Hiring Executives with Greylock Talent Partner Jeff Markowitz | The Scaleup Offsite 2017

Bringing on world class leadership is incredibly valuable for a scaling company. But executive hiring can be a long and delicate process. In this talk, Greylock talent partner Jeff Markowitz breaks down the five steps to hiring executives, starting from the planning all the way to making the final offer. This presentation was recorded at the Scale Up Off Site, an event focused on scaling companies, hosted by Greylock Partners and Y Continuity.

Imagine you have to hire a key executive or several key executives. You aren't sure how to start to look, but you know you need to do it. How do you go about the process? There's so many things to consider. Where do you look? How is this person going to fit with the existing team? Have you thought through the compensation elements of it and what happens if you make a bad hire? Whether or not you've done this before, you probably know hiring executives, it's a tricky, cumbersome process to get right and rarely do they go smoothly. So right off the bat, using your fingers, 0 to 10, 0 being not at all comfortable with hiring executives, 10 being you've done it a lot, you've hired a lot of executives. How do people feel? Zero to ten fingers, some very comfortable, some not so comfortable, some in the middle. Good. It's expected. What I hope after today is that those that feel not really comfortable with it, you're going to get a lot of input and maybe feel more comfortable coming out of it. Those that feel very comfortable with the process, hopefully you'll just get some tidbits that come out. I like to break the process into five key areas. The first is planning the process. The second is working with candidates through the process. The third is reference checking. The fourth is talking about compensation. And the fifth is the offer process. So I want to try something a bit different. Take 20 seconds, turn to the person sitting next to you. What are some ideas you think are important to consider when thinking about the planning process of hiring executives? Just take 20 seconds, just turn. Easy. Turn to the person sitting next to you. Okay, planning process, what do people come up with over here? Strengths. How about over here?

Who's the most authentic natural fit to the world?

Authentic fit, great. As I reflected on just doing this for a long period of time, there were a couple things that I thought of that would be good to discuss. The first is create a 12 to 18 month roadmap. And what you're doing with this, it's not just the people that you know you need to hire, it's the people that you think you might need to hire. And a lot of people get Very caught up. And it's like, these are the. These are the needs that we have. These are the needs we know we have. But you should think about proactively. What are all the hires you think you may need? You may have to plan for surprises, and you may come out with a list of five or six executives. You can't possibly hire five or six executives in one period of time. So you have to develop a prioritized list. And then after you have that prioritized list, you aggressively go out and meet superstars. One of our companies next door, Niraftoli, as the founder and CEO, Nirav aggressively wants to meet candidates. He doesn't care if he's hiring for that role. He's always asking, who are the superstars you've met? I want to meet them. Because even though he doesn't have a need just then, he knows sometime in the future it may be a great opportunity to get that person into the company. The best entrepreneurs are always aggressively meeting with superstars. The second thing is start the process early, as early as possible. And in doing that, you're basically going through and you're saying, what are the companies, which companies do you admire? And who are the leaders in those roles where you need to fill at those companies? And then you go meet them. And the idea is you want to learn what great looks like. Scott Dietzen, he's the CEO of Pure Storage, one of our companies. I remember when Scott wanted to hire a chief financial officer. It was about 18 months before they were going to go public. And Scott sat down, he asked me to come in, and he basically said, I want to go meet with great CFOs, because I've never been a public company CEO. I want to learn what a great CFO does. And so we sat down and we basically mapped out the tech landscape. Some of the CFOs were in our company, some were not. And I said, why don't I go reach out to these people, see if they're willing to take just an exploratory conversation. They are not going to be candidates for the role. A lot of them are in positions, they're just not going to leave. But they would be willing to take an informational meeting with you to help you learn what great looks like. And so Scott did this. It took a couple of months, and over that period of time, he met people. He was able to develop a very clear picture of what he wanted in that role, what he was able to do after that. And this is a very big difference between Entrepreneurs who hire really well and those that don't. Scott came away with this picture and then when he went out to talk with these CFOs, he was super impressive because he knew exactly what he wanted. He was able to talk about people that he met and he was able to explain to high level candidates what he wanted and why he was prepared. And the byproduct of this process was one of the people that he met in this four to five person exploratory conversation set was a guy named Mark Garrett, who's the CFO of Adobe. Mark was not going to leave Adobe, but Mark was so encouraged by Scott that he ultimately joined the board of Pure. So there's always benefits that come with meeting great people. Let's talk about the candidate process. I like to think about the candidate process along this timeline from the very first time you meet somebody all the way through the point of offer. Knowing that you're probably going to meet with several candidates and you're only going to get to offer with one person, hopefully if you do the process right. But it helps to think about each candidate you meet along this timeline and there are many different components to it. I like to think of each component where it happens in the process. There's some that you do at the very first time you meet a candidate and there's some that you do in the middle. There's some that you do at the end. This notion of ball control. Ball control starts from the very first time you meet a candidate and it goes throughout the entire process. So ball control is basically for sports fans, it's the whoever controls the ball is likely get a score. And from the standpoint of controlling the process, whoever controls the process is in good shape. And both candidates and companies should maintain ball control for purposes of today. We're just going to focus on the companies though. And to start with ball control, it's this blend of buying and selling. So I see entrepreneurs do this quite a bit where there's one extreme or the other. They either buy too much when they first meet a candidate. So they're just asking questions, they want to dig in, they want to interview and they're just interviewing. They're never really selling the company, so they don't set that hook. And on the contrary, I see entrepreneurs who just sell, sell, sell. They're so excited to talk about what they're building that they never really show an interest in the candidate early on. And the best candidates, they want a dialogue, they want you to interview them, they want to have the back and forth. And the good thing about it is once you set that hook with a candidate early, they open themselves up to be interviewed in a much different way. So set that hook early. And then the other thing I like to do at the very beginning of the process and it goes all the way through. And this is counterintuitive, but it's asking this question, is the candidate closable from the very first time you meet them? People probably know pushes and pulls. The concept of that pushes are why would this person consider doing something different from what they're currently doing? And pulls are why would they join your company? It's important to get to both. Early pushes are oftentimes the hardest things to get to because you're just met this person. So how much are they going to really open up with dissatisfiers with what they're currently doing? But the best interviewers are listening intently. They're back to this buying and selling. They're listening, they're showing an interest in the candidate. And when they show an interest, you can hear the pushes and they balance the selling as well. And then compensation. Why talk about compensation so early? It's. Most people think let's talk about comp. Towards the end of the process or towards the middle of the process. But when you talk about compensation early, I don't mean negotiating with the candidate the first time you talk with them, but it means understanding what are the gaps. This person might be coming from a company where their salary is $500,000, you're going to pay them $200,000, you think that's a gap? Maybe they don't understand the value of equity. We see this a lot. They don't get the value of equity. They get percentage of ownership, but they don't understand value of equity. And so why prolong, why push this conversation off until you get later in the process? You can waste a lot of time with candidates who are never going to get there. So I call it the compensation trap, which is just don't wait till the end of the process. Learn the candidate's expectations early on. If there are gaps, it doesn't mean once again you're giving them an offer. It means you just work to close the gaps. And if you don't see any possibility to close the gaps, the reality of it is, and it's a hard reality, as much as you sell, you're never going to close it. This next thing, reading the candidate point A to point B, it kind of comes up sort of in the middle of the process towards the end of the process. And I'll give an example of it. We were hiring a CEO for one of our companies, Sumo Logic, a couple of years ago. The candidate, Ramin Sayer, who joined the company. Ramin was a senior executive running a billion dollar business at VMware. He had multiple CEO roles that were coming after him. And at some point in the process, we said, we need to get into Ramin's head. We need to understand how we're going to get him back to the ball, control how we're going to get him excited enough about us that he wants to join us. We may not want him, but we need to get him excited about us so we have the option. And so it's simple. We just sat down with him and said, ramin, we are where we are in the process now. We want to get to a point where we can figure this out over the next month. What are all of the things, all of the open questions you have that would prevent you from joining our company and then work through the issues. And guess what? When you work through the issues, more questions come up. But if you have that ongoing dialogue with the person, keep moving it down the path to when that person will hopefully join the company or get to a point where they say they want to just get in their head. The last thing I like to talk about, and this is different, you don't get it from interviews, you don't get it from referencing. It's this concept of the mini board meeting. This is another lesson I learned pretty early on. It was like 2002. I was doing a CEO search. It was my first CEO search. It was a big one. And we had this, it was a high profile one. We had this candidate we were very excited about. The candidate was ready for the offer and he was scheduled to meet with one of the board members to get the offer on a Tuesday. He called me on Sunday and he said, jeff, I just want you to know that I'm about to email the board member and I'm going to say, I don't want to have the meeting. My initial reaction was, oh my God, what happened? We blew the process. It's going to blow up. But before I could think too far, he said, don't worry, I'm still excited about this. But I just did a lot of work with the founding team. We had strategy sessions, we went out, talked with customers. I, I have very direct opinions on what I'm going to do if I'm the CEO of this business. And I want to have a conversation with not just one board member, multiple board members, to make sure that we're in alignment. And he specifically said not agreement alignment, he actually wanted disagreement. He wanted to push for that in the process because he knew that if he took this job that there would be multiple times of disagreeing with the board afterwards. And so he wanted to make sure that that tension, that disagreement, working through those problems felt good. Now this goes really for any role. It doesn't have to be a CEO reporting to a board. It could be a VP reporting to a CEO, it could be a director reporting to a vp. But going through this exercise where not everybody's on their best behavior, really pushing for where are areas we disagree and let's figure out how we can resolve them. So working to disagreement, let's go back to the fingers. So on a scale of 0 to 10, 0 being not at all comfortable with referencing process, you don't know what questions to ask, you don't know how to interpret the answers. 10 being you've done thousands of reference checks, you know exactly what to ask, you know how to figure out answers from people that the references give you and those that they don't. How do people feel? 0 to 10. All right. Some high, some. Okay, got it. Good. I think unequivocally referencing is the best predictor of a successful hire. Way more than interviewing. And the key is to do a 360 degree process where you look for patterns. You're talking to bosses, peers and direct reports of their last several jobs. You're not talking to three references, you're talking to 10 to 15 and you're pushing for developmental areas. If you don't get developmental areas with a reference, it's not a good reference in my opinion. You may be able to pull some things out, but that reference is probably they either one, don't know the candidate that well or two, they're holding back because everybody has developmental areas. So you have to push to get them. And you dig deep into the candidate's past and you ask open ended questions. What did they do? How did they do it? Tell me more about it. We went through another search. It was a CEO search a couple years ago at Greylock. And we had this candidate who was very well regarded. He'd never been a CEO before, so this was going to be a first time thing for him. And he did great in the interviews. Most of his references were actually very positive. But when we dug deeper and deeper, there were some flags that came up. Not about him as a person, but just ability wise he was missing some things. And so then we talked him more references and we were able to piggyback and ask more questions about that. And these same issues came up consistently. And so it basically came down to asking. The board had to ask themselves this question, is this somebody knowing what their flaws are? Do we want to manage them? And this goes for any role. If you're hiring somebody, once you get this clear picture, strengths, weaknesses, ask yourself the question, do I want to manage this person? The goal being you want to eliminate surprises after the hire. So if somebody has issues, they all do. They're all developmental areas. Everybody has them, so why not figure out what they are before you make the hire? Everybody gets very excited about going through the process. You have this candidate you really like, you want to get it done, but you should really know who you're getting. Okay, compensation, we touched on it briefly. I really. And compensation is such a deep, long, lengthy topic. It's way more than we can cover today. So I'm just going to cover sort of the framework side of it and the process side of it. And I already talked about the compensation trap at the beginning and, and avoiding the compensation trap. At this point in the process. You have this candidate, you've run them through the process, you understand their pushes and pulls, you've read them, you've done the mini board meeting, you've done reference checking, you feel really good about the candidate. At this point you have to continue reading the candidate. You basically have to sit down with them and say, assuming we get all of the non economic issues covered, how do you feel? And you have to really work on these non economic issues. You have to see if there's any hesitation in the candidate's mind before you talk about compensation. And if there's any hesitation, don't talk about compensation, don't even bring it up. Once you talk about compensation, once you bring it up, that's where the focal point goes. And if the candidate has other issues that are there, they almost get hidden. So I like to tell our companies, make sure you do not bring up compensation other than what you did in the beginning to make sure you're in the ballpark until you firmly believe that all of the questions that the candidate has have been addressed. The non economic questions and the final step. And it's a thing that we see our companies get tripped up on the most. And it's a subtle point, it's how and when do you give offers? Once you're confident that all of these non economic questions have been addressed then and Only then are you clear to give the offer. Because you want to make sure that everything has been touched on and when you give that offer, it's going to be accepted. You should see from the candidate that they have this enthusiasm. They're excited to join the company. We had a situation. I had a situation back in 1999. Everybody probably remembers the company. Loud cloud, it became opsware. I was doing an SVP of corporate development search and we had a candidate we were very excited about. And for some reason I was, I was giving the offer and I was working with the CEO and I came back to the CEO and I said, candidate's ready to go. They're super excited about joining the company. And so we kind of went ahead and we gave the offer, wasn't accepted. This was somebody we spent a ton of time with and he backed out. And then I got a call from one of the board members. I wasn't excited about getting the call, but I did. And he said, jeff, I want to ask you one question. What do you ask the candidate? I said, well, I asked the candidate if they want the offer. He said, don't ask the candidate if they want the offer. Ask them if they want the job. Are they ready to join the company? Have all of their questions been answered? Are they ready to join us if we make the offer? It was a huge lesson learned. It's such a subtle point, but candidates will take, there's lots of people that will take multiple offers. But are they really ready to join your company? So don't ask. Are you ready for an offer? Do ask. Are you ready to join the company at that point? Thanks. Hi.

Regarding references, I've actually never done them for most of our key hires. It's worked out well so far, but I want to make that leap.

Wow, that's impressive.

What's the best way to go about it? Is it just go after anyone randomly through their network or ask them for people to contact? Any suggestions for the best way to start that process?

Yeah, I think the best references tend to be people that are in your network who, you know, who might have a point of view on the person that is a trusted source. That's the best in my opinion. I feel that you can get great information from any reference. So I actually like to call references that the candidate gives me because I feel like I can, not that I, I try to fool them a little bit. But if the candidate gives you a reference and you start asking these very open ended questions about what, how, tell me more and you dig into It I've seen references that a candidate has given us who should be positive have turned into negative references if you ask the right questions. So it's interesting to me, when a candidate gives a reference and that reference turns out not to be a positive, that's a super negative reference. So that's how we do it.

And where in the process is that? In the middle of the ongoing conversations or when an offer is going to be made that that's the time to do it?

There's levels of reference checking because a lot of times with executives it's hard because they're in a given situation with a company. So you have to be very careful from a confidentiality standpoint. We try to get as much of a feel for the person as early as possible because you don't want to spend a lot of time with somebody that your network is not telling you is positive. As you get further down the path with the candidate, the references go from like reference checks to reference audits. And so before you're going to hire somebody, that's when you do really in depth reference, like detailed reference checking on references.

How many references do you see as being sort of a standard number? I mean, I love references, but I would do dozens if I could. And I almost get sort of sensitive to over committing the candidate to just handing their entire Rolodex to me, which is a challenge. So one, just how many? And the second question is about sort of teasing out weaknesses. How often do you see the best candidates being relatively open and honest about what those weaknesses are, how best they're managed, and how often are they kind of spinning the negative into a positive?

Yeah, there's a couple things in there. We talk to as many as we can. I mean, you don't want to have this month long effort of checking reference checks, so you want to do them in a very quick way, but you want to talk to as many as possible to see where these patterns develop. The key is the patterns. Talking to one person who's a negative reference doesn't. I mean, it gives you a data point to talk to other references. In terms of your second point is a question I ask all the time. I always want to ask the candidate, what's this person gonna say? And lots of times I know the person that they reported to. So even if I don't know the person I reported to, I say so I'm gonna call Joe and I'm gonna ask Joe what he says about you. What is he gonna say? And it's funny, when they do that you could just tell by the body language how it's gonna be. Sometimes they're very upfront. Sometimes they say they're gonna say, you can expect to hear this and it's negative. And then once again, you kind of go right into. It's almost like you're doing a reference check with the individual. It's like, tell me more about that. How did that happen? How did that manifest itself? So it's kind of. It's just. It's following. It's following a path. That's all we have.

Time for one more quick one.

This is a really specific question, but I'm currently going through a process where the two main candidates. One's a number two where he currently is, and the other one is like a number one. And I'm just curious. You know, I've seen different. The process is moving very differently for each one. Any just best practices around as you have two people, one of whom's. Let's go with marketing, one of whom's a cmo, and one of whom's maybe a director or VP of marketing. Just best practices around balancing those two, where you want to compare the two, but you also know that one might take longer to ramp but has bigger upside, et cetera.

I think there's a long answer to that. I think understand what you're hiring for. And I think Sam had said this in the talk with Reid. If you're hiring somebody who will be great 18 months out or 24 months out, but they're not going to be great for where the company is now, that's not necessarily a good thing. If you hire somebody for where the company is now, but they maybe can't scale beyond 24 months. Well, that's actually an okay problem to have. So I think it just comes down to what do you need in balancing those two things out?

Thanks, Jeff.