10 must-cover topics when you're kicking off a search

Here are ten questions your recruiter should ask you if they know what they're doing and really want to compel candidates to talk to you:

1. Why was this role created or what led to this search?  Good and bad events, as balanced a version of things as is possible without airing too much dirty laundry.

2. Who does it report to and what does that person expect out of this hire?  Or in CEO cases, what does the Board really want to get done in 12, 18, 24 and 36 months.  Concrete deliverables.

3. Who needs to be involved in the selection and search process and why?  Who are key stakeholders and influencers?  What are they thinking about, and where are bottlenecks and disagreements likely to come up (does the engineering team really not want new leadership, for example, because they don't want structure?  Do management and Founders not want a new CEO but feel the Board is forcing that person upon them unfairly?  Why do people have this view and does their argument have merit?)

4. How many employees do you have, cash on hand, revenues, margins, basic expense line, growth rate, capitalization structure, capitalization strategy, Board makeup, management team backgrounds.

5. History of the company.  Why was the company invented, what was the thought process, what is the driving core innovation of forming the enterprise in the first place and what does it aspire to be?  "We want to be the THIS of the THAT SPACE" should be covered in some detail.

6. Key challenges and barriers to success?

7. How the organization will change and evolve over the near and medium terms, and how those evolutions will affect the company and this role?

8. What are key opportunities in the market place, key challenges, market dynamics, philosophical camps, various approaches to the problems you're solving, etc.?

9. How do you typically hire people?  What's worked and not worked?  How do we best work together to ensure success in a reasonable timeframe?  What is your hiring philosophy and it is consistent with other key players?

10. Discuss the process.  Map out the strategy for identifying the key people, getting them to the table and expediting it so that the process is an advantage in recruiting, and not an impediment.

10 ways to close hard searches in 90 days

We just finished our first search for a CEO in health care IT.  I can't even believe I won the search, much less closed it in well under 90 days.  Since I'm passionate about this space, this one really, really mattered.  They all matter, but this one was possibly a do or die situation in my ambition to build a killer, dominant practice in this exciting field.

This is a crazy fun space, but like a lot of technology categories, you have the dinosaurs and you have the newcomers, and not a lot in between that would be your sweet spot hunting grounds, which I would define as "companies who grew solidly, delivered great results and exited or developed enough leadership talent that it's worth exploring for CEOs."  You don't want people from the old world dinosaur companies like GE, and the newcomers are usually too under developed for a bunch of experienced leaders to be running around and mobile.  And they're trying to do what your client is trying to do half the time, get religious about their approach, or are flaky enough to jump from one situation to another before it's an appropriate time to do so.  So what do you do?  Classic conundrum in a growth space in technology.

Here's what we did:

1. Map the market.  No, really MAP IT.  No one else in our industry can map markets as fast as we can, because our research arm is LOCAL, not outsourced to India, and they're all Stanford, Cal, come from great schools, MBAs, etc.  A client once told me she was impressed by Heidrick's ability to map the market, so I got ahold of one of their maps.  It was hard not to laugh out loud.  Our maps are vastly more detailed, more thoughtfully developed and rendered, etc. Who are the people who develop this data? People who would have otherwise gone into Financial services in another era, have now figured out that our industry is a better racket than other categories and we successfully recruit and develop these people.  We spend 10% of revenue on research.  Not a single other firm in our industry does that.  And we think it's money well spent.
2. Who are the M&A's that are nine figures and above and who were the top 3 people in those companies?  Who IPO'd? Who made money for investors or outperformed peers and were really clever, hustled, took nothing for granted and above all, grew shareholder value. Track the lineage of the out performers and track the people down who made it happen. They could be anywhere.  In PE firms, living overseas, about to hit the ejection button after getting acquired, etc. You can't fake this work.  It's a grind and these spaces need to be DRILLED hard to get to the "gems" underneath what can, at times, look like massive lumps of coal.
3. Network like crazy.  You can't delegate this to junior people as many search firms do. Killer people want to hear from senior people who are genuinely interested in them.  The project leader and other senior people need to do this work personally.  Talk to everyone you can, as fast as you can, get to the thought leaders out there, the well-known professors on whom the smarter leaders in a given space will lean for advice, get to VC's and investors in the space, find out who they liked, convince them to work with you vs compete with you for this talent, etc.  This seems obvious but way too many people in our industry do this in a half-assed way.
4. Your client cannot sit around in "shop" mode for very long.  They have to be in "buy mode" where, if you have a tight spec, and you deliver really interesting candidates to that spec, they know they have to MOVE FAST.
5. Sequester the time to do it right.  Too many search people just bill everything in sight.  You have to have the capacity to do CEO projects the right way.  If the search person is overloaded, they won't make that extra call to the candidate between various interviews or events, and they might miss something.  Every candidate in a tight spec search is a precious asset and needs to be treated as such.
6. Be prepared for hard conversations, weekend conference calls, late evenings, etc.  If you let your calendar have no gaps or aren't willing to chip in a little "free time" to make it happen, you won't make it happen.
7. Be aggressive in comp. Understand it's a buyers's market, get over it and be ready to invest in people.
8. Don't mess around with silly things like change of control on second trigger.  You've sold the company, Board voted for it, be aggressive here.  And don't get cheap on stuff like relocation. This is where people get angry.  The core offer will be what it is.  But don't shoot yourself in the foot messing around with the "trimmings" of a deal.
9. Keep your interview team and search committee, small, tight, influential and empowered to act.
10. Resolve that any serious candidate will be "resolved" within 2 weeks max.  First interview to final interview.  You don't have a month.  You might not even have two weeks.

Groupon just grabbed a killer engineering executive from one of our clients who really wanted the guy.  A very senior, A player.  GROUPON!  Yes, the same one that is a spectacular flameout.  How?  They moved from first conversation to close in 7 days, went "yard" with the deal, focused like crazy and grabbed the guy. That is how you close people.  You move fast and you be aggressive.  Be focused.  It's really not rocket science ultimately, but far too many people are living in a dreamland that there are lots of candidates running around.  There really are not great candidates running around.  You have to RUN THEM DOWN.

The Interview 2.0

People need to understand that to be effective, interviewing actually matters again.  Gone are the days of taking a first meeting to "get to know" people.  Candidates getting to know companies, companies getting to know candidates.  "Culture fit" is an aging term, and one that in my view is totally useless.  No one gets anywhere these days if they have an iffy culture or an iffy, jackass vibe. They wear it on their sleeves if it's an issue, in most cases.  So set that aside to later meetings, is my advice and focus on having an effective interview.  Otherwise you'll lose candidates, and candidates will lose opportunity.  There is little margin for error, so if you want to execute, in my opinion, here are the basics and I believe this is "interview 2.0":

Companies:

1. Read your own job description. Everyone who meets the candidate should have a copy.  Read the resume fully, and suspend judgment until after you've met the person. You'd think this is 1.0 but man, so seldom do people in an interview team actually read the job description.  They think life is moving too fast.  That's just being lazy. STOP.  Do your homework.
2. Don't walk through the resume. That's old school.  Interview 2.0 is, "here is what we're trying to do.  These 3-5 things REALLY matter to us.  Can you do it, and have you done it, where, and how might you approach THIS situation?"  This is the core of the interview. Asking stupid, demeaning Google-ish questions like how many black cats are in Nebraska is immature, silly and arrogant.  Not to mention unproductive.
3. Take a few minutes on the front end to capture the essence of why your company rocks.  And then go back to it at the end of the meeting. Re-cap why your company is awesome, a great place to work, could  enrich everyone personally and possibly financially (be balanced here, don't set crazy expectations), etc. Offer to answer questions the candidate might have.  Talk about your views, if you're possible, about why they could make sense and make an impact, be embraced by the team, etc.  If you don't think they're a match, keep that to yourself or defer to item 4.
4. If you're the CEO, tell them if you don't think it's a match.  Too many Californians are nonconfrontational and want to "kick the can" down the road saying "this is good, let's keep going" when they really mean "this isn't a fit.  I don't want to jerk you around or waste your time." If it is anyone other than the CEO, or a key Board member in the case of a CEO search, then keep your opinions to yourself, tell the hiring manager what you think and leave it to that person to decide whether to agree with you or not.  Breaching this rule can cause a lot of internal problems.
5. Talk about next steps and process.  What you think the person needs to do to reach conclusion.
6. Stay close to your search firm, because if you're saying different things, the candidate will lose altitude as they lose trust, or they're think you or the search firm aren't paying attention.
7. Sell for the right to buy...You can answer a LOT of questions in referencing.

Candidates:

1. Come prepared.  Read the website, read the job spec, and be humble.  No matter how bad ass you think you are, be humble.
2. Bring ideas to the table.  Be bold with your observations about the space, market, company, etc., as long as it's constructive stuff.  You don't want to present like you know the situation better than the person interviewing you, you just want to appear as someone who has thought about this meaningfully.
3. Be an open book.  Let them get to know you.  They'll open up more, the more they know about YOU.  Yeah this is a "candidate's market."  But always sell for the right to buy as I mention above.  Give them a narrative story.  Who you are, where you come from, how you've architected your career and most importantly, highlight where you made maximum IMPACT.
4.  Be 21st century!  Talk about "marketing 2.0" or "sales 2.0" or "leadership 2.0 for a CEO".  Disruptive business models, best practices.  Frictionless selling, freemium, digital demand gen, social, how to build a killer product company, etc. If you talk about old school practices, YOU'RE DEAD.  And you're irrelevant so just retire now, is my advice.  Get smart, get current, or just join silly and tired companies where you can fake your way through, thinking and acting like an old school executive.  Growth companies want cutting edge.  If you aren't interested in re-inventing yourself and really making an impact in an insanely fast changing landscape, don't even try. Because short stint job hoppers are not en vogue.  Never have been, never will be.
5. Put yourself in the job mentally.  "I think I'd approach this THIS way," or "this is what I'm hearing so far, what do you think about THIS strategy or THESE priorities."
6. Tell them you're interested, if you are.  Tell them if you aren't, and be gracious.  It's a small world of technology people who actually matter.  And people talk.  Be the class act, someone they wish they had, no matter what you think about the situation.
7. Follow up. That one's a basic.
8. Be on time.  That one's a basic.
9. Stay in front of the search firm.  Don't be aloof.

The secret to Citrix's success

This is a blog that I'm going to splash out there, and then work on over time.  I love Citrix and want to talk about them as a model for some of our other clients.  And I think I've figured out why they're so successful.

Citrix is run by an entrepreneur, vs a corporate animal.  Mark Templeton is disdainful of the big company corporate culture, way of life, entitlement, ego's, etc.  And this is why he cannot be caught.  They just move faster than the herd because it's in their DNA to concentrate on speed of movement vs sheer size, and they certainly don't waste any time talking about how great they are.  How big a weapon is humility?

Look at the organization and the bio's of the key players.  Do you see a big company in their backgrounds?  Not many, and anyone who does, had it some time ago, vs recently.  Most are people who came from startups, or were home grown.  Mark has an uncanny eye for talent, and he's collected an interesting cast of characters around him, including some "nobodies" who came in through acquisition and are now industry stars, like Mr. Payne.  These people were not usual suspects, not "obvious" choices.  These people, over the last 5 years, were hungrier than the guys at VMWare and the billions of other players like Cisco with whom they compete.  This team just outruns people who are busy pointing to the size of their "P&L" (it's the kiss of death when people start to point to size as a measure of success or relevance).  I talk to guys all the time who are more proud of this stupid, irrelevant subject and the Citrix guys would never think like that.  Their driving thought?  Their standard?  Their goal?

WINNING. LEADING.  PIPELINE.  OF PRODUCTS. AND TALENT.

These guys are tireless, they're hungry.  You can see the fire in their eyes.  But they're level headed and thoughtful at the same time.  And Mark is a horse.  The guy operates with the energy of a 20 year old but the wisdom of statesman.  He is the most underrated CEO I've heard of in years, probably because he operates out of Florida.

More later.  This company continues to amaze me.

How to pick a search consultant

I continue to get several calls a day from clients (entrepreneurs, VC's, late stage privates and public companies) saying "I need a VP of this or a VP of that and tell me if you'd take it on."  Some situations are pretty early stage, and as cool as early stage companies are, the earlier you are, the harder it is to attract talent.  People want low risk, high reward right now, so to get people who are good, who are willing to take the risk of earlier stage companies, you have to be prepared to dig really deep, hunt very widely, and beg, borrow and steal to get peoples' attention.  And the junior VP in a larger company is just as hard.  Hard is good and we all like a challenge, but the key for clients: match the role with the search person.

My advice is to really step back and think: "this is going to be a grind and a dogfight, so whom should I use to get this done?"  The usual suspects aren't always the right answer in picking a search person, though as a "usual suspect myself," I would hate for clients to stop thinking about me!

Here is how to think about hiring that killer up and comer VP for either a small startup or a public company looking for people several layers below the CEO:

• Use younger, hungrier search people for these projects.  They're about DIGGING and CARPET BOMBING, and begging people to talk to you, not taking no for an answer, and being clever about getting in front of people.  Higher level projects are much more strategic and require, typically, a senior search person to navigate Board dynamics, convince successful CEOs, or CFOs, or what have you, to talk to your client and ultimately accept your offer because, in part, they trust the judgment of the search person as much as their own judgment.  I'd like to believe that my partners and I possess this unique ability and credibility to impact senior people.  But the junior VP project is a different animal altogether...When in Rome...
• Senior search people who would take on a junior VP project are not likely good, because they're not highly sought after for higher visibility projects.  If they were highly sought after, with great respect for the junior VP stuff, they'd be doing more senior work. It's that simple and basic.  Like any profession, the search profession is full of people who are ambitious to climb higher, vs stall out.  You work your way UP, not down.  Having said that, it is always fun to do the occasional "crazy" project and we all love to mix it up a bit.  Sometimes you find an entrepreneur, or they find you, to whom you just can't say no for anything.  I'd do a janitor search for Jyoti Bansal, for example.
• The talent at the VP level are typically now a next gen, Millenial or Gen X crowd.  Match the candidate population with your recruiter, and you'll find they'll get great results.  Again, want to be a Roman (young, well trained commando)?  Your search consultant should be able to look/act like one.
• The next generation talent will work 80 hours a week to prove themselves.  My partner, Lee Schweichler, still works harder than many 25 year olds I know, and none of my partners play any serious golf.  I don't even have a handicap.  But we are the exception.  None of us were hugged enough as kids, or maybe we're just adrenaline junkies who are paranoid of failure and love a challenge.  Most of our peers are playing more golf than working, spend more time selling vs doing projects, etc.  If I were choosing a search consultant for an up and comer VP, I wouldn't select myself.  I'd select Eamonn Tucker, Mike Doonan, Sean Lucq, Nicole Freitas, Mike Dempsey, Jeremy Levin, Melissa Taunton, etc.  It's a dog fight out there.  Hire the rabid, hungry dog to win a dog fight.

Good luck.  It's a brave, tough, hard world right now in this chaotic realm of technology, Bay Area, recruiting, too much money sloshing around, etc.  Things are tense, things are sketchy, things are moving at warp speed.  Don't look at your recruiter's resume, look at the fire in their eyes and the clock speed in their brains, because otherwise you're in for a long, difficult search with someone who won't work as hard for your tricky search, and won't crawl through fire to pull it off.

It's an age-old, universal truth that if you give someone who is well trained, hungry and smart a shot, most often it pays off significantly.  This applies to just about anything, from football to business.  In other words, give our up and comers a shot...I have 1000% faith in every one of them, and the youngest one, with a head injury, would outperform any "veteran" I know.

Internet radio: a conundrum

I love music, am in a garage band, and am finding myself conflicted about the state of this lovely form of art, so I'd like to post a way off topic blog here for anyone who may be unfortunate enough to land on my blog page. Welcome.

I was an early Pandora enthusiast, and then became a big Spotify evangelist and early user. I've got subscriptions to both, because the thought of my music being interrupted or unavailable at any time is appalling to me. I've got sound cloud, sonos, all kinds of stuff. I'm "that guy." And proud of it.

Long ago, I decided not to steal music and not because Jobs told me not to. It just didn't feel good to rip off music and then try to enjoy it. It's just not cool.

So I love these services and feel immensely indebted to those who create the music I enjoy. But I'm beginning to wonder whether these services help or hurt musicians. I can't get this topic out of my mind, so I thought I'd jot down a few pro's and con's to get this thought out of my mind and into the world, in the hope that someone will step in to help sort this out.

Why these services help:

1) exposure of course. Mass distribution at low cost. Easy.
2) you don't sell your soul to a label. The indie movement lives. No cheeseball LA bonehead music executive determines whether you're relevant to the world. Yes, I saw Rock of Ages. Hated that bald guy....
3) a lot of bands who would have spent their lives in obscurity now have a shot at stardom. What's not to like about that?
4) you feel as though you're discovering people all the time. That's gratifying. And then you share your discoveries. Feels great to share good art.

Users, of course, music fans, etc. all benefit immensely. This explosion of music: what does it mean? Were there always this many bands around to delight us? Did digital music services and Internet radio give rise to massive numbers of new musicians, or just amplify their presence? Hmm....

Why the services hurt musicians:

1) musicians make no money now. The only way for musicians to make money is to tour and sell merchandise.
2) we're swimming in music now. Is the super band a thing of the past? You can love a few bands, but when was the last time you felt like part of a cult? Was Cold Play the last mega smash hit multi platinum band? Where is the next U2? the next Zeppelin?

Do we have too much choice? Is dilution a threat to quality? Are we drowning in this delightful and vast realm of sound, that is suddenly such a big part of or lives?

Ultimately I'm happy for all of this but have to admit to a little guilt over the plight of the modern musician. Life on the road can be rough. I hope it's worth it and that the art lives on. But you wonder: like everything, is too much of a good thing actually a bad thing?

EU Salvation=Germany, which=disaster?

Forget the headlines you'll inevitably see over the next few weeks, months or even years.  "EU pledges solidarity.  So and so is open to Eurobonds.  So and so has just bailed out Spanish banks.  Greek leaders promise to...whatever..."  Anything you hear and see out of the press is just a band aid masking the real problem, which is today invisible to most observers of this long-simmering crisis.  Where the EU is hemmorraghing is inside itself.  It comes down to culture and history whether this region will survive long term.  The prognosis doesn't look good.

There is only one solution to the EU's problems--to create a super state with a common financial framework, including a one-size fits all fiscal policy, thereby lowering the cost of debt and bringing financial order back to the region. Without this, more bailouts may be possible for awhile longer, but they won't actually fix anything.  The systemic problems of high unemployment which accompany necessary but pain-inflicting austerity in a downward economic death spiral will persist as no one will lend to a country not committed to austerity.  Then you have cultural blowback, as we've seen in France, where socialism is firmly back in power, imperiling France's ability to attract foreign capital and bring balance back to its state-run economy.  People don't like pain.  They avoid it and seek pleasure.  This is humanity 101.  Get over it.  So ultimately, this merry go round of awarding bailouts for austerity which leads to blowback and political upheaval will end poorly, in chaos.  The solution?  A central bank with teeth, and a central governing structure with fangs--led by Germany.

But don't hold your breath, because the architect of this superstate would of course have to be its strongest member--Germany.  And this is the same country that sought world domination less than 100 years ago--twice! Germany, ironically enough, is treading lightly here, clearly hoping that the PIIGS will proactively pursue this superstate, not wanting to suggest this idea too strongly given its checkered past.  Problem here?  The other states are led by clueless politicians who are more interested in re-election for their own basic survival, than the harsh financial realities they're facing.

So make no mistake, Germany's terrible past will come up again, overtly or tacitly as the rest of Europe grapples with this simple reality: consolidate around German leadership or dissolve the EU and wither for a generation while emerging markets and the US gap you by a mile, relegating you to second world status.  Because that's where the weaker EU member states are headed in a hurry.  No natural resources, an uncompetitive work force and most damning, a lost generation of unemployed young workers reliant on the state for basic survival.  Which will take another generation to unfold.  Game will be long over by then.

Good luck to all!

Quick update on what we're seeing

So everyone now has:

1. A BYOD or security angle. Or some hook into any of the top 3 priorities of I/T customers in pull market conditions.

2. A mobile strategy (or you're a dinosaur, or just don't like customers or cash flow)

3. A need for more people than candidates to fill various roles (if you're smart enough to be taking advantage of a pull market in technology)

Let's look ahead. I think:

1. Facebook will do well, but level off around $150B in market value until someone democratizes your Facebook data. Then what do they do? They can buy their way into phase two. How many user abuses will be inflicted before this company "grows up" and how will it grapple with privacy rights vs their commercial interests on an ongoing basis? To me this is Facebook's fundamental dilemma.

2. Google's just not getting it. They don't get consumers at all. But Android will consolidate, 2-3 handset makers will dial it in, fragmentation woes will settle down and it'll make a run at iOS. But droid will not ever dominate tablets. MS will make a nice push here.

3. I/T (despite "overclouding", a word I made up recently), is where the real money will be in the next 5 years.

4. Cali will do ok and stabilize for the next year or two but the technology space's success is masking a very deep and insidious longer term threat to the state's well-being, which is a tax-the-rich, tax and spend political culture. Lookout Cali, in about 2014/2015 when this really inflicts pain and once again, Jerry Brown will have made a bunch of stupid mistakes like he did in the 70s, and leave someone else holding the bag. He should be ashamed of himself for caving into the CFT last month on the tax strategy for November, which will narrow the tax base even more, when Cali needs to widen it considerably, leaning too hard on the top 1%, which are mobile and which will eventually say "enough's enough." Letting public service unions dictate tax policy is a recipe for disaster as it's the fox guarding the henhouse effect and they already have way too much clout in this space. Cali's achilles heal are public service unions. Anyone with a pulse MUST see this and fight it. They're the ultimate anti-capitalist, pro-big gov't, etc.

5. 90% of solar startups will be gone by this time next year.

6. 90% of US battery startups will be gone by this time next year. Same with biofuels/biochem. Any capital intensive greentech company running short on technology/cost excellence, commodity shock proof (show me one?!) and needing capital should just be shut down now but people are too embarrassed to admit they blew it in this space and their denial of this harsh reality will cost their investors dearly. Time to cut and run from capital intensive green tech. It's so obvious it's sickening.

7. Digital is leveling off. Companies are starting to flatten out, management teams are flaky, you're seeing high turnover in startups and the bigger companies like Groupon continue to show why inexperienced management teams in hypergrowth public co's are a recipe for mediocrity if not outright failure. No one seems interested in mature leadership teams and this will be the undoing of many digital media related companies, unfortunately.

9. The next 5 IPO's in technology, Facebook excluded, possibly Twitter excluded, that are positive events for investors a year later, are likely going to be I/T related vs digital.

10. Ecommerce will go from $1trillion to many trillions over the next 5 years, at the expense of a lot of retail jobs in Europe and here. Will actually help Asia from a job creation point of view. I just don't know how strip malls survive this next era where you're buying shaving gear on the web.

11. Apple is truly unstoppable. Until MS, with tremendous irony, becomes the "underdog story." And makes a dent in tablets and mobility. Watch for them here. But with such a bumbling idiot in Steve Ballmer as CEO, they could blow this. And Windows 8 reviews suggest promise, but some real cluelessness on the PC level. If they nail tablet and handset, they're good. If they don't, Apple is a thousand dollar stock in two years and a trillion in market value, potentially acquiring Microsoft? Stranger things have happened.

Hope you enjoyed the stream of consciousness. We'll see what happens, of course.

Andy

Competition for People-tips you might not have thought of

I'm looking pretty hard at two finalists for a cloud CEO search. In both cases, the finalists have been CEOs before, and made money for investors. Both are highly sought after. Here's a few tips for how to keep killer people in the running until you close one:

1. Keep quiet about your candidates. Don't forward your search status reports to anyone. If you want data from, say, a partner in your venture or PE firm, just call and ask about what they know. Even partners can make a mistake, forward a note with a bunch of resumes and biographies, and then the data goes viral. That's just bad hygiene, possibly illegal and risky. Big search firms tend to brag to the press about who they're talking to, which is spectacularly stupid on a number of levels, most of which are abundantly obvious. Clueless, big company Boards take that press, eat it up and say, naively: "look at who those guys get to talk to!" Meanwhile, the "candidates", most of whom never even returned a call from the Korn Ferry partner in question (an example), are thinking "who the hell's using my name in vain?" Too many examples to count, point is, keep quiet! Recruiting is about discretion and not chest beating.

2. Do very quiet early referencing on key people, contextually of course, and don't let people run off half cocked checking around because they've got nothing better to do, running their mouths off about who they're talking to. Word travels FAST. And people will wake up to who's around, who's open to things, etc. It is a call to action when, say, a PE or VC partner calls another one for a reference on a successful CEO they might have backed. You're inviting competition to act more quickly. Big mistake. Save it until the last minute, but know that you don't have any likely land mines before that stage, so you don't have to blow up the project and start over. Re-capping: don't wake people up to your candidates until you absolutely have to, in referencing or bravado.

3. Don't talk to the press. Enough said.

4. Stay in close contact with your candidates every week--at least the top 3. Spend the time to really understand how they're thinking about the opportunity you're discussing with them. Does it really fit their life plan? Are there motivations coming from a healthy place? Listen, don't just sell. You can close more people by listening than by selling.

5. When you have a "live one," be agile. Above and beyond all other things, don't let a high overhead process (too many people interviewing candidates, for example) bog you down and lose people. Get to a yes/no within 2-4 weeks. Healthy for all.

Good luck!

Interesting CEO profiles: Myths vs Realities

Everyone's frothy right now, like a bunch of rabid dogs chasing a bone truck. There's money to be made, gold to be mined, in technology right now. It's a risk-on environment for sure. But classic mistakes are being made in hiring, or at least contemplated, daily.

My advice for CEO recruiting? Don't fixate on "big personality/big resume" CEOs thinking they'll make the difference for you. Focus on what your candidates say they'll do for your company as they get close to it, and that will drive your decision process. Don't get hung up on style or even resume. The best CEOs, in my view, behave like level 5 leaders, are calm and measured, mature, and seldom come into the success stories armed with a big resume and gaudy track record. They come in with a plan or at least an approach that makes sense. Ready to listen, to understand the work, develop relationships with Founders, management and Board. The ones to watch out for are the heroic, "get out of my way and let me at this thing" types, the ready-fire-aim strategy. And if anyone asks "what about Steve Jobs," please stop reading this, refer back to history, and many of the points here will be made for you...

Examples of solid CEOs who were not "big personality/big resume" profiles before their last success (this list is a mixture of current CEOs and a couple of big notables from history):

1. Fusion IO ($2B market cap, 2011 IPO); My firm ran a CEO search there and talked to a bunch of veteran CEOs with big resumes, ultimately recommending that the Board stick with Dave Flynn. He had a great plan and management was behind him. We're glad the Board made the right call. Because sometimes, the right call is a non-call!

2. 3Par ($2B acquisition after IPO); Dave Scott is a solid engineering type guy, not a lot of hype. They plugged away and outlasted competitors stuck to their knitting and never took their eye off the product vision. Solid execution drove value here, even though they burned too much VC money en route.

3. Data Domain (2B acquisition after IPO); Frank Slootman is a competitor. He’s very polished but hard nosed, serious minded and holds peoples’ feet to the fire. Working for him is a labor of love. And I consider Frank a good personal friend, so I say all of this with great respect. He is NO hype, NO handwaving. Hired young, unproven people with just OK track records and made them work like animals, focused them, didn’t let anyone BS him, ever, especially not sales people. Slootman would say “execution, not sales nor even strategy, drove us. The strategy became apparent as we executed.” Frank had a so-so resume before DDUP.

4. NetApp (huge hit, still public, industry leader); Dan Warmenhoven: engaged the Founders successfully, has the scratchy voice of a smoker, has a sort of nervous energy to him, was fired in his previous role but was a steady, no-nonsense hand on the wheel. He was anything but the glamorous hire when Lee Schweichler found him for NTAP...

5. Cisco; John Morgridge. He was frugal, and humble. He had a great eye for talent. He’d been fired from his previous company and was pretty measured stylistically, though driven (people see "measured" and think "low energy." Huge mistake far too often). He hired John Chambers. Another great Lee Schweichler discovery (both Morgridge and Chambers).

6. Microsoft; Bill Gates. Geek. Founder/CEO...Maybe Andreesen Horowitz is onto something here? People should think twice before taking out the Founding CEO in some cases.

7. Mark Zuckerberg. Geek. Founder/CEO...hates being on stage. Didn't even HAVE a resume coming into FB...

Let me illustrate an example of where big personality/big resume loses. A few years ago, I hired a CEO who’s a huge personality, very compelling, extremely articulate. Big, gaudy jobs in a globally recognized company mixed with a couple of interesting startups. He took a 20 person company worth almost nothing to an IPO worth a billion. But it hit the wall and is now worth a fraction of that because this person is a victim of his own success as a salesman and didn’t line up execution with hype. The company will be acquisition bait, ultimately, and declared a success. But it could have gone a lot farther had he dialed back the hype and focused more on quiet, focused execution--managing investor expectations and outperforming them, vs going for huge valuations which wouldn't ultimately hold up. To be sure, this guy has done more with the company than anyone could have dreamed, but it could have done a lot more. Ironically, he'll probably be a much better CEO the next time around!

So in my opinion, the difference between flash in the pan startups and those who really make it big is about walking softly and carrying a big stick. Staying quiet until you are ready to knock someone out and punch big companies in the mouth with a brass knuckles equivalent product and business plan. It isn’t about the resume, nor is it about the big personality of the CEO…And history will easily show this when/if people get around to doing their homework to reach the same conclusion...

Enjoy!

Reference your references

References are the single most critical component to any executive search and need to be conducted thoughtfully, but for reasons far beyond the obvious. This is true of any hire, from Board members to CEOs to VPs on down. Take the time to get the complete picture on an interesting candidate. B candidates? Don't bother to reference them--you shouldn't even be talking to them in the first place. But when you think you have an "A" candidate, make sure you don't overlook them due to quick, out of context "referencing" done by people who aren't equipped to "reference the references."

We see great people overlooked because the untrained eye (sometimes our clients, or someone involved in a hiring process) will "do a reference" on a candidate, which is nothing more than a passing conversation during which an offhand comment is made. The "reference" can be highly suspect for a bunch of reasons. Among them:

1. Competition for talent. If you wave someone off a great candidate, you have a better chance of grabbing the person yourself. If you're a PE or VC firm, chances are, one of your partners is looking for a CEO and because there's a huge imbalance between the supply of great CEOs and the demand for them, this is a critical competitive edge that any firm would want to gain.

2. Almost never are these references done contextually. We never hear people actually walking the reference through the specific situation at hand, and having a thorough, balanced conversation to really flesh out someone's qualifications for a given situation.

3. Everyone's controversial. The more senior, the more visible, the more controversial. Steve Jobs. Enough said....

4. Personal vendettas are everywhere, and no one goes through a serious career without making a few enemies. Those people talk more loudly than one's supporters, typically, because people love to complain, especially in this day and age.

I could go on and on, but here's a real-time example of where a "back channel" (generally thought to be the best kind of reference and worth 10 listed references) almost cost me a world class CEO candidate.

• I'm running a high profile CEO search. My target is a CEO whose company was acquired, returning about 100% to investors over 4 years. A spectacular performance.
• I called the former COO, whom I know very well, and consider a good professional friend.
• My source had been part of the former regime, which was replaced by my target.
• Reference was highly negative. My source gave me anecdotes of what other team members complained about.
• I almost eliminated the target from consideration. But I stepped back and asked "how objective was my source?" This guy was passed over by the Board for the CEO role, and the "old guard" was clearly unhappy about it. So it was impossible to get a balanced read on the target from this particular source. His "followers" would naturally complain about the new regime and leadership in general.
• So I and my client ran about half a dozen other informal references, and then looked more analytically at how the company performed under my target's management. It was stellar. References were stellar. But they're binary: old guard unhappy, new guard ecstatic.

So this is a simple example of why, if you're going to run references on someone, take the time to do it right, really think about it, and give any candidate adequate consideration before moving on them, or moving on.

Chasing stock price=recipe for disaster

Let's talk about Reed Hastings for a minute. Hero one day, goat the next?

This guy fascinates me. We talk to Netflix employees all the time and what we've found is that the entire company is geared towards driving the stock up. That's all well and good...to a point. But if there is one thing I've learned in the last 18 years hanging around growth technology companies, it's this: pay more attention to your business than to your stock price.

Employees need to be motivated every day. And if they're sitting around staring at the ticker, what are they NOT doing that some other upstart player in their market IS doing? A lot. Classic case of the hungry eating the young of the lazy and decadent. Happens all the time and is baffling. it's so easy to arrest this. CEOs should personally interview every employee up to the first 50 and should ingrain this concept into their heads: come here to WORK. Come here to get stuff done. Check your politics at the door and let's go build a huge company, hire a bunch of people and kick someone's ass every single day. Stock will reward us in time, and will be sustainable wealth.

One interesting thing to do is to watch the inevitable wall-hitting that occurs when companies go public. You can almost set your clock to it and they get crushed within 2 years as key people unload the stock and go cash in not just shares but resumes for bigger jobs they're usually unqualified for. Then a bunch of piled up work gets undone and BAM! You miss a quarter and are smoked. Analysts don't trust you anymore, investors are mad and dump you, etc. Hard to recover from this. In my view, it's all rooted in the go-go mentality of jacking up stock vs focusing on building a long term winner.

So Reed Hastings is the poster child of this mentality. Now that the stock has fallen back to earth and he's bounced around on strategy, making multiple public apologies (huge that a rock star CEO can admit when he screwed up but will it help?), alienated legions of customers, etc....what's next for Netflix? Watch for a huge brain drain out of the company and the beneficiaries will be the growing horde of digital media companies wanting to sell subscriptions to consumers for whatever. Too many of them to count, and a lot of Netflixers chomping at the bit to cash in those options and those resumes.

I am personally rooting for Mr. Hastings. I love what they did in general. A neat startup success story overall and good guy. But we'll see if that pro-stock-price culture becomes their undoing.

HP

OK so my last blog turned out right in the Leo area. Employees didn't like him, flip flopped on strategy, no one wanted the PC biz, on and on. But at least he wasn't a sleezebag like someone else (predecessor)....

Another big search firm, big company board misfire in a growing lineup. But the Board had the courage to admit their mistake and make a change vs let the company languish further. That is something worth cheering. Too bad they couldn't find a suitable internal candidate but that just speaks to the former CEO's failings in org development because Leo didn't have time to find the men's room, much less really develop anyone, before it became clear he was in over his head.

So let's discuss Meg for a minute. I personally like this hire for a few reasons:

1. She's got something to prove after being humiliated by a far left activist lawyer named Gloria and beaten by the same politician who created the pension mess CA is facing right now. You gotta be pissed when you lose out handily to an old world radical, even if he's doing some good things at the moment (some...).

2. She's smart as a whip. And I'll take smart over any other factor at the end of the day. Why was Apple so successful? Jobs is just smarter than his competitors. That's really the bottom line.

3. Female with a track record of success where Fiorina came from Lucent, one of the worst managed companies in the history of mankind and rotten to the core ethically. Gotta love seeing more female CEOs out there in technology.

4. Internet paradigms constantly shifting and ultimately wag the IT dog if you really think about it. Cutting edge Internet companies are often followed by enterprise customers so this DNA actually maps better than people think. Certainly better than construction software (Autodesk) going to Internet company (Bartz/Yhoo). So she can set a winning vision with that background and you just hope she empowers a senior leadership team to go get it done at the BU level because her GM credentials are iffy at best, at the $100B level. But this DNA is as good as any. What would you do? Go to IBM? Great company, not sure there's a fit for SV culture. EMC? No one there. DELL? No one there. Intel? Anyone left at Intel just didn't get a call worth taking...Apple might have been good but they don't have a lot of great P&L people. Interesting that they didn't at least poke around here. Always thrilling to poach from a huge winner.

Whitman is a risky choice. But I'll take a risky choice over another usual suspect or a tired horse kind of hire any day of the week. I'll root for them, in part because Ray Lane is one of my favorite people in the Valley and I'd love to see him turn this ship around. HP's a BUY in the low 20's, Greece or no Greece...I'd short Apple above $450 and buy HP under $25 any day of the week.

Good luck to all!

Founders=soul of a company

When you think about Steve Jobs, you have to think about so many other companies where Founders have been pushed out. I have to believe it happens more often than not and it's unfortunate. Without entrepreneurs, the technology scene just doesn't happen. Innovation dies, Silicon Valley dies. But one prominent venture capitalist famously said "it's never too early to fire a Founder." Is that right?

I work with a lot of entrepreneurs and help them through the wrenching transitions in hiring new CEOs to "scale the company". And there are some interesting patterns. Here are a few:

1. The idea people have a tough time prioritizing and communicating. Entrepreneurs are idea people. They don't operate on the more methodical wavelengths that their backers want them to, so you find tension here, when a deal doesn't happen with a strategic, the engineering milestones slip, whatever it is. The symptoms are many and varied.

2. They keep thinking that even though they took someone's money, it's still "their company." This mindset is a killer. And you see this more often than not, unfortunately. It's the kiss of death.

3. When it works, it's because the Founder has been well treated and people are constructive. The message should be "aren't your talents better utilized doing X, Y and Z (product vision, new technology development, long range strategy, etc.)?" Vs "dude, you aren't getting it done. We're bringing someone else in, get out of the way or you're out of the company." That can destroy so much value and so many VC's are clumsy with this transition. They don't even realize that even if the entrepreneur stays, he or she will never trust them again and they've just destroyed the morale of the heart and soul of a company.

I could go on and on here. But the point I'm trying to make is that entrepreneurs need firm coaching but with some empathy to understand what is really going on when they give up control, and to embrace the situation positively in gearing up to bring new management on board to complement their efforts, vs "diminish their roles." In Jobs' case, let's be honest. He was a big SOB early and often, a primadonna of the highest order, etc. So he had to go off and screw up NeXt to grow up before being worthy of running Apple. It didn't help that the Board blew it in hiring two losers in a row who knew absolutely nothing about consumer electronics (a soda pop guy and a chip guy??? What were they thinking!?).

What's the lesson here? There are a lot of lessons. But the bottom line in my view is to try and hang onto entrepreneurs, utilize their talents and work through transitions constructively, even if it takes more effort and time than you want it to, or you lose the soul of a company.

Oil prices lower=big windfall

So oil is at $80. Not good if you're a biofuels company but REALLY good news for everyone else. This will amount to a big windfall for strapped US households and all kinds of businesses, and will be one of the real stories exiting Q3, if crude stays down below 90. Then major questions will be how much momentum did the economy suffer over the debt ceiling impasse, what is housing doing and will jobs finally stabilize? Here's hoping we thread these needles and go into 2012 with a reasonable sense of optimism that we're not in the equivalent 1973 or even the mid-30's with a long uphill climb back to prosperity. The innovation ecosystem requires the exits gravy train to get back on the rails sooner vs later, despite all the optimistic talk in technology.

State of the market

Pretty interesting last couple of weeks with debt debate and a bunch of other going's on back in the real world (everything outside of DC).

Here are some predictions:

1. We'll find that Q3 GDP was hurt by the debt debate and uncertainty there.

2. Market won't find new catalysts and dog days of summer will go on, so blockbuster IPO's may be tough to come by this quarter. You may see some delayed offerings.

3. Q3 earnings will be fine, S&P valuation will look cheap. Buying will resume.

4. IPO window will open again briefly Q4.

5. New bubbles forming beyond social networking. No popping of digital valuations until the first company throws up on revenue growth forecasts. I believe this will happen around mid 2012. Hopefully it won't be as bad as March 2000.

6. Clean Technology/Advanced Energy will kick up again (see below) by Q1 of 2012.

Right now, the people market is dominated by financial motivation and career growth, which is good. But be careful, that greed could turn to fear if the realities of the world economy finally hit technology/digital media. People will become guarded and cautious again. So what's the takeaway? Grab talent while you can!!!!

Other observations:

1. Buy when everyone else is selling. So people should invest in clean tech again. Technologies are maturing, commodities look pretty good, oil prices solid. The fundamentals actually look reasonable for this space. And valuations are back down to earth. It's a way better time to invest here than it has been in frothier times. And yet capital is hard to come by for too many companies. Ironic!

2. Don't be surprised if this whole euphoric feeling around technology hits the wall in the next 12 months. I hope I'm wrong but the "spidey sense is tingling." Great companies will get built regardless, but the driving forces right now in too many situations remain monetary vs passion for a space, product, company, etc. Make sure you and your teams, no matter what you do for a living, are prepared to ride out some seriously turbulent times. Those who do will be rewarded in the long run.

Prescription for success for CA and U.S.

Here are five things the state needs to do in coordination with the Federal Gov't in order to "save our state" and as we all know, where CA goes, so does the country...

1. Comprehensive tax reform--reduce the burden on production supply and output, for starters.

2. The federal and state budget deficits: a comprehensive, long term and credible plan to reign in deficits is critical to get people really investing in CA and the US.

3. H1-B visa/green card reform: we will be begging for immigrants as the boomers retire and the labor force is strained to support a large demographic suddenly "unproductive" and yet drawing considerable resources at an awkward time in our country's history. Japan and China have similar problems and they're serious. We need to be able to attract the best and brightest and while India and China churn out engineers by the hundreds of thousands, US students want to study Liberal Arts. So we have to go abroad to get key technical talent. It's an unfortunate reality.

4. Energy security for CA and the US are critical for a million obvious reasons ranging from climate change to basic economics and military security.

5. We need to stimulate business investment in the U.S. Let's give corporations a tax break, perhaps tied to investment, to repatriate the trillions of dollars they have in foreign accounts.

I could add reign in unions and entitlements but that one is so obvious it's barely worth posting...

My two cents...

End of the week notes

So LinkedIN is back above $90, Pandora back close to $20. Very exciting for the digital media space. Very enthusiastic for our friends at KP, Sequoia, NEA, Accel, Lightspeed, Greylock and on and on. We are quite sure that the next big story is that venture, by end of 2011, will handily beat the S&P over the last decade and cries about the death of venture over the last few years and how broken the industry has been, while in some ways true, will prove to have been way overblown. The second and third tier players needed to go away and that is happening. We'd like to see some specialists re-emerge and can see some on the horizon. We'd also like to see more angels get organized and that seems to be happening. Innovation lives regardless of debt ceilings, terrorism, politics or sovereign debt. And venture firms continue to make this happen, along with of course the idea people, where it all begins. There will be oversubscribed funds raised over the next 12 months, especially given the exits that are happening right now. The only question will be, how disciplined and whether this creates a capital oversupply problem again. We'll see!

So here's a parting thought for now, for our entrepreneurial clients: THANK YOU for what you do for our society. Not only do you solve important problems but your work and passion lead to job creation and is the foundation of what our country was built upon.

Notes from the field....

Interesting times....are we in pause mode? Looks like we dodged a bullet in Greece but when does the other shoe drop and another PIGS country flop? When do Germany, France and UK, Sweden, etc. give up on these people and push them out of the EU? Or will the albatross' drag them all down?Fusion IO worth almost $3B, LinkedIN recovering from free fall mode, Zynga coming out, Groupon coming out, KiOR worth $2B, Imperva in S-1 registration. Interesting companies and opportunities across the board. Is this IPO market open or closed? I say it's open for viable business models and if it stays open another year, the VC industry at the top level, is set. Returns will outperform S&P and innovation will continue to get funding.

Let's round up the stuff we're seeing:

1. Social is completely and totally over funded to the point of lunacy, but monster companies are emerging. Will they consolidate and swallow up smaller players? Someone will need to. This space needs to cool down a little and come back to earth. Facebook at $70B pre? Hope it works! Google has no response to Facebook, Microsoft still clueless, etc. We're rooting for them.

2. Green is changing quickly. Biofuel exits surprised everyone and are providing very good returns for patient investors like KV and Braemar, Lightspeed, KP, TPG, etc. But all we see now are capital efficient plays. We see half a dozen IPO's coming that are pretty exciting companies but new financings look more venture appropriate. Power electronics, plug load power, thermo electrics, consumer related technologies, etc. seem to be getting all the attention. That's good because we can hire killer technology people to run these companies as they're getting bored with traditional technology plays.

3. Virtualization continues to be a monster, so is cloud in general. Next wave is cloud security. Cloud enablement architectures in place now. But security is a gaping hole. Watch for a couple of big security exits in the next six months to renew excitement on the space. Our favorite companies are Tintri, Citrix, Riverbed and a handful of startups. So much room here it's not even funny.

So what's next? We have very cool companies like Weatherbill emerging. Exotic looking plays attacking old and inefficient categories. Saw a company in the food space yesterday that looks quite interesting. The adventure continues.

CEO Success Factors

We've been re-evaluating a bunch of CEO hires and looking at patterns. Who made it, and who did "just OK?" Early results are surprising. Bottom line? The up and comer, first timers seem to be performing right in line and possibly better than the "veterans." For example, I'll take Larry Page over Carol Bartz any day of the week. I'd even take Zuckerberg over a turnaround, slash and burn "operator" in the digital media world, any day of the week.

A big hit for us was Frank Slootman at Data Domain ($2B exit). He was a first time CEO and the two things he has really going for him: incredibly smart and incredibly competitive. Isilon exited at $2B recently, same story. Smart, intense guy running it, wouldn't strike you as a "usual suspect" CEO type. CEO of LoopNet, Rich Boyle, was promoted from head of engineering and sold LoopNet recently for $850M or so. The list goes on and on.

Boards need to think long and hard about risk. How do you define risk? At what point do you say "I'm betting the company on this person?" As opposed to, "how do we avoid a shareholder lawsuit if we get it wrong?" The risk aversion in public company Boards is shocking, disappointing and yet another handicap to US company competitiveness over the long term. That culture of risk aversion needs to end, yesterday.

As for startups, the "usual suspects" orientation really needs to change in my view. When will a return to inspired hiring occur? There are only so many usual suspects running around, many with very questionable "leg drive" after coming off a nice exit, and it's time to re-think the qualities that make up excellent CEOs. Every situation is unique and custom. But the basic thinking should be "who" and not just "what" are we looking for?