Sarah Smith (Partner at Bain Capital Ventures, ex VP at Quora, ex Director at Facebook)

Hey everyone, this is Erik Torenberg and you're listening to Execs by On Deck. Execs is a show for founders, operators, and leaders who want to understand the playbooks, frameworks, and tactics that leading tech companies today have used to scale. Our guests are tech execs in key roles at top tech companies who share their hard-won, earned secrets on how to scale faster.

Sarah Smith is currently a partner at Bain Capital Ventures after an early career of building elite HR teams for huge tech players, including Facebook and Quora. where she helped scale Quora from 40 people to 160 people in 3 years. In this episode, we discussed hiring that first crucial people person, how to train first-time management, how to nail goal setting, and how to improve vesting schedules. Sarah's insight is valuable. We hope you enjoy. So Sarah, One thing that I'm curious about is when people are looking for senior people talent, one thing that your background proves is that people without prior experience in the role can come in and do really great work. And so I'm curious how you advise founders for what to look for in senior people talent and how they should be open-minded to people who don't have that prior experience, but what really they should be looking for.

Yeah, I hear this a lot from founders that there's always this tension of, do I hire someone who's done HR forever and Am I going to end up with someone who's like a 20-year Oracle, by-the-book kind of policy person?

Or can I find someone who's maybe a bit more creative and really aligned with my values and my culture and get great talent into the organization, especially given how competitive it is? I'm obviously a data point of one, but I have known many other people who have made the transition from essentially being A people leader, someone who's built teams, who's hired people, who's had to fire people, who's worked through really difficult interpersonal situations, who's had to do budgeting, rapid scaling, and hiring, all the kinds of things that are typically found in a, hopefully, thriving early-stage company.

So, I think if you find someone who has that managerial background, whether that was in sales or ops or frankly even engineering, a lot of people forget that Chris Cox at Facebook actually led HR in the early days.

So, you can find people from all different backgrounds to run HR, but I think they need to be really, really committed to the interpersonal side, like really love managing people, leadership, building up people. They love thinking about ways to build inclusive cultures. And so, you need someone who's got this people management background, but then there's also this sort of business side to HR that I think a lot of people also forget that is important when you're working with, for example, finance and figuring out what do we have in terms of our budget for comp, for our equity pool and equity refreshers. You do live in spreadsheets a little bit as an HR person. So, I think you need to find someone who likes the business side of that as well.

And then last is just, I think of it as this kind of X factor, which is just sort of judgment. And it's really around Knowing when you need to call an employment lawyer. I mean, you don't need to have 20 years of HR experience, but you need to know when, wait, this feels a little high stakes. I think I need to call someone in to help me with this and make sure whatever I'm doing is legal.

And I think that's the thing that I recommend to people who are making the switch is make sure you pair that person with an awesome employment lawyer on call. Totally.

So at Quora, you kind of built the people function from scratch. Talk a little bit about the team that you built and what that looked like at different stages. What can a founder expect in terms of how that team will evolve and what to plan for?

Yeah, in the early days, I mean, when I joined, just to set the stage, Quora had just raised the Series B and was about 40 employees.

Very, very early, definitely pre-monetization. So it was mostly engineering and design and product and data were the majority of of the headcount there at the time.

And the recruiter that they had had prior to that had just left.

And so, it was really just me, and we had just hired one university recruiter. So, that was it for HR and recruiting team.

And I think in the early days, for me, I don't know if it's having grown up in the Midwest, I'm just happy to roll up my sleeves and literally do anything. I'll clean the toilets if I have to. It doesn't matter.

And so, spent a lot of the time in the early days Just putting the basic tooling in place.

If any of you've ever even heard of Jobvite, this was a horrible ATS product that people were using at the time. This was right before Lever and Greenhouse started to take off.

And so, I went on a hunt for my first couple months here and there, meeting and looking at different systems to use to help track recruiting because it was kind of a mess. We were hiring really fast.

We were trying to set up lots of interviews. And to me, the most important thing at that stage is you've just done the work of hiring these amazing engineers who have every opportunity in front of them, and then you're going to go throw them in 10 hours a week of interviews. Nothing crushes the soul like 10 hours of interviews if none of those are leading to hires.

So, I think you have to think about how do you make it as efficient as possible for that early team so that they can not only be building, which is what they came to do in the first place, but be a part of— know that the time that they're going to be spending on recruiting is really high quality and going to lead to really good outcomes and help them recruit great people. And so, spent a lot of time in the early days just getting the systems in place, everything from actual software like ATS and HRIS and our comp system and designing all of that.

But actually spent a lot of time in the early days, I think this will resonate with a lot of early founders, is How are we making decisions on hiring? When I came in, people were really nice because it was a small team still. And I was sort of like, we were a little bit more on this consensus basis of, is everyone comfortable with moving forward with this person? That is one of the most inefficient things you can do in recruiting.

You really need to have a very clear point of view that the hiring manager is the responsible person to ultimately make the decision.

everyone else's input. And by the way, the important part for everyone who is an interviewer is that they need to come out of the interview with a point of view, like hire or no hire, but not like I'm on the fence. If you're on the fence in the middle of the interview, like you need to keep asking questions to get you to one side of that fence. So we spend a lot of time helping people just get better at—

as interviewers so that they could walk out with a strong point of view. We get higher quality feedback. And be able to make a decision for that candidate, which is also great for them.

What's an example of a question that helps one get to— because I find myself on the fence about what comes to mind.

Yeah, you're hiring a lot. So I can imagine you're in the middle of this right now. So what I think about, I always, as an interviewer, try to do— and by the way, there's a lot of tech that's been built now to help aid interviewers.

And so I haven't even personally tried a lot of them yet, but I think there's We're moving in that direction where you may even have an AI aide next to you that will help you with that.

But short of that, the algorithm you'd run in your head is like 15—

let's say you have a 45-minute interview.

I'd say 15 to 20 minutes in, I just mentally do a check of like, okay, if I had to decide right now, where am I at? And if I am leaning out, why am I leaning out? And what can I do to probe more in the areas of concern that I have?

So, let's say somebody came into the interview and you felt like the answers were a little bit rambly, like they weren't very structured, and it was for a role that actually required a fair bit of structure. Well, then if they've been rambling, I might just say, hey, can you talk me through a project that you led recently and everything from how you set it up, how you scoped it out, to the execution of it, and then the ultimate results and how you evaluated that?

Put some structure in front of them and then just see how they respond. Do they actually then now kind of walk through something more systematically. And if you kind of keep seeing that same concern play out, well, then you walk out a lot more confident that, hey, I had this concern, I triple or quadruple checked on it throughout the interview and it just didn't get better. Maybe someone else has a different data point from their interview.

At least you can compare and contrast. But just try to think about what is that lingering concern, maybe a third of the way through the interview, and try to make sure you give yourself enough time to double-click on that.

Yeah. Okay. That makes sense. Okay. So you're building the infrastructure, you're getting the systems in place, you're getting some recruiters. How does the team expand from there as Cora advanced?

Yeah. So a big part of growing an organization, of course, is how do you organize the organization?

How do you think about leadership and frankly layering and management layers and teams and sub-teams? And that is, I think, one of the biggest challenges a lot of people face.

Typically, Series As and Bs don't really mean a lot these days. Everything's all wonky with sizes and stage and so forth.

But I'd say in general, a lot of times when people hit Series B, that's when they kind of start seeing a time of growing early employees who maybe have never been managers into managers for the first time. They might be hiring external managers in to take over some teams that had been led by early employees. Those kinds of things, I think, are probably the area to focus on at that stage when you're in that 50 to 100, because you're starting to cross that chasm where not everyone is going to know everyone or know everything that's going on like they used to.

And so, you really have to start to be able to rely on a very strong set of people leaders that are typically sitting in between maybe the entry-level employees or newer employees to the organization and probably a C-level executive.

That's kind of what's starting to happen there. At that point, what we did at Quora was spend a lot of time on investing in coaching, for example, and leadership development and training for especially first-time managers because that can be a pretty overwhelming experience for them. I personally spent a lot of time just as a head of HR and people with those folks to make sure they felt supported, especially around performance review time or managing out low performers or if Their team wasn't growing fast enough and they were struggling to recruit. How do we beef up our sourcing efforts to help them get the team growing a little bit faster so they can meet their goals? So a lot of that is spent, I'd say, at that time on the management and leadership layer.

Say a bit about that because we have a lot of first-time managers at our company. We're starting to think about, okay, we need to invest in manager training. What does that look like when it's done right, or what advice do you have for companies that need to do something similar?

I start all of this, like anything around HR training, leadership development, it kind of comes down to the first principle of the people function, which is, are you clear as a company on your mission and your values?

That's like tables. It seems so basic and table stakes, but I see a lot of people either not even take the time to codify that, or if they do, they do it very quickly in their first few weeks as a company, and then it just sits in a Notion doc somewhere and no one ever looks at it or talks about it again.

I think it's really important that as the CEO, founder of your company, and your head of people, VP of people, chief people officer, that you really think of that as a guiding compass and force in how you go about literally everything from hiring and attracting people into your expectations around performance.

And so, If you have those values, then you can really shape your management training around that.

So, if, for example, one of your values is, you really care about moving fast, executing quickly, well, then think about what does that mean then in terms of how our managers are expected to create high-performing teams?

It probably means that we have to have a lot of autonomy.

And how, as a manager, do you do that? Well, you make sure that you have very clear OKRs, you have clear documentation with your team, but what's happening this week, what's happening this month, and then, hey, go. Make sure that you've got everything that people need to be able to move fast and get those things done. I think it really has to map to the values, but the core tenets of good people management is how do you build really strong emotional relationships with your employees and make sure they feel really cared for? The best practices are how to how to structure one-to-ones and make sure you're holding them consistently with people. I think in a remote world, this is even more important that it's really easy for people to switch times on the calendar, and nothing makes people feel less important than a last-minute calendar switch.

So, I would spend a lot of time with our managers on just how to hold effective one-to-ones.

The best article I've ever seen written on this, actually is by, if you look up Rands in Repose, R-A-N-D-S in Repose, R-E-P-O-S-E, he's a very early engineering manager from Apple, and he's written the best article I've ever seen on one-to-ones, which is called something like the update, the vent, and the disaster.

And it basically is like 80% of the time, it's just gonna be updates. 20% of the time, or sorry, 10% of the time, 15% of the time, it's gonna be kind of like a venting session.

And then 5% of the time, once in a while, you get that kind of disaster one-to-one. And it helps managers think about how to contextualize those and how to manage those. But to me, that's a really important drumbeat for every first-time manager is to make sure they're just meeting consistently with everyone on their team. And then the other areas we talk about is just ongoing performance management and working on giving managers great tools around performance management, And if someone's a low performer, for example, working through that with them and how to make sure there's clear expectations, identifying where the delta is, and then supporting that manager and working quickly to manage that person out of the organization if it's not going well.

I'd love to pull on that thread about performance management, actually. As we're sort of growing to that point, we're instituting our first performance management systems and sort of leveling and all these. people function systems. When you rolled that out at Quora, what framing did you use with the employees for people to understand the importance of it and not sort of the hamstringing feeling it might feel if you joined as an early employee, there were 10 people or something, now all of a sudden we've got all these what might feel like corporate systems. How do you sort of play that balance?

Yeah, it is a hard kind of balance to strike in terms of making sure people feel like they have no limits. It's a lot of transparency, a lot of autonomy.

Nobody wants to feel like, oh, I'm a level 7.2. It feels like you're a robot or something. But I think it's important for people to understand the reason you have that is because, as an organization, we value equity in terms of our compensation. And at the end of the day, we all get compensated in so many different ways now.

It's not just cash and equity. It's the the purpose of what we're building.

It's all of that. But at the end of the day, it's interesting. People really do care that they're getting paid fairly. They want to, and we want that too.

And so, that's why you have to figure out how do we loosely try to measure what your impact is in the organization relative to other people in the organization with an overlay, of course, of your market, the demand in the market for your skills. So, it's always tricky to say, hey, you're a level 4 engineer and we can map out roughly what that means in terms of the core competencies of engineering.

But the market values that differently than a level 4 HR person.

That's just the reality. And I think having those frank conversations with people is really important. But I do think having some rough career rubrics, like level rubrics, is very helpful around, like, yeah, that's kind of going from 50 to 100, because especially for newer employees to the organization, and especially now that people are remote and distributed, They have even less signal on, like, hey, what does it take for me to grow here? What does it take for me to get to the next level? What does it take for me to increase my impact and my compensation?

Before, they could kind of just look across the room and see the VP of engineering and be like, all right, I see how that person's running the show. But now, so much of it's happening in different Zoom rooms, and they don't see it. And so, I think having more documentation around just, like, here's what we expect around code quality, here's what we expect around...

Infrastructure expertise. Here's what we expect around your efforts in recruiting and what you would be doing to help grow the organization.

And maybe here's a couple anecdotes at each of those levels.

Just that alone, I think, is helpful. Also, as a springboard, frankly, between the manager and the person on their team of like, hey, here's where you're knocking it out of the park. And if I were to increase your impact over the next 6 months, these would be the 2 boxes I'd spend more time on. Let's get you more involved in recruiting. Let's get you spending some more time with the infra team because That's just an area of the technology stack you don't know as well. But I think having something, I feel like as much as we resist sometimes documentations or lines or grids or spreadsheets, having structure and clarity actually can often help people really thrive in an organization because they just have a lot more certainty and they know what's expected of them.

How do you think about performance management in terms of feedback versus ratings and sort of the different theses on that? What's your take on how the best performance Yeah.

Again, this really comes down to the values of the organization. If you are, let's say, take it to the extreme, transparency was the number one value you have as a company, well then you might go with a system where you have all the feedback that everyone gives everyone is totally transparent.

I could read Joe's feedback to Erik and vice versa because transparency is a number one value for us as a company.

Most people are kind of somewhere in the middle where they want that to be maybe a little bit more of a personal conversation and, you know, collect that and share that, you know, in a more refined way.

But I personally think the biggest area where people often go wrong is they spend so much time focused on the distribution of the ratings being a certain way because that maps to a budget and that maps to comp. And what ends up happening, I saw this, frankly, early days at Facebook, was, like, the dollars at play were actually so great depending on what your rating ended up being that the entire performance cycle got focused on exactly who got what ratings. And then when people got the reviews, all they looked at was the rating. So, the really rich feedback that you were getting from your peers and people above you and below you and around you, like, you might read that, but frankly, like, most people went straight to the rating because that just, like, you know, was mapped to their comp. At Core, I really tried to decouple those and not actually have the rating determine your comp. Your level determined your comp. Your rating was an input into whether or not you would get promoted at some point, but the rating didn't directly tie to a bonus or to equity. And I think that's, to me, that's an important thing is that you really want performance reviews to focus on the quality of the actual feedback and how do you increase people's impact.

That's a really helpful framing. And I wonder how it ties to something you brought up a little bit earlier in the conversation about OKRs, Or goal-setting frameworks more broadly. Got a couple questions along those lines, but would love to know the way you think about goal-setting, OKRs, do they relate to performance management in your mind, the way you think about it, or do you intentionally sort of separate them, or how do you think about their relation?

I think in terms of best practices for goal-setting, especially in startups, this is— everyone feels this like pendulum swing of like, oh my gosh, We need more OKRs, we need more structure, we need to know what everybody's doing, we need to do this quarterly, we need to do this big planning process. So then they do that and they find it's out of date in a week because startups just change so fast.

And it's just really hard, I think, to set goals that are much longer than a week or 2 weeks. I do think as an organization, you could set 2 to 3 north star massive company goals.

I remember one year at Facebook, it was around revenue and site speed, the two I remember. Those were so critical because everything mapped to those two and user growth. But basically, user growth led to revenue and site speed led to user growth.

All three of those were fairly intertwined. Those were big enough goals that the whole company could keep pushing towards those for an entire year. But then at a sub-team level, then you kind of have to figure out what's the right cadence for that sub-team. So for recruiting, for example, it's pretty common that you have quarterly hiring goals. That's just like, because it just takes time to build your pipeline, to move people through the process. And then individual recruiters might set their own weekly OKRs, for example, with their manager of what inputs they need basically to make this funnel happen. In engineering, you might have 6-week sprints or 8-week sprints, or 2-week sprints. I think it really just depends.

But I'd pick the right timeframe that works for your organization and then make sure you have pretty simple company-wide, 2 to 3 company-wide goals. As a team, you probably have a couple key initiatives you're trying to get done during that period. And then as a manager, you work together with them on whether it's every week, every 2 weeks, something that gives you enough flexibility where they're meaningful and they actually drive day-to-day behavior versus—

Setting a bunch of goals for a month and then 3 weeks in, you don't even remember what goals you set because the world's changed.

And do you recommend everybody in an organization having transparent goals or individual OKRs, or where do you think about the OKR level or altitude going? If you have a business level, maybe you've got a couple departments or business units, do you think all the way down to the individual level is the most effective way? Does it depend on the organization or size?

Yeah, I think it depends on— definitely depends on organization size. I think what you're looking for with OKRs is 2 things. One is accountability.

You want to make sure everybody's pulling their weight and you can count on each other to get your pieces of the puzzle done so you can make progress towards your mission.

And then there's a coordination piece. You have visibility, so you kind of know, oh, I know this team over there is working on this thing and actually what we're doing also.

So, you know where the dependencies are in terms of coordination. But I really think the thing to avoid, and I've seen this happen again and again as companies get bigger, is the amount of, frankly, homework people have related to goals and reporting on outcomes and goals ends up being so much that it doesn't really result in the right payoff, if that makes sense.

So, I think it's important that the head of people, the founder, people leaders in the company generally watch Okay, let's be clear.

What we're asking people isn't so much time on this administrative part of goal setting that it's a motivation killer and it's taking time away, frankly, from direct development.

I remember seeing things where we'd have to do these roll-ups when we got bigger at Facebook that were due, they were going to go out on Monday morning, which meant the VP needed it by Friday, the director needed it by Thursday, managers needed it by Thursday morning. And so people were writing Wednesday night. Something that was gonna get published the next Monday. It was ridiculous. So you gotta be really careful about how much actual reporting you need.

I just encourage people to try to keep it super, super lightweight. Maybe it's a quick all-hands, highlights, accomplishments this last week, key blockers. That's another great thing I've seen people do is just highlight the one win and one loss of the week or one thing that is really blocking your team that maybe others can help out with. I just focus on the bottlenecks. than the administrative overhead.

It's really, really helpful insight there. I'd love to wrap up this slide.

I'm actually curious, what are you using? Are you trying like an OKR system now?

Yeah, we are. We're just implementing our first one. And it's going to be at the altitudes are just at the company level. We've got 2 to 3 OKRs there, and then at the business unit level. So one below it.

Yeah.

And that's all we're going for now. But thinking about how we, you know, bring accountability to the rest of the org, whether that's through OKRs or some weekly accountability tracker or however people feel most empowered. And so I would love to know from you to sort of wrap this topic up or this line of questioning. You talked about if speed is a main value of the organization, which at On Deck it definitely is, Yeah. that there's a few pillars that need to be in place. You mentioned OKRs in this as one. What are the various other aspects of the situation that need to be true for people to really be able to move quickly at a company? Whether that's look up and see a goal and be able to run towards it, what's sort of your other advice around that?

I think the most important thing is that people have a lot of clarity around their alignment to the mission and the goals for that particular period of time, and their role in it, and what's expected of them. And so, the most important thing is people know what decisions they're responsible for. and what decisions other people are responsible for and how they can influence those. But once those decisions are made, they have to get on the bus and execute towards those decisions, whether they agree or not. At Quora, we actually implemented something called DRI, just directly responsible individual. Every project, every hire, any decision that had to get made at the company, it was pretty clear who the DRI was.

We would know.

And so, if there was any ambiguity or any question marks about accountability or Or, hey, I need to do this thing, and who's the DRI for blah?

You could find that out very quickly.

Now, for that system to work— and this was actually originally developed at Apple.

It's a past practice there. So, I'm a huge fan of this consultative decision-making, where there's one person responsible for the decision and the consequences of the decision, but others can influence it.

The important part of it is that you do need to have an escape valve. where if somebody, like, let's say Erik, I don't know, wanted to—

well, he's not a good example because he's the CEO.

But let's say, Joe, you wanted to do something. You're like, hey, instead of a podcast, I think we should do a super high-end, Oprah-style, high-production thing in LA. Let's spend a million bucks on it. It's going to be amazing, super differentiated. And others on the team are like, no, no, no, terrible idea. That's not where the world's going. And you're just like, no, no, no. I'm responsible. I'm doing it. You've got to have a way for people to pull the ripcord and basically say, I feel so strongly about this decision being wrong that I want to elevate it above Joe, and then we can, all 3 of us, talk it out. And that's got to be an okay thing to do. It can't be like, you can't harbor feelings that someone elevated.

There's got to be a mechanism for when those extreme cases happen, that there seems like someone's really making a bad decision.

But that's pretty rare that that happens.

And I think the most important thing is that people know who's responsible for what decisions, and then they can actually move very quickly towards execution.

That makes a lot of sense. DRI is a nicer version of the term that I heard from Jeff Weiner, I believe, throat to choke.

Yeah. I feel like consequences as a word typically has a negative connotation, right? But I really tried to push myself to think of it more Whereas like, it's both. It's like upside and downside. Like, if you hire someone, you're responsible for the consequences of that hire, whether that's like the best rock star the company ever hired or the worst.

But like, it's your— you're responsible. So yeah.

Totally.

I'm a big fan of that. Throat to choke.

The visual is so strong. It's like a cartoon, you know?

Totally.

Well, let me actually zoom out. One thing that On Deck has that a lot of people have, they're growing, they have product-market fit, and then they need to hire their first people leader. Like many companies, we hired a bunch of generalists to start out. Some ex-founder types, really talented people. So there's a question of, hey, should we promote someone from within the company who hasn't done this role before and doesn't have the expertise that we need, but hey, they're a really smart, capable person? and they can figure it out? Or do we bring someone who's done it before to bring the necessary experience and expertise that we don't yet have at the company? Any thoughts or advice on that? I bet a bunch of companies experience something like that.

Yeah, I think both can work, but there is a lot of value, I think, in having someone take on that role internally.

If they really are— if there's someone that you believe completely embodies the values and the culture you want to build and cultivate as a company, That's a huge positive. That's going to be really hard for you to get from someone on the outside.

In Quora's case, it was actually unique in that I was the 45th user of Quora.

I was in the office and it was 3 people with granola bars and boxes and water bottles stacked up against the walls, Charlie, Adam, and Rebecca. I was literally there day one when the product was released.

I didn't join until 3 years later, but I felt like I kind of was internal because I'd just been like a groupie.

Like, I'd been hanging out with the company for years while I was at Facebook.

So in a way, I always felt like a little bit of an internal person coming into the job because I just knew the team and the ethos so well. So I think internal is a great option if you have that person.

Often that will come from someone who has either sales experience, operations experience, recruiting experience, But it can come from, like, you have a super gregarious engineering manager who just loves the art of people management. That could be a great person to have in that role.

Now, if they've never done it before, again, I would emphasize, have an awesome employment lawyer on call because weird stuff comes up. The one thing about HR and running it that I didn't expect or realize is there's just a lot that happens behind the scenes that nobody knows.

I definitely used to be one of those people who was like, what do these HR people do all day?

Really, what do they do all day? And I can tell you, it is like one of—

I liken it to being like an EMT.

The hard part about HR is you're dealing with people, and you can't predict when serious shit comes up for people, and it comes up at random times. And you can't be like, oh, hey, I know that really terrible thing just happened to you, but I got to get home, and can we just talk about this Monday morning?

Yeah.

It just doesn't— you could ask my husband. There were many weekends that were blown up because stuff happens.

A major executive quits on Friday afternoon. Well, now your whole weekend is spent dealing with figuring out what the comms are going to be, what the transition plan is going to be. This stuff doesn't wait.

And so it's a lot like being an EMT, which makes the job—

so it's got to be someone who's comfortable with not having everything perfectly planned every week.

You have your, like, okay, oh, I'm going to find our new ATS system this week, and then Tuesday morning, something hits, and you got to be ready to manage that.

Yeah.

So, I think it's got to be somebody who's really flexible, who doesn't get stressed under pressure or under chaos. So, if you have someone like that internally, I think that could be awesome.

Obviously, the advantage of someone external is they hopefully bring a whole toolbox of best practices and things that they've seen and learned in other places. And sometimes that's helpful perspective too, for especially the early founding team, where especially if it's their first time leading a large company, just having someone who's seen the movie before, who's been on that boat, it's like, don't worry, this storm will pass, it's going to be fine. Just kind of keeping everybody steady, that can be pretty helpful to have someone on the outside.

But you can also find mentors like that.

If you promote someone internally for the first time into the job, Pair them up with a few great people who've done it before. And I've definitely had lots of conversations with chief people officers at other companies just as a sounding board as different things come up.

Totally. And the sell to them is, hey, this is an opportunity to play a leadership role in the company and to really define the culture and the people experience and sort of the product that is the company or that is the internal experience.

Yeah.

I mean, we're all out fighting for revenue and customers, but I think the most intense fight we're all in is for talent.

And it's an incredibly impactful part of the company to be in. And you really talk about consequences, like the decisions you make and that you carry out have huge consequences for the future of and how an organization thrives. So, I think it's awesome.

And by the way, the market's super tight for the role.

So, it's an awesome— for people who love it, it's an awesome career opportunity.

If you do well in that role, you can name quite Your ticket, name your company in the long run.

I'm sure anyone you would put into that would want to stay at On Deck forever. But truly, for someone who thinks it's interesting, I think it's almost as competitive as VP of engineering these days from what I hear from founders.

It's a very, very hard role to fill.

Yeah, totally. We've been looking for some time. Segue a little bit. So you were sort of a person who's seen world-class institutions like Facebook, etc. smart, can think of things from first principles. When you were in this role, how would you advise others in terms of what to rethink from first principles and what to take best practices from the industry in terms of how they do certain things? What comes to mind for you in terms of, here's, we'll just copy everyone does it like this, we've solved that as an industry, versus, no, actually, for equity, for example, you rethought that from a compensation perspective. Where do you think about that in general in terms of room to innovate versus, hey, let's just take best practices?

The few guiding principles I think that carry over everywhere is, and I've been beating this drum already in the podcast, but clear mission and values.

No matter where I would ever be a chief people officer, that would be the place to start.

And most importantly is that I want to know that as a chief people officer, I'm 100% aligned with the CEO founder because That person is going to make a lot of decisions that I have to then carry out.

So, I think it's super important that as a chief people officer, you're spending a lot of time making sure that that's really solid and super set and is permeated throughout how you attract people into the company, their interview experience, their onboarding experience, their performance management experience.

That should permeate everything. And then I think it's important that you're setting the stage Anywhere I would go, I think it's super important to think about how do you create an inclusive culture. You can have lots of different views on values, whether you're move fast or you're more of a polished organization, or if you're a super direct versus we're a little bit nicer, empathetic, softer on the edges type organization.

You can have a bunch of different things around those dimensions, but— Making sure that anyone, no matter who they are, walks in and feels like they could imagine themselves being successful at that company, that's super important. And the way you do that is really also creating psychological safety with the people that you have internally.

So, that would be something I would definitely spend my time on. And then the last, I think, kind of universal first principle thing that is always important is whenever something's coming up in the company, I just hammer this in for managers, especially first-time managers.

If there's a conflict in the team or something's just not going well with someone on an individual basis, it almost always comes down to either they feel uncertainty, like there's some uncertainty in the company, in their role, in their team, something is really uncertain for them, or they feel unimportant.

Something was done that made them feel unimportant.

It was a reorg, a title, someone else got a title change, or a promotion, their manager keeps pushing their one-to-ones or canceling their one-to-ones.

Something is going on where that person is feeling not important.

And so if you can step back and figure out how do we help create certainty for this person and make sure they know their importance in the organization, that generally solves almost everything.

So those are the 3 things I'd say no matter where I would go or what company I'd be in, I think about a lot. In terms of things to question, I definitely think compensation is a playground for innovation.

People should be really thinking twice about how they want to set up compensation and benefits, especially around equity.

And the reason I say that is all these templates that we get from really lovely firms, Gunderson Fenwick, Cooley, whoever you work with, they're just going to hand you this equity stock plan.

And it's going to have standard four-year vesting schedule with a one-year cliff and monthly vesting after that.

And da da da da da. Well, these were set up literally in the nineties when companies went public in three years with no revenue. Like I'm not kidding. Like that is why the four-year vesting schedule exists. It does not map to anything that is happening in today's world.

Like nobody starts at a company going, "I know I'm going to stay forty-eight months." Perfect.

Like people start being like. Hey, I'm excited to be on board. I'll probably be here for a year or 2, maybe a little bit longer.

But nobody today starts at a company thinking they're going to be there for 4 years or whatever.

It's just an arbitrary number. And what ends up happening is then all these companies have so much equity locked up in future grants when people are going to leave in 18 months. And by the way, if you misleveled somebody on the way in, now you've got someone who's either super underinvesting compared to their impact or overinvesting compared to their impact.

So, I'm a huge fan of companies considering 2-year initial grants with an annual refresher grant that you cascade on top of it.

Because it allows you to lock up less of the pool upfront. And then every year, you have an opportunity to really reward the people who are having massive impact or really outperforming the level that you hired them at. Or be even more conservative with people that maybe the jury's still out or they're still finding their way or whatever.

But you basically have a lot more agility. And frankly, it just maps a lot closer to what's actually happening in today's world in terms of employee tenure. So, I would say definitely question the 4-year vesting timeframe.

I also think you could question whether the 1-year cliff is the right cliff.

If you want to be really competitive with the market, make it a 6-month cliff.

There's nothing magical about these things.

Because the reality is, I will say, if you fire someone at month 10 and you don't let them vest their first year of equity, they will tell everyone they know.

I mean, it's such a crappy thing to do to somebody. So, the reality is people end up waiving those cliffs most of the time. So, they mean nothing. I mean, except they're like a congratulations for working hard for a year. But why not question all of these things? The other things I think about are, Early exercise. I don't know why people are so anti-early exercise.

That's a great way for people to take advantage of potential tax savings, but also show their real commitment to the company if they have the means to do that.

So, I definitely am a fan of allowing employees to early exercise.

And then, of course, the 10-year exercise window, I think, is table stakes, even though that's still often defaulted to 90 days. post-termination. So, for those listening, you're probably aware, but most stock plans require people to exercise any of their vested options within 90 days of leaving the company. Depending on where your strike price is or the FMV, that can be extraordinarily difficult for some people.

And so, it just means that then that piece of compensation becomes much less meaningful because they basically are like, well, if I left, I can't even afford to exercise it.

So, Why stay?

And it almost actually ends up hurting you as a form of compensation.

So, I'm a huge fan of making sure you've implemented a 10-year exercise window if possible.

I find your thoughts on vesting really interesting here and would love to dive in more with this sort of— So, just to recap, it sounds like your sort of proposed or what you would suggest to companies is a 2-year vest with a 6-year cliff maybe would be like one option you would advocate.

6-month vest.

Is that accurate?

6-month, not 6-year.

Sorry.

Sorry, 6-month vest. 2-year with 6-month cliff. How do you think about long-term retention with this? You talked about cascading annually. Can you talk a little bit more about that? Because I think this is actually a pretty novel approach.

Yeah, we actually implemented something fairly similar at Quora.

And a big reason was that at the time, the VP of engineering and I had both been at Facebook. Facebook, and frankly, saw a massive drop-off in our vesting at the 48-month mark. We were early employees, and then the refreshers that we had gotten weren't anything compared to what we had gotten originally.

And so, that just, it kind of, you looked at it, and you're like, why stay?

I mean, I'd rather go somewhere else. So, what we did was actually, we did end up, we had already gone down the path of a 4-year vesting schedule, so that was a little bit harder for us to change. But what we did was grant additional grants every year on top of the original grant. And we made sure that going on a go-forward basis, that that person was vesting in total at least as much as a new hire at that level, if not a little bit more. So, the point being, what can happen is you hire a level 3 engineer right out of college, and you give them the standard entry-level engineering equity.

And in 6 months, we had, for example, we hired Alex Wang, the founder of Scale. He was 17 years old when we hired him into Quora.

He hadn't even gone to college yet.

And by the time he left after about, I guess, a year, year and a half, he was practically running a bunch of the infrastructure team.

He was having the kind of impact you'd expect of someone who's now running a multibillion-dollar company. But that doesn't make any sense that he's stuck with this new grad package when his impact's so much greater. So, if you have an annual process where you can review the impact that people are having, and then you then have an opportunity to basically add additional equity grants every single year going forward.

And you could do those for— you could design it however you want.

You could have it vesting immediately for the next year. You could have it be a 2-year grant. A bunch of different companies have done different things.

But I wouldn't make it too long because, again, that's the same problem you have of locking up so much of your pool.

If you could just make it like 1-year grant or 2-year grants, then I think that stacks really nicely over time and preserves the pool.

Yeah.

I have one more follow-up on this. As you've talked about the Great Resignation a little bit, a lot of folks are moving around. What are some of the more creative ways or unique ways you've seen companies layer on benefits outside of equity that really attract people or keep their employees right now at a time when a lot of people are switching jobs?

I've seen a number of things. I would say I haven't seen the silver bullet, though.

I think everyone is struggling with this, to be honest, because in many ways, it's a huge positive for DEI. Now you can go out and recruit people. Geography is not a limiter. So, you can recruit people from absolutely anywhere, which really does open up the world from a diversity perspective and is awesome. But I do think people still crave in-person time.

And hopefully, we will get to a place where COVID is like the flu and we just kind of, we have good testing, we have all the things we need to be able to gather safely in person.

I was saying earlier, I have a 2-year-old, so it's just been harder for me to get out there because she's not vaccinated yet.

But I assume that day will come and I can be back out and doing a lot more in person. And I'm seeing companies, I think a great practice is Fully distributed teams, live wherever you want.

We have certain hours of the day that you need to be available for in-person meetings. Maybe that's like, I don't know, 12 to 4 Pacific or something, something that kind of works for most of the time zones, at least in North America. And then quarterly we get together for super intentional week-long offsite, which is half business, half just social, personal, getting to know each other, I think is really important.

The other thing I've seen is with companies like Retrera, Mystery, I've seen a few different companies out there that are helping.

I mean, to some extent, Donut and Lunch Club do this too, but connect people internally around common interests.

One of the interesting things we found at Quora is kind of related is people were most engaged with topics on Quora that were super nichey to them. I love thrift shopping.

I'm just a thrifter.

I go to Goodwill.

It's my therapy. I love to just run around a Savers or a Goodwill on the weekend.

And so, I love reading about vintage stuff and thrifting.

It's this very unique thing. I played Magic: The Gathering in college. I'm really interested in strategy deck-building games.

So, finding those nichey things amongst your employee population that they can connect on.

And there's, again, software that's doing this for people, but you could even organically do it if your company is small enough.

And then just pay for them to go do stuff together. Just be like, hey, you guys want to go do a Magic tournament? We'll pay for it. We'll buy you new decks. But buy things that are so delightful and create a shared experience. Maybe Erik has a family recipe that he loves to make, and you could Amazon Prime all the ingredients to everybody's home, and you could all cook together on Zoom.

There's a lot of things you can do, but making it as personal as possible.

And connecting people on common interests, especially cross-functionally, I think is really important. Because one of the biggest predictors of whether people will stay at a company is whether they feel like they have a friend at the company.

And so, what you're thinking about is, how do you create friendships when we're over Zoom most of the time? And it probably means that you either need to be getting together in person sometimes, or you need to help people connect on stuff that's maybe not necessarily related to work, but they feel kinship with somebody else.

Yeah, that's really interesting. And maybe gearing towards close here, beyond sort of, you know, doing well as a company and having very clear values, what else do you advise your companies who are thinking about how to build great employer brands?

Just like any branding, like, I think having a clear point of view of like, what do you want people to know you for? And then making sure that's really consistent in, you know, in fact, I funded a company called Mathison.io, which is focused on like your DEI strategy across hiring and retaining employees. And Arthur Woods, one of the co-founders, wrote a book called, I have it on my desk right here, Hiring for Diversity. And he talks a lot about this and like the way you think about your company brand and how you project your brand. So, you have everything from like, the classic company website, but don't forget, people find out stuff about you in all kinds of ways. They read your tweets, they read your blog posts, they might look at Glassdoor, they might look at G2, they might look at, like, you have a bunch of people that are in your ecosystem in Ondak who are writing about Ondak all the time. They're going to read about what that experience has been like and those interactions have been like.

And so, I think, think about it as cultivating or curating what are people seeing and knowing about us.

If you actually took a VP of marketing, for example, I mean, I think it's great for the chief people officer to very closely connect with the VP of marketing and think of your company brand for the employee experience just as much as you would think about it for your customer experience.

So, that might mean that you have things like brand trackers.

You're measuring sentiment about your brand from a potential employee perspective or candidate perspective. What are people saying about you? Are you collecting feedback, for example, after the interview process of everyone who interviewed with you and making sure they have an opportunity to share what they liked or didn't like?

Maybe ask them—

I think it's always important to also track if you interviewed people, you gave them an offer, they didn't join you, where did they go? Why did they go there and not with you? Making sure you're spending a lot of time understanding And the people that did choose you, why did they choose you? Like really asking those questions and collecting that data can help you get a really good sense of where your brand is really thriving and where it's really strong and where you might be falling a little bit short.

And you don't have to be everything to everybody.

Like that's the whole point of having a strong culture is like what's super differentiated and unique about your company, about working at your company? How do people know when they walk in like, oh, I'm at On Deck. Like this is the On Deck way. Like this is, This is how we are with each other as a company.

Thinking about what is it that makes that unique, and then how do you make sure that that's really clear to people who might join you? So there's a lot to it. There's no one checklist. I'm actually thinking about publishing a few guides and resources in early 2022 around some of this.

So if I do that, I'll be sure to send that back over.

Totally. We'll distribute it. Last question. You were covering the importance of retaining talent and some thoughts there and the importance there about people having a friend at the company. It's also important, of course, that people feel that they're growing. I'm curious if you recommend doing anything formal or deliberate around encouraging mentorship within the company.

Yeah, there are definitely some good companies out there that will help match this up.

I think it's especially important for underrepresented folks in the company to feel like they have a mentor and to be a bit more intentional about connecting them.

But the honest truth is that the best mentorship relationships are ones that form organically.

It's just really hard. If someone is like, I really want to break into venture, and they reach out to me and be like, will you be my mentor? It's so awkward. We have no— Contextual anything, right?

And so, I think it's important that you, again, facilitating those types of informal exchanges, retreats, opportunities for people to connect outside of a formal business meeting setting is a great way to informally set up those mentorship networks.

But I also think it's important that people, you also kind of train junior people to understand that mentorship can look like lots of different things.

It doesn't have to be a formal monthly check-in with someone senior to you in the organization.

It could be that you are just sitting in on some meeting with another senior person in the company and you're just getting the chance to watch them in action as they go and close this big partnership or whatever.

Mentorship looks like a lot of different things. It doesn't have to be incredibly structured.

But yeah, I think for every company, it's going to be different.

I think in a distributed world, it's totally reasonable that you create some, even if it's a 6-month trial, let's match up people across the organization and try out this mentorship thing. I know we did that at Facebook and I remain close to a couple of folks that I was mentoring there. I guess one other anecdote I'd say is senior leaders in the company also just proactively reaching out to more junior folks just to set up time and chat and get to know them. Austin, when I opened the office there, I made sure to meet with every single new hire in their first week. And I asked them specific questions about like, what strengths are you bringing that you hope we can like really draw out in your first few weeks here? What, if anything, has you feeling anxious or nervous? And what can we do to make sure you're successful? What can I do to support you? Like, I asked very specific questions that created like space for vulnerability and openness. And again, that psychological safety that I think is super critical. People just need an outlet for that psychological safety.

And that's, I think, a lot of what you're trying to solve with mentorship.

Awesome. That's a great note to end on. Sarah, thanks so much for coming on the podcast and dropping a lot of insight and being helpful to us throughout.

Yeah, best of luck to you guys as you figure out this role. It's really important.

And I'm always happy to talk about it. I'm always happy to help, so ping me anytime.

Thanks for listening to today's episode. Execs is produced by On Deck, where top talent goes to start companies, find their next roles, or invest in their careers. If you're looking to start a company, uplevel your career, or navigate a career transition, I encourage you to visit beyonddeck.com. See you next time.