that are already doing the job. Instead, here's the playbook that nobody talks about, but is actually what's used by Stripe, by Square, and some of the best companies in the world. So let's go around the fence. Let's stop hitting the wall. Right? So number one, find the companies that you respect. Create a list of 2 to 3 companies that you respect. Find the people that you would love to recruit from those companies and then build an org chart and find the people that report to those VPs and look for the person that's been promoted a couple times because that's probably their right-hand person, their top lieutenant, and they're never gonna get promoted into that VP role until that person leaves or goes somewhere else. And so you go and you give them an opportunity to get promoted. And so, hey, you are currently a director. I'm going to give you the VP role. And I've been able to repeat this process over and over again. If you did want that VP, what you do is you hire them as an advisor. I'm going to bring you in $5,000, $10,000. I know Cody in the back, she's done that. She's run that playbook and it's incredible. It works really well because they come in as an advisor. They learn your culture. They learn your process. It's a bit of a dating, right? Is this a good fit? And then slowly they start getting indoctrinated into your business and you can add those hours over time. Some mistakes to avoid. Number 1, hiring too fast because you've lowered the bar. You're unhappy with the quality of candidates that are coming through, and so you lower the bar and you end up hiring the corgi. Don't hire the corgi, even though the corgi's cute. If I could just point one mistake that I made over my tenure as CEO, it is just this. It was lowering the bar with hiring. It was trying to hire too fast. Instead, if your team is feeling the pressure, hire a consultant, hire a contractor, Hire someone hourly to release that pressure valve so you have more time. Expect 3 to 6 months for a solid hire, longer if it's a truly specialized hire. The next mistake, being too passive. Slide into DMs. Don't stop sliding into DMs. Don't think just because you've hired a recruiter, your job as the chief recruitment officer has stopped. I actually slid into this guy's DMs almost 5 years ago to run our ads. Still doing it to this day. Patrick mentioned it, underpaying. Pay for top talent. If you really think about it, top talent is delivering 20x results. You can't get that on any Facebook ads market platform. Could you imagine getting 20x on Facebook? You would keep spending that all day, and yet people are cutting corners all the time when it comes to people. Pay 2 to 3x of market in order to get those 20x results. It's the highest ROI for your business. Pay an uncomfortable amount of money and you will start to see those results. The key is keep it low base, High bonus, so it's directly aligned to the results that they're driving. And so you can actually cut them after 3 months if it's not working out and you actually haven't paid that much. Thinking been there, done that executives are going to do that. Honestly, the best executives are homegrown. Build them up, train them up. The only way to get around this is hiring them as advisors. Bring them on as advisors. They'll be able to help direct all of your internal folks in the right way and avoid some of the costly mistakes. Thinking just because somebody is interviewing well that they're going to be a good hire. Sometimes they've just been interviewing for a long time. People that interview well oftentimes are not the best candidates. You don't want to hire Elon. Well, maybe you do, but maybe not this guy. The next thing is forgetting to test skills. So actually put skills tests as part of your hiring process. I was talking to Mike earlier, and they actually make you do a client pitch as part of the hiring process because that's super critical. I actually, for one of our roles, we were actually requesting to be detail-oriented and be tech savvy. And so we asked them to send a screenshot of typingtest.com. She didn't even want to retake it. And apparently she got like a toe bump problem. I don't know. But this tells you a lot when you're testing out the candidates. So put that as part of your process. Even, I love asking for a 1-minute video about why you want the role. You learn so much about like, are they willing to go above and beyond? And you get bonus points if you upload it as a private video to YouTube and send me the link. Maybe a deep link. You're one hire from cutting your problems in half and 2 hires away from a completely different company. And that's really why your number one job as the CEO, you hire the right people, you set the right incentives, and then you just get out of the effing way.

All right, so that's it for this session. Hope you enjoyed it. If you are interested in learning more about the Leveling Up Founders private event, it's basically an annual thing where we gather the top founders and also the top speakers and ultimately just help each other grow our businesses. Is faster. Last event was rated a 9.8 out of 10, and everyone said it was more so about the people. The speakers were amazing, but the people are even more amazing. So you can go to live.levelingup.com to learn more if you are interested, and we will, we'll catch you later.