All language subtitles for Harvard i-lab Startup Secrets Part 2 Company Formation - Michael Skok [English (auto-generated)] [DownloadYoutubeSubtitles.com]

[Music]

hi everyone um we're going to get

started tonight um I'm Neil Doyle from

the iLab I want to welcome you to the

second of the startup Secrets seminars

that we're putting on uh with Michael

Scot hosting tonight's event is uh

startup Secrets uh company formation um

first I think a lot of you were here for

the first event so you might know

Michael but by way of brief introduction

Michael is a partner at Northbridge

Ventures he's the founder of a number of

successful software companies uh with

lots and lots of investment thanks again

and and here's Michael thank you

Neil so it's great to be back uh for

those of you who haven't been here

before I'll try to catch you up on the

the key subject matter those of you that

have uh we're going to use some of the

teams and the learnings that we had from

the first Workshop so bear that in mind

okay so

as Neil said we're at stage two of

trying to put the map together around

building a company for you and this is

going to be an agenda which hopefully

feels very simple at one level but I

will tell you it's also challenging at

another so I just set that expectation

up front some things are very scientific

in starting a company like for example

the amount of dollars you raise what's

not so scientific is the softer issues

that go behind this such as what's the

vision for the company the culture you

want for it the people you hire the way

you team team and indeed how you make

that all work and so I'm going to tackle

that tonight with a view to giving you

at least some guidelines and principles

for thinking about how to go about

building your own company and making the

most of your

idea but first of all where does this

all fit I think a lot of people struggle

to understand you know the sequence of

starting a company and indeed how to put

it all together uh in the right order to

make make things really play out most of

of what we did last time of course was

talk about the value proposition around

your idea and that's certainly a great

starting point I already had a question

even before I started this evening which

was a good one which is could you start

with the people and then come up with

the idea and yes is the answer of course

you could and indeed we even do that in

our own office but let's assume you've

got your idea thanks Adam then the next

key thing is what we are going to talk

about tonight which is how do you get

the best people uh to work with you

around building the business of that and

then to team on it and then there's a

step that we're not getting into tonight

which is really fundamental which is

obviously how do you all execute towards

building on your idea and going after

the vision to dominate and lead a

Marketplace and the reason we're not

going to talk about the execution pieces

believe me that could be a year-long

course uh having said that it's

something I'm certainly willing to get

into with any of you in specific terms

when we are obviously uh thinking about

future sessions or future workshops but

we are going to talk tonight about the

vision and one of the reasons why is

that it's actually extremely important

to understand where you're headed and

the old classic uh saying is if you

don't know where you're headed any road

will get you there the same is true when

you're starting a company it's actually

extremely important to understand not

only what your starting idea is but what

your vision is for where you're going to

take the

business now um I'm a big believer in

lifelong learning as some of you may

know and one of the reasons I really

like doing this is to learn from you and

so I've learned from a lot of people now

that there's some incredibly important

things that are changing in the world of

startups uh there's things like The Lean

Startup there's this notion that if you

can come up with something quickly and

iterate on it that that's the way to

build on it and all of this is actually

teaching me some fundamental things that

I would say are helping me better

understand what might be the next great

way to build a company so I decided to

come up with a way to pay homage to that

rather than lip service to it and I

think most of you know that um from the

first seminar for those of you who are

here I'm a big believer in acronyms

because I was a horrible learner at

school and the only way I could remember

anything was to create an acronym out of

everything so forgive me if I create

acronyms for you all the way through

this here's the first one and the idea

around it is is simple I think the great

companies do actually iterate very

quickly around their idea at the

beginning and they actually try to

figure out a balance between something I

always said as an entrepreneur listening

and leading so what do I mean by that

well in many instances if you go to

customers and you say what do you really

want what's your need what's your pain

as we talked about last week they they

might know and they might be able to

identify it but they probably can't

identify it in any way that is anything

other than in the present so they might

know for example they've got a problem

with data backup but they may not know

that they've got a problem that is going

to turn into a real issue for years to

come around archiving and how they might

actually manage all the different forms

of data they have and where they might

store those and how they might manage

those in compliance and 20 other things

I could think of and why because

customers aren't in many instances

Visionaries otherwise uh they'd be going

off doing what you're doing as

entrepreneurs so I think there's a

tremendously important balance to come

up with and that is to listen to the

market needs and then to lead and along

the way iterate and learn and that's

where those first Three L's in This

Acronym of lip service come listen to

the market try to uh learn from it but

take a leadership position on what you

believe will be the vision for this

product or Market opportunity and then

iterate iterate iterate I think um lots

of people realize this today it's easy

because of things like cloud computing

to get an idea built into a prod

that's the good news the bad news is

obviously if you just take it out there

as version one and expect it to sell um

you'll probably going to get

disappointed so why not use the rapid

iteration that's now available to you in

technology to actually iterate around

not just the product which is the first

thing to do uh but also the whole

proposition the whole value proposition

we talked about last time so for those

who weren't here last time I basically

came up with a simple way of of

describing how to build your value

proposition the add-on for today is just

simply it's very important to

continuously iterate around it that

sometimes you don't start with the right

proposition or the right product and the

market fit may not be there so you have

to Pivot or move to adjust that that's

the same concept as I'm really saying

here is involved in iterating around uh

your value proposition and indeed uh all

of the pieces that go into making your

business successful and I would

encourage you to do that at all stages

of the business but now let's pause for

a second there's something at the bottom

of this slide and that is culture and

it's the one thing I would not recommend

iterating so let me just say that again

it's actually the thing tonight that

even though it's going to be probably

hardest to try to understand what's

behind a culture is probably the most

important thing to end up having as a

platform that stays consistent so let me

make sure I cover that for you this

evening but this is in Broad terms how

everything fits together that I'm going

to cover tonight the value prop the

vision the culture and the people that

are going to execute on

it any questions before I go

on go

on okay first of all the vision so I

think I've already said that the vision

is incredibly important because it's

really the big picture of where you're

going to take the the business and I'll

tell you right off the bat I start with

this because imagine if you went to hire

somebody and all you could say say was

I've got this great

product and you couldn't say where it's

going to be not just tomorrow but in a

year's time but in 5 years time

hopefully it'd be hard for somebody to

get excited about that if there wasn't

some Vision about wow this could be the

next great big thing whatever the next

great big thing is in your vision but I

hear great entrepreneurs all the time

with actually very small ideas initially

who are very focused on say one paino

who have huge visions and they are able

to attct and hire the best people

because the V the vision itself is so

compelling that people want to sign up

for it so think about for example how

Google might have come along with with a

vision that said hey we're going to come

up with the next uh great search engine

and if all they could show was you know

we do search and it's faster than

everybody else i' have been pretty tough

to have hired people but instead of

which I think what they were able to do

was not only talk about a compelling

Vision about how this might become a way

to index all the world's information

which was div Vision at the time but how

they might leverage that into huge

number of products and services and

indeed a disruptive business model

suddenly it becomes compelling and

exciting for people to get involved in

so the vision even though it's something

you might say is way out there is

actually incredibly important right at

the beginning and becomes an important

piece of how you establish uh what you

are as a company and I will give you

simple three ideas about how you might

uh develop your

vision first of all how will your Market

evolve

if you don't know how your Market's

going to evolve trust me nobody does

that's the good news nobody's got a

crystal ball but hopefully uh based on

what you've got as some personal

experience and unique understanding of

that Marketplace that you've developed

over some number of years or significant

focus on it you will have at least your

view of how that evolves that's good

enough in many instances markets

actually evolved because somebody

created an opportunity nobody told

Edison that that there was going to be a

whole set of markets associated with his

Innovation and genius he envisaged it

and he envisaged what it might be if he

could go out and you know create the

breakthroughs he did I would say the

same is true of many great entrepreneurs

they don't wait for the market to come

to them in many instances they go and

create it then of course the second

thing is how will you lead it

participating in a market is one thing

leading it to another and as we talked

about in the value proposition that

doesn't just have to be technology it

can easily be a business model shift

that people might use to go lead a

Marketplace so our case study tonight is

going to be a company called aqua who

are all here thank you guys and they're

actually innovating in a way that's very

disruptive and that's through the

business model of Open Source so we'll

talk a little bit about that later

on finally from where you are today and

where you're going you need a road map

you need to be able to talk with some

sense of a set of Milestones along this

road map as to how you're going to

advance from your initial starting point

to where your vision really comes to

life and the more credible it is uh

sorry the more Milestones you have the

more credible it is so if you can say

well look version one looks like this

and our initial business model looks

like this and we think it'll iterate

like this and we'll have you know for

example different versions of it for

small business and Enterprise and we

think that by the way you'll have a

version that you might use locally and

Mobile on your mobile phone those kinds

of things build people's belief in what

that vision is that you're espousing so

with those three things I would argue

that most of what you need in the way of

a vision can come to pass obviously you

know we don't have time tonight to

develop a vision for every one of your

ideas but the nature of of uh great

entrepreneurs is they know how to take a

few things like this and build a vision

so I would challenge you to go do that

as the first thing you do when you start

up before I go any further any questions

on Vision yes go ahead to me it's bit

contradictory that you have the road map

and it has to have many Milestones yeah

but you should be flexible and willing

to Pivot so it means the further you go

along in terms of Milestones more

fuzzy that is a great example of one of

the dichotomies of being an entrepreneur

because people expect you to always have

an answer and yet in in reality in many

instances all you have is a straw man um

so the way I I respond to that is to say

it's great if you can set the road map

out and think of that as a straw man but

it's also okay if you recognize it's

just that it's a straw man you're going

to Pivot through iteration and change

and learning and listening to the market

and then taking a new leadership

position um one thing I will tell you

that's really interesting though is if

you correlated the number of companies

that came through our door with just an

idea um and you know those that came

through with an idea and a vision first

of all we very rarely back anybody

that's just got an idea uh we almost

invariably look for a vision uh I flew

down just last night uh out of the blue

actually uh to go meet an entrepreneur

in New York who uh I would say has one

of the great visions that I haven't

heard you know anybody espire in a

Marketplace for a while yet I've seen 20

companies in his space he's in the sort

of next generation of Twitter or Tumblr

space um and I've seen dozens of of

players there come out with what might

be another feature but what he's got is

is a whole vision for how he might

evolve a product I know and he knows and

we talked about it at dinner last night

that that make all change but here's the

next correlation I'll tell

you when we look back at the companies

that are most successful and we have one

for example I'm going to take one out on

a road show to get public in the next 2

or 3 weeks I can't say who it is but be

easy to look in the s1's and you'll see

they walked in with a vision that has

really not changed uh in the seven years

since they they came through the door

fundamentally it's the same vision sure

lots of things have changed around it uh

we'll have them as a case study in two

sessions time they've gone public and

I'll be able to tell you who it is uh

but trust me your question is a really

good one because it's something that

people worry about do I have to have

everything right I wrote a post on my

site if you want to go there you'll see

it entrepreneurs don't have to have all

the answers and it's basically to allow

you to relax around this issue but

having a vision for what it might be is

a great starting point does that help it

does good thank you any other questions

before I move

on okay so here's the really tough

subject for me

uh

culture can anybody in this room uh

describe any cult since that's the first

part of the word they've been part

of it's okay could be could be a simple

cult doesn't have to be a religious sect

that got you

intoy what Rocky Horror Picture shows

Rocky Horror Picture shows can you say

more Tom yeah I used to go at midnight

in s Francisco with a regular group of

people and you celebrate by dressing up

and throwing right and squirting squirt

guns and how the hell did I hire you I

don't

know too late now fantastic no but it's

a great example actually uh people have

all sorts of things that they have

cult-like followings around I mean rock

bands or Rocky Horror Picture shows or

sports or whatever it might be and the

point about it is that there are

like-minded people who get together for

whatever reason it might be throwing

rice or drinking or whatever uh or

sharing a a passion and a sport that end

up building in effect a common culture

Associated what with that um you know

interest or passion that they have and

they're following really all this

culture is about uh the session on

culture is about is trying to help you

figure out what can that be in your

business so that instead of if you have

100 people them all running off in 100

directions you have 100 people all with

that same passion like the rocky hor

picture show group or you know the

followers of whatever it might be in in

sports uh the Red Sox Red Sox National

an obv this one here uh wanting to run

in the same direction because they're

all passionate about the same thing

think about either the dissipation of

energy without that culture or the

concentration of energy with it that's

really what culture is about it's about

trying to build a basis for everybody to

get on the same page with the same

energy with the same passion to go make

the same thing happen trust me that

makes a big difference in a startup and

if it isn't obvious I hope I can expose

to you why

so uh again in terms of putting this in

perspective this is the one thing that

should not change at least not

dramatically in a company I'm not saying

it won't evolve but it's not something

I'd expect you to Pivot or iterate

around CU could you imagine if you were

following the Red Sox and they suddenly

all disbanded and went off and started

playing different sports it'd be pretty

tough to suddenly all you know get

excited about where they all players had

gone and all the different sports they'

taken up it just you know it doesn't

work obviously the same is true in a

startup if you're really iterating your

culture of the whole time you're going

to struggle people will find it

difficult to understand what's this

company about what does it stand for how

do I get conviction around it what is it

that I'm really investing my life in and

that's how I always think about this is

that even as an investor we write a

check for a company and we're thrilled

to do that but that's money you guys

when you come and join a company as a

founder or a co-founder or just one of

the team are investing your life you

know 9 to5 if you're lucky and most of

you many more hour than that in building

this thing so you really better believe

in it and you really better feel like

it's actually true to who you are and

therefore you can give it your all but

don't trust me let's actually take a

look at what some of the best examples

of companies are and from Fortune

Magazine they publish this every year I

picked the top five companies that are

considered the best places to work for

and I actually wanted to understand for

myself you know well does that actually

have an impact on the bottom line

fortunately I didn't have to do the work

it's been done many times people have

studied this in many different ways and

if you go have a look at the uh results

you'll find that there's some very clear

measures for what companies who've got

great cultures and are you know where

there are great places to work can

produce in terms of results and without

following this I'll just give you the

the simplified version of this I'll post

the real one for you it's basically a

300% uh outperformance on on the stock

market for example so think about that

for a second what I'm saying is that if

you can create some of the things we're

talking about tonight like a Clear

Vision and a compelling culture that you

can really be part of it really does

impact the top the bottom and even the

fundamental worth of your business so

that's why it's so

important so how do you create a

culture not easy uh there are some

things that will come out of this that

are going to be entirely personal but

I'm going to start with a couple of

concrete things first of all I would say

culture is really only two fundamental

things and there are many ways you might

you know double click on these first of

all the guiding principles that you

believe in and secondly the values that

you have so let's drill into

those guiding principles are things you

really have conviction around and there

might be simple things like you know

you're an ethical person you think it's

unbelievably important that you always

treat customers very well and you give

them great service you'll almost hear

that from any company on the planet

that's successful but here's a

challenging um example of where culture

comes into play which comes first the

customer or your team anybody want to

give me an

answer anybody I heard somebody say

customer anybody want to volunteer go

ahead I would say the customer because

if there's no customer there's no team

okay that's that's a great and seems

like a great answer to me does anybody

agree with that raise raise your hands

if you agree with

that okay good uh anybody else um I

would say that um the employees in the

company are the internal C customer at

customers so if they are unhappy the

external customer who is the real

customer will never be happy so in my

opinion the internal customer which is

the employee is very important that's an

unbelievably thoughtful answer anybody

else agree with

that okay great and the rest of you I've

obviously lost you

already um the point is yeah sorry you

have a question I think it also in the

storic experience I do have that if you

say if customer go over the wall for the

customer it can lead you it can be some

very poor decisions in terms of where

you invest um there are customers from

hell in fact firing customers is

something that you would have to do

painfully at certain times well said

well said so uh here's where it becomes

difficult for me to do anything other

than tell you what I've learned I've

learned you're all right there's no

wrong or right here this is going to be

a choice that you will make that Define

what your culture is in your company

I've seen companies who do not care

about employees be extremely successful

because they are maniacally focused on

customer service and they churn through

employees not saying that's right or

wrong it's just the way they do it I've

also seen companies who take your

Viewpoint who are extremely passionate

about that team and put an enormous

amount of energy into developing that

team and as a result to your point they

have incredibly happy workforces the

workforce actually become not only

incredibly good at handling customers

but literally the natural evangelists of

the company and the product and the

service it happens to be where I lie you

know whenever I started a company I I

always said it's at least first equal

was the way I put it because I always

wanted happy people because I felt like

it would show instantly in the customer

conversations or the calls or the help

desk or whatever and generally speaking

I found Happy People ended up being much

more productive we'll talk more about

that in a minute but the point is these

are examples of questions that you

should ask and I could think of many

many others and they really should be

questions centered around what your

beliefs are and they will help you

define how you will behave as an

organization towards everybody from your

customers and your employees to your

partners your suppliers your

shareholders like your your uh investors

Etc and and uh thank you for raising the

the point you did about firing customers

on the front end of that I would

actually say that all your stakeholders

customers employees Partners suppliers

shareholders Etc are people you should

choose carefully so you don't have to

fire if you can choose at the early

stage

who your investors are choose them lots

of people can write you a check I mean

I'm no better an investor than the next

guy cuz I can write you a bigger check

that doesn't mean to say I'm any better

at all you should choose carefully who

you want to work with same with your

customers your initial customers will be

very demanding because they'll expect as

a startup that you're going to be nimble

around them so choose them carefully

ditto your partners in your supply chain

if you end up with partners that you

can't trust that's going to be a problem

that's going to come and bite you in the

backside at some point when you can't

deliver on your customer promises so

every Stak holder is a choice and if you

can give them guiding principles around

which you're going to work you'll find

it's a lot easier to say okay this

customer fits my principle that they're

highly ethical and so I'm not going to

go through all these guiding principles

um as you may know I've been trying to

do write ups for you uh on the site

after these workshops I'll try to write

more of these things up in examples but

I'd also love to hear from you if you go

up on the site and you've got guiding

principles you think should be up here

or or things you'd like to challenge me

on please you know comment them on the

site and give us some feedback the one I

am going to cover though is

communication and uh this is a small but

uh to me very common example of

something that companies don't spend

enough time on in the early

stages it's the lifeblood of small

companies it's how you communicate to

get action it's how you communicate

progress it's how you communicate

results um I've got a CEO in the front

here who knows this very well um and I I

always say that even with for example

your board finding a way to tell them

what you're going to do do it tell them

how you did it and Report clearly on

that to keep everybody in sync is a

simple example of how to keep everybody

happy well it's true of every

stakeholder it's the same with your team

if you're not figuring out how you're

going to communicate with them regularly

and it might be simple things like you

know you just have a standup scrum

meeting if you're developing a product

or if it's a larger company you have a a

regular standup meeting where you tell

everybody what's going on what you

learned if you're the CEO from the

customers out in the field and and I can

tell you that it makes more impact in

the early stages of a starting company

than anything else if you overc

communicate there is no such thing in

fact I would argue in the early stages

of startup of overcommunication overc

communicate about what you're

experiencing in the marketplace what

you're learning from each other in terms

of building the product or the value

proposition and in terms of how you

engage together what you could do to

improve things um so just put a bit of

humor around that I'm a big fan of

Dilbert

unfortunately this isn't far from the

truth for many companies um you

literally do find people getting stuck

in their cubes digging in on their own

thing and finding themselves losing the

ability to to relate with everybody else

so one of the things you might do in

your culture is establish the rhythm of

communication that you want whether it's

hey we're not going to have any meetings

at all we're just going to you know

gather around the water cooler because

there only six of us or hey we've got to

be a big enough company now we need to

have you know Monday meetings for the

management team and Friday meetings for

the sales team and monthly meetings for

the staff uh and you know town halls for

everybody you know uh once every quarter

and then once a year we're all going to

go for an offsite and have a great time

and uh what I'm going to do is just ask

Tom from Aqua to uh give me a quick

example of what what are some of the

things you do uh to improve

communication and to keep some some uh

transparency at at Aqua um hi everybody

um great to be here uh actually several

things and i' I've been with aqua since

we started the company and it was uh

just two people and today we're 200

three years later so it's a slight you

know things do evolve over time but one

of the biggest things that I remember

actually when Michael and I first worked

together was having a monthly get

together with drinks and celebrations

and and from a company perspective it's

one of our biggest things that we do is

we have a compy update uh every month we

change the themes it's not just what's

going on but sometimes we talk about

what's going wrong in the company and

sometimes we talk about what it's like

to be a public company some days we talk

about uh our new customers um we

recently I know I bet Harvard Business

School and Harvard is one of our clients

but so is Stanford Business School and

uh and we had the CIO of the Stanford

Business School talk to the entire

company was a very nice experience to

talk about what it's like to be a

customer so that everybody could

understand in the business hey what does

it mean to be a customer of ours that's

one of the things we do we also like to

celebrate um we had a great year in

2010 and so April last year we sent the

whole company to Puerto Rico for a long

weekend uh 120 people so it was a lot of

fun it's a type of communication it's

also a type of Celebration um we do

spend a lot of time on this issue um we

just recently turned off the ability for

everybody in the company to send a note

to everybody in the company because

we're now big enough that uh maybe

there's a little bit too much laundry

being discussed there but uh that's

unfortunately one of the penalties you

pay as you grow but some ideas around on

communication anyway thanks a lot Tom so

we'll hear more from the aqua team as as

we get going but that's a real world

example of of some choices that Tom and

the team at Aqua have made around how do

they want to communicate and what they

think is important in their

culture so here's the second thing I

said I drill into which is

values I don't know about you but I had

a hard time growing up with the idea

that everything had because I went to

boarding school a rule and a regulation

associated with it that was like oh yes

give me another rule let's see what we

can break here um so I felt like

starting companies one of the best

things I could do was Empower people as

opposed to restrict them and values

should be empowering as opposed to rules

that could be restricting I'm not saying

rules aren't a good idea that make total

sense in in lots of s situations but

values are really about empowerment and

what we're trying to do is enable people

to feel like if they understand what

your values are how they can behave to

really make the most of their own

capabilities and examples of these and

they really are just purely examples are

how you might decide if your culture

should be really proactively honest that

was one of the values that we had in one

of my companies and uh proactive honesty

to me meant that if you saw a problem

you didn't wait till somebody else saw

it it was your

responsibility actually you were even

accountable to the company to make sure

you brought that to people's attention

proactively before it became a problem

for somebody else to encounter and know

it I'm not talking about just a rip in

the carpet that somebody might trip over

but it might be that simple but often

times it grows into hey you realize that

the way we're treating customers even

though it's just a little bit not right

could turn out to be a lot not right if

it continues you know the way a degree

becomes a mile over time that's the kind

of thing that if you've got a proactive

open honest culture you could avoid and

so again these things can be very

impactful in time now again I'm not

saying that's a value you should have

I'm just trying to give you an example

of how you might think about what are

some of the values often times I hear

people say well you know values and

ethics what's the difference maybe none

again culture is not a very black and

white subject you might decide your

ethics need to be part of your culture

statement another example here for me it

was extremely important that there was

respect around every individual in the

company no matter what role they played

no matter what country they were in no M

what no matter what set of beliefs they

had when we came together at my

companies it was extremely important

that everybody had respect and why that

was so important was because we were all

playing in a very different role than

just the one that we grew up in you know

in our family or from our background and

we needed to all play together with one

set of values when we were engaging

around for example new customers or new

products or new situations trying to

figure out how to build new Partnerships

or establish new ways to go break

through things which is of course what

you're doing as a startup you're in many

times you know breaking through into

areas that have never been tried before

so if you don't have respect for the

people that you're with you get into all

sorts of difficulties if you if you

start making fun of somebody's

background or their beliefs or whatever

you're going to take away all the energy

that should be going into the problem

solving or the Breakthrough that you're

going after and it's going to dissipate

into the politic that I personally could

never stand at any company that's why

I've never been part of a big company

for more than five minutes when I get

acquired because unfortunately the

bigger you get the more likely politics

it comes but anyway I would argue that

whatever your value is whether it's

respect or Integrity that I put up here

make sure you really declare that and

then obviously try and this is the next

important piece to make it

yours uh I would argue perhaps I have

this back backwards in the way I

presented this actually and I think

about it really it is about what you

authentically believe in um because if

it's really authentic and it comes from

the heart it's actually something that

means something to you you'll probably

be able to live it and uh culture is

really all about what you live what you

do rather than what you say so that's my

first uh startup secret uh to to bring

tonight which is don't try to build a

culture around hey I read that Jack

Welsh said that these are three great

things we should do

believe me I see do this all the time I

just read this book let me show you

great uh good to great or you know built

to last or what they're fantastic books

I love Jim Collins I I would sit in his

lectures and soak it up but I would only

take away what I believe in because

otherwise I can't live it every day so

think about what really means something

to you and try to bring that to your

culture then I think it will be

authentic secondly whether we like it or

not it comes from the top the good news

about being a startup is in many

instances the top is you know one

founder couple of Founders six or seven

uh it's pretty easy for you guys to

become the organic basis for the culture

to get built I will tell you though that

if you try to insert a culture into a

company after it's grown to being you

know even 30 or 40 people let alone 300

or you know as Tom showing you 100%

growth year on year it's really tough to

do uh and in fact one of the reasons

it's really tough to do is because just

as I said um earlier that culture is

something that you have to live every

day and if if it wasn't from the get-go

something that for example was all about

thinking about this in the sports

analogy again the same team that you

were supporting and suddenly you you

know some group comes in they're

supporting a completely different team

they just you know Clash like Yankees

and Red Sox unfortunately uh so this

needs to be modeled from day one and it

needs to be something that you really

believe in for it to really take

root finally uh to state the obvious

that I've already covered um it's valued

by people not by what you put on the

slide but by what you do and the more

consistently you do it the more people

believe in it like some of you may not

even remember this company but um it was

called H Packard it's now called HP and

Dave huet and Bill Packard when I first

met them was lucky enough to meet them U

they are known for management by

wandering around that was literally what

they did they would walk around the

company to try to get to know what was

going on even when HP by the way became

huge in fact it blew my mind that we

became one of the largest uh desktop

computer customers in the world selling

CAD cam systems and they literally flew

us from initially I think the pl

division was in San Diego then they'd

take us to Fort Collins in Colorado

which is where the computer was made

then they' take us to Geneva where the

inkjet was made they would fly us all

the way around all of their different

locations every year at their expense

too to make sure that we

what was going on at HP so that we could

be a good partner to them believe me

after you've done that a couple of times

you realize that they don't just believe

in the culture of management by walking

around they even bring their Partners

into it to get to understand how that

company operates and how to work with

them and if you talk to anybody at HP

and I did I trusted um sorry I learn

learned to trust this um by experiencing

it you could talk to somebody whether it

was in Geneva or it was in San Diego or

it was in the Corvalis division uh doing

calculators and you would find that

everybody knew what the culture was at

HP and they knew that you were expected

to be open about your communication that

anybody could walk up to you at any time

and ask what you were doing you would

share it you'd be trusting of that and

that culture really built a phenomenal

company in fact you want to talk about a

pivot this is a company that started out

as a medical instruments company and

then became a computer company oh and by

the way along the way it's spun out

agilant a completely different company

still all of those companies have been

successful

and many products still around the world

have the HP logo on them and pretty

proudly so they may not May struggle

occasionally with things like

introducing tablets we won't go there

for today's audience but that doesn't

matter that's part of the point about

this is that's an enduring company you

know 20 30 years later uh that has done

many things pivoted and so forth and I

would argue that a huge part of it is

because they had a consistent culture

throughout

it okay I already introduced Tom but now

I'm going to embarrass Tom uh

the team at Aqua really deserves

tremendous credit for having recognized

that from day one and I would argue that

one of the reasons theyve become so

valued in the marketplace and so

recognized is because they really did

spend a bunch of time figuring out what

that culture is but that's a tough thing

to talk about uh so Tom en encouraged me

to actually share a video with you and

uh we're going to do exactly that so

here is a little bit of uh a video on

aqua's culture

[Applause]

[Music]

working at Aqua it's very fast-paced

it's very entrepreneurial it's

challenging and it's a lot of fun

working in aqua is probably the one of

the greatest jobs I've ever had in my

life aqua's founding changed my life in

a in a pretty big way of helping to

build one of the you know fastest

growing startups in Boston I came to

Aquia because I saw uh an opportunity

that I hadn't seen since I got into this

industry you know the opportunity of

getting involved with a platform as um

significant as Drupal as open as it was

with such a passionate uh developer

Community working with the open source

project Drupal is great it is it's

really the highlight of the job just uh

felt like the right place right time

amazing opportunity I looked at the

vision for Drupal and I said this is the

future and and I want to be part of that

so we're hiring like crazy and um it's a

real challenge the challenge of growing

is is making sure that we continue to

communicate we continue to find new

great people I think the important thing

when you're hiring people though to look

not so much for raw experience what does

the resume show but instead look at who

they are as a person um I think good

people like to work with good people

instinctive drive to accomplish

something in the world that passion and

the smarts to go with it I'm being with

people that I like to be with who share

th those common interests and that makes

it a heck of a lot of fun we're a

company that has a a very very bright

and promising future we're enabling a

lot of um individuals and companies to

do things that that um you know they've

never really been able to do before so

it's very exciting it's it's a Once in

a-lifetime chance I mean we we're we're

on a company that is just it's a rocket

ship it's really a tidal wave that I'm

happy to be

[Music]

riding want to follow that up with

anything tell about actually

that was Ron's video thank you Ron um I

I've been fortunate enough in my career

to be part of a lot of great companies

um all of them I was reminded this

morning when I was talking to someone

else have been sold at one point in time

or the other um one of those companies

was company called Web methods and in

2000 it was the largest IPO and if you

followed Google's IPO a few years later

they actually were comparing it to web

methods IPO as the um web methods had

the largest single first day pop in

their price in the history of NASDAQ so

quite an interesting company I learned a

lot about culture throughout my career

but especially at at a company like web

methods and uh I had a great mentor

there and and we um we coined a phrase

that I've since adapted and we actually

um enforce our culture or try to say

extend our culture at uh at Aqua by

using an acronym that is derived from

those web methods days and that acronym

is p i and it's something we look for

and every candidate who hire is hired in

the company and starts with passion P

for passion and we want people who are

really you know love it I I had a

conversation with one of our people on

our engineering team last week and I

asked him he's been with us a year I

said how's work going he said work I

looked at him kind of funny he said yeah

work he said I don't work he said I come

here because I love it and uh that's an

important thing about passion and uh for

the sake of time I won't go through

details on the other three but they

stand for in order intelligence

integrity and initiative and it's about

intelligence not raw intelligence but

you know doing the right thing doing the

smart thing using Common Sense Integrity

because by all means we need to do that

with ourselves with our peers with our

customers and with our partners and

initiative we want people who um we have

another saying for that of course which

is uh ask for forgiveness rather than

per

and we live that each and every day so

that's how we Define culture we use an

acronym it makes it easier and we can

talk about it as a company as result so

thank you John so does anybody think

that that might help actually get the

right kind of people to your business

show fans if you

do okay I still got some selling to do

but sounds pretty good good uh so that

is one of the reasons that we think

about culture before we even think about

people because if you don't know what

you want to stand for and you don't know

what you're looking for again you're

going to find it very easy to hire the

wrong people but if you're very clear

about what you stand for and what it is

you're driving towards uh with your

vision and and your values and and your

culture defined and it's going to be

easy to come on to this next session and

figure out how to hire the right people

and build a

team so with that in mind uh I love

Tom's p triaa and uh you know like all

these sessions it's about learning so I

learned from him when I was thinking

about this deck I really should include

some of those aspects so they're not in

here yet uh but you'll see me adapt and

evolve this presentation to include them

anyway what we want to do now is is

figure out the importance of the the

team and and the people piece and I

would just simply um say at this point

it's easy and obvious to overlook this

but the biggest Capital you have in your

business is not Financial it's human and

the human capital is the engine of your

business and so any thought about what

Vision you have and how you might drive

towards it ain't going to happen unless

you've got that same group of people on

the same page driving towards it with

you so how do you go about specifying

finding hiring developing anded

retraining if necessary uh people and

then when things don't work out firing

people that's a very big subject so just

to be clear I'm not going to cover it

all

today I am happy though to talk about

the First Step which is how to hire the

right people and it starts with you need

a spec of what you're looking for it's

amazing how many times I hear people

saying oh we've got 20 people to high

they've written a job spec no okay well

you're going to immediately run into

issues with what you think you're hiring

for may not be what somebody else thinks

they're hiring for and so if you have a

couple people interviewing for that

person and they're not even on the same

page about what they're looking for

you're going to have a problem so

specify upfront even if it's not

something fancy in the way of a job

black and white what it is that you're

looking for and we'll talk more about

how you might specify it in a moment how

you find them is a whole subject into

too but I I would just say the best

thing I've seen in St in small companies

is referrals in fact you have a bounty

on referrals $5,000 okay so clearly we

value that at Aqua we're willing to pay

people $5,000 for any referral when we

hire them why because that value is

going to come back to us over and over

again I hear some people say well you're

saving a a recruitment fee that's part

of it but it's really not the real

reason right and the real reason is

great people hire great people and if

you've already hired the right starting

point what better way than to trust them

to find you know the next people that

they would trust to work with then to

focus on hiring I'm going to talk a lot

about this it's probably the most

important single thing you can do and

we'll talk about who owns that in a

moment the next piece though of

developing coaching and mentoring again

big subject I'd simply say this which is

people come to work at companies not to

stay stagnant but to learn and I

wouldn't hire anybody if they couldn't

answer this question which is what do

you want to learn it's a great question

to put in your tool bag if somebody

looks at you blankly it's probably not a

great fit for a startup because you're

going to have to learn a lot in the

startup after all you're going to be

doing things if you're going to be

making breakthroughs that have never

been done before so you're going to have

to learn continuously to figure out what

it is that you're going to bring to

Market or how you're going to of that

secondly or or rather finally the

retraining piece which is if you are

going to be one of those companies that

as I said using that acronym of of pay

lip service to this who's constantly

listening learning leading and uh you

know innovating and pivoting then you're

going to have a lot of people who are

going to have to move with you and

they're going to have to get retrained

with you in some instances they might

need new skills along the way they might

need new ways of approaching problems

and so forth so it's not just about hire

them and bring them on board and you

know train them in the particular job

it's about often times retraining them

as you evolve the company and as you

pivot and expect to do that because if

you don't you're again not using the

biggest piece of capital that you've got

invested in the business your human

capital and finally the bottom line here

is when things don't work out do not

wait to fire somebody you are doing them

a favor even though that is the hardest

thing I've ever had to do and we'll

probably still ever have to do is to

fire somebody why two reasons number one

if if they're not a fit you're helping

them get to the next place where they

should be a fit number two the rest of

your team needs to be able to get on

with their lives where they are all

fitting together they do not need

somebody dragging them back and holding

them back in some way and I will tell

you the biggest lesson I've learned and

you'll hear it from many Executives is

we usually wait too long I'll very very

very rarely I can't think of when I've

heard it actually hear an executive say

I fired that guy too soon

it's just amazing I can't think of an

example actually Tom how do you ever

know you never know no it's never Happ

it's very rare so hard but true and in

the end I would say that back to the

culture there are ways to let people go

that can be very very well handled for

example figuring out how you might help

them through your network get their next

job placement or give them a reference

and recognize that they may have been

great in this situation your situation

just evolved and now they're just not a

fit doesn't mean to say they're an

invalidated person they're still a very

valid person just not for this situation

with this role and obviously if you can

you know as your company comes larger

try to find them another role in your

company first uh that's one of the best

things you can do for them but the

bottom line is you should treat people

with that same respect and integrity

that you started out with and guess what

they should be your best reference when

they go out into the world and say you

know it didn't work out for me at

company XYZ but I'd work there again in

a heartbeat if there was a fit for me

that's a sign you handled it

well okay so who's responsible for this

Tom and I had a little chat about this

and I told him that when we um first met

and he wanted to be CEO I said that's

great but I think you should be

CTO Tom you want to explain

why uh hiring teams is the most

important thing as I might get you to

stand it just for a second yeah no I

when Michael we've known each other a

long time but I said he asked me what

I'm good at I said I'm good at hiring

teams that's what I'm good at that's

what I focus on and I've spent my career

hiring almost 2,000 people um including

all over the world living in Europe

living in Asia and uh it's proven to me

that if I focused on hiring the right

team good things happen no matter what

so thank you so I really do believe by

the way that the CEO is actually really

the CTO they are the number one

recruiter for the company and the really

great CEOs I see even when the companies

get really big

if there's a key hire they'll get on a

plane and they'll fly and they'll make

sure that that high gets made because

guess what again that's the thing that's

going to make the greatest difference in

a company so people often Al ask me well

how scalable is that and uh despite my

natural tendency to want to be in

startups some of my companies have grown

pretty big uh I think in semantic we got

to being a a company that was doubling

just like ACA is you know actually not

quite as fast as ACA but um you know

pretty quickly so you you would have 20

30 people come in in one Department in

one quarter and you you'd say wow okay

uh how are we going to assimilate all

those people Etc uh and that you'd still

get a call from somebody saying okay we

need to hire somebody who's going to be

the regional rep in southwest of England

and this is the killer guy I need your

help you could ignore that call but I

can tell you it's probably a good call

to take and it's probably a good action

to take here is my rule of six about how

to think of it in startups I made this

up I just Tedd you blunt it's not based

on any great science it's just based on

observation of watching companies grow

the first six people in the company are

usually the founders uh in fact I often

used to when I said I was starting a

company consider all the first six

people whether they were you know

co-founders by reputation on the idea or

the patent or whatever just consider

them co-founders um some kind of cases I

would actually even say it was the first

36 people so you will see some people

who worked with me have that title even

though they joined as employee 20

because um the first six people you know

they're almost always just going to get

along communicate around a water cooler

there's no big deal about you know

figuring out what you're doing

communication flows very easily multiply

by six you need an exec team if you're

going to grow that next multiple of six

requires Management in fact we just went

through it right how many people are we

know about that 26 there you go pure

coincidence but um the reality is if you

don't have an executive team that knows

how to hire the next great group of

people and understands what their role

is in things like uh continuing the

culture and and getting the

communication right and so forth it's

going to it's going to be very tough to

scale a business here's the next little

secret I saw is that one of the first

company I was involved with did not hire

at that point the right management team

the next layer of people the people who

are actually for example running things

like quality assurance or service and

support and they didn't scale at all

successfully through a thousand people

in fact that company struggled hugely to

get to the thousand people and had a lot

of Staff turnover by contrast the next

company I was involved with did a great

job of training and developing from

within the rising stars who wanted to

become the next generation of leaders

they put a leadership program in place

they encouraged people who wanted to

step forward and take that role to step

up and it was hugely successful in fact

the company scaled through a thousand

people without even blinking about it

went public and was a very successful

investment in the whole uh stakeholders

sense so that's my rule of six my view

is the first six therefore are

incredibly

important in the next 36 are just as

important because they're rapidly going

to come the people that turn us into

that sort of uh what I would call

critical mass and finally if you're

going to really scale big think about

how you're developing your talent

internally so that you can actually get

that scale without losing the culture

and so

forth okay

hiring everybody always thinks hiring is

easy oh yeah I've got a job spec I I

just need to go down the checklist you

know somebody needs to know Java they

need to know U perhaps PHP and and if

they've got some experience around in

installation and whatever it might be uh

we've got a checklist we're done I wish

that was true turns out to be probably

one of the least important things uh and

I categorize all of that as what uh in

This Acronym is eks experience Knowledge

and Skills what experience somebody had

is important clear it helps if you've

got experience in an area that you're

hiring for if they've got knowledge of

it that's great too you're not going to

have to teach them it from scratch if

they've got skills in it so much the

better but the amazing thing is I hear

people say God that person is wicked

smart we've got to have them on

board maybe maybe not what if they don't

fit what if they don't get along with

the people that they're going to go work

with what if their cultural style is

totally different if their ethics are

totally different if they don't believe

the customer is important if they don't

think communication matters if they're

really not that respectful if actually

they're pretty basically difficult to

work with I don't care how smart they

are I would never hire them and so I

tried to actually come up with something

would help you understand what that is

and over the years I developed something

I called

CQ and that's cultural quality of fit

you you've probably heard of EQ I don't

use EQ because that some people

researched that and they say that EQ or

emotional intelligence is important but

doesn't necessarily impact job

performance I might argue with that but

I don't think you can argue with the

following which is that

CQ is a whole definition just like Tom

said with his ideals of of

pii that aquer is very clear about

they're looking for passionate people

with Integrity with initiative what was

the third one intelligence and with

intelligence so that piece is in there

but he wants those other three

attributes too so to me if you can't get

this cultural fit you're going to have a

problem so I'm going to call on if I may

Chris who runs our engineering at at

aquat to talk a little bit about this

because you have this problem all day

long I'm sure yeah so um hi I'm Chris

I'm still surfing the Title Wave um yeah

so when we uh build the engineering team

I think one of the things that we're

looking for besides the p is that they

can work really well on the team and you

know that involves not having an ego

being passionate about the customers and

the product over themselves um that's

really important and the other thing is

that we want to make sure that they just

haven't followed a single track in their

lives that you know they've done a lot

of different things because you know

they're just trying to build up their

experiences in whatever way it is

whether it's a side project I think

that's kind of one of the key things I

always ask is what have you done outside

of the curriculum what have you done

outside of your work because if you're

not doing anything outside interesting

in it then you're probably just a 9o5 or

onedimensional person and maybe not

going to add a lot and then um the other

thing is that you know they're

competitive and really driving um for

something you know beyond just you know

day-to-day success and then um you know

so we organize in terms of engineering

we organize everybody into Sprints um

follow an agile process and so which

helps everybody align with what the goal

is going to be in three weeks time so

you know spend a half day planning

really intense understanding you know

what the dependencies of of making sure

that that success is achievable and then

executing on that success daily with

daily standups Etc and then also cross

functional

um between engineering and marketing and

all the different groups of of aqu we

have we do something called the gold

development plan um which we come up

with the Strategic most important goals

for the company to achieve over the next

year looking at a three-year vision and

backing up into what's achievable in the

um next year to get to those three-year

goals and we come up with cross

functional owners for those different

goals and meet as a team monthly to

track um a various list of action items

and metrics and actuals against those

goals every month so it helps uh cross

functional teams achieve things that are

necessary to achieve our ultimate

threeyear success thank you by the way

how was our first interview that was

brutal it was it was would give you a

chance to fight me say that he's told me

this for years yeah it was it was uh it

was tough and uh but it was great it

made me think in different ways and uh

you know I came to aqu to grow so it was

awesome thanks for coming off despite

the interview he's been telling me for

years it was a tough interview I needed

to let him get it out in public um

anyway one of the things that I would

Advocate thanks to people like Chris is

uh the learning that I've gained from

this which is if you're going to get

people involved in an interview it can

be easy to ask you know the specific

questions about what role they're going

to fulfill and go down that checklist

again but I would Advocate you should

always ask your team two questions at

the end of the interview process let's

say you've got you know two or three

people involved this is easy sometimes

you get companies that will say we want

12 people you know on an interview team

and that may be appropriate by the way

for certain cultures or roles Etc even

then i' would say the supplies number

one is each hire additive or dilutive

just think about that for a second are

they bringing capabilities or qualities

or smarts experience knowledge skills

that is additive to this team or in net

when you put them in this team are you

actually going to be diluted a little

bit and it's diluted is probably not the

right High secondly on the cultural

front on the CQ fit is each High

multiplying or dividing the culture

multiplying is great cuz they're going

to reinforce everything dividing is

going to take your team and pull it

apart and people pretty instinctively

know the answer to these things I found

that when you actually get to that

question and you get people to stop and

think if they can say oh no they're

definitely multiplying thumbs up if it's

like well I'm not sure you probably want

to go around the interview process and

just think it out so anyway two quality

control measures for you

now the other thing I hear all the time

because it's either taught at B school

or somewhere along the line This became

the sort of famous thing is that are you

got to hire a players no no no the new

thing is A+

players awesome so what does that really

mean and how can you apply it in

practice I wanted to make something very

practical for you to think about and so

again using the idea of pneumonics here

are my Three A's and three pluses first

of all I would argue that aptitude is

often more important than the experience

Knowledge and Skills because if somebody

has a real aptitude to learn something I

they a quick study and they can quickly

get to grips with things guess what when

you change directions and there's

something new for them to learn all the

experience Knowledge and Skills that

don't apply doesn't matter but if

they've got great aptitude for learning

you're probably in a great spot secondly

ability obviously it helps if they've

proven they've got an ability in

something and thirdly if they've got an

attitude which is leaning forward really

engaging and desirous of becoming a part

of your team isn't that a little better

than really not that sure I don't think

this is for me I don't quite know I'm

really smart I don't think I need

you okay I think I'm done with that one

so you you get where I'm going with this

there are lots of ways though that

amazingly I watch people in interviews

skip right over these things and so my

definition for a players is literally

aptitude ability and attitude first off

if they don't have this I don't bother

going down the checklist because I know

it's not going to be a

fit in the middle the plus since

everybody wants the Plus in Google now

you're going to get it from me too there

are three pluses here too number one is

are they

authentic because if the person is

giving you a great sell and believe me

when you hire sales people that's what

they do they should be really good at

selling so they can sell whoever they

want to

be you're not going to get the person

you want you don't want an actor you

want somebody who's authentic who really

you can see this is who they are so

Chris's question was an excellent one

which is well what do you do when you've

got you know your own free time uh and

that you know nobody's telling you what

to do and it's your hobby that's the

reason that's a great question because

you can find out authentically whether

this fits with what they've been selling

you you know if they're a they're saying

they're an unbelievably enthusiastic

coach but they hate

Sports okay interesting I mean may be

true but you know it's a good way to try

to test the authenticity of somebody

this is what of my favorites which is

awareness self-awareness in this case I

would love to be able to work with

everybody who was self-aware because not

I'm saying that it's a bad thing if

you're not but if you are self-aware it

makes it really easy for somebody to say

okay well you've told me that you're

really great at this but you really need

help with that well then okay I can go

find you some help for that or I can go

get you some coaching or training or

mentoring or developing but if you have

no idea what you're good at and you no

idea what your weaknesses are where

you're lacking or where you need help

it's really tough to help you now I'm

not saying that you shouldn't hire

somebody if they don't have

self-awareness but it's one of the plus

factors it's one of the if you can get

it it's great and finally this last one

is back to that fit thing it's actually

spelling out the word plus and a simp

acronym which is are they people like us

are these people that we'd want to work

with that we would just enjoy working

with you heard Tom say it in his video I

love coming to work because I like the

people I'm working with that's just an

acid test at the bottom line and if you

wouldn't like working with this person

well guess what it's probably going to

be pretty tough living with them you

know the 80h hour weeks that we all work

so I'd put that as the bottom line so

there's my startup secret for hiring a

pluses 3 A's three pluses so how does

this fit well I want to put it all

together with three key questions which

I can't claim particular credit for

because you'll probably see any great HR

people around the world use these same

kinds of questions in some form or

another but I certainly learned them uh

myself too number one is you've got to

figure out can this person be successful

at the job you want to set them up for

Success not failure clearly so you're

going to do that by obviously evaluating

the things we've said number two will

they really love this job if they don't

yeah their energy is not going to stay

with them they're not going to be

sustaining the business that makes it

enduring for you and finally will they

fit and reinforce the company in its

vision mission goals objectives and

obviously if all three of those things

uh answered by you in the interview I

think you're probably knowing you

figured out whether you've got the right

candidate or not and trust me it isn't

30 questions it is three if you really

have answered okay this person could do

the job and be successful at it they're

going to love it and by the way they're

going to be a great fit here I'll I'll

bet you that that is going to be a great

hire and obviously as what I'm saying is

in in the middle I'll be looking for

this this this fit if you will around

attitude aptitude and and ability if you

want to know how the the final piece of

the puzzle fits in when I'm evaluating

somebody's experience Knowledge and

Skills I'm basically saying okay does

that set them up for Success when I'm

seeing them about their smarts I'm

really trying to figure out you know how

adaptable are they how much aptitude do

they have for Learning and therefore

will they not only love the job now but

would they love it in the future and

finally in this CQ thing in this

cultural fit will they really fit here

in a way that they will add to this

culture not uh and multiply it and

really reinforce the values and

conviction have around the business if I

could just take that one page into an

interview with me and nothing else with

that resume that's that's my guide so I

hope it turns out to be useful for you

if it doesn't as I said I teach to learn

so I'd love to hear from from you what

are your experiences about what would be

better better things to

evaluate okay quickly some tools um

obviously you get the resume you get the

interview uh I very rarely see people do

enough of the second thing which is get

the proof

so how do you know somebody's as good as

they say they are again they might be a

good salesperson or a good actor the

proof should be around things like

problem solving and it's easy people say

oh I can't you know figure out if

they're a good salesp person except by

looking at that W2 maybe but again they

might have been in a place where all

Boats were Rising with a high Rising

tide were they really A salesperson who

made a difference well try to give them

some examples of what they might be

situationally dealing with in selling

your product and tell them just to do

simple pitch back to here's our data

sheet how would you pitch us that

product how difficult is that to do it's

easy You' be amazed how people don't do

that or if you're in engineering give

them a a problem to code you done that

oh yeah all the time and is it helpful

absolutely so we have a little bit of

advantage in open source and that we can

look at their code that's already out

there perfect so my advice to you here

is get some proof don't just take

everything for granted and you will

learn a lot from that and then finally

on the quality uh fit the cultural

quality fit the CQ your interaction

should tell you something so at

Northbridge we have this saying which

again I take no credit for one of my

partners Rich came up with it which is

the deal is the

process I scratched my head when he

first said that and then having been

there 10 years I realized he's so dead

right what we mean by that is as we go

through the process of getting to know a

deal and doing the diligence with the

entrepreneur and figuring out what it is

that they're looking for and what we're

looking for and then negotiating things

like the term sheet Etc we learn a lot

about each other and in fact it's why I

try not to rush that process because I

quickly realize okay is this a fit or

not and if it isn't a fit it's pretty

obvious so again if if you don't mind

actually from last time I'm just going

to spontaneously call on David from aan

who put me through the most ruthless

process he actually interviewed me and

told me who I was going to be working

with uh on his investment bench but you

got the job so

so um uh we we we we were raising money

at an interesting time it was the first

half of 2009 so it was absolutely dead

out there there were practically no

series a deals that were getting done

but um fortunately aan had a pretty

attractive proposition we had about

seven different term sheets and so it

really came down to us deciding who we

wanted to to work with and it really did

become an interview process and I would

say very much the deal process was

really what gave us that confidence in

terms of Northbridge uh so it you know

it's very much the case as you went

through that process you really got to

understand what these people are going

to be like to work with uh and that

really was what gave us the confidence

in fact we even took a low evaluation to

get you guys so tell me that thank you

okay so in your interview process what

David and I would just describing as a

deal is the same thing in the interview

process if somebody's quick to respond

to you sends you emails right back when

you ask them question is always punctual

on time and is always showing up with

the kind of energy and Vibrance that you

want in your team that's probably going

to tell you a ton more than and what's

on that resume so I'd really encourage

you to think about uh this as an

important part of it but here's the

absolute bottom line I would never hire

somebody without doing real references

and real references are not what the

what they give you it's not here's my

mom go call up I have a feeling your mom

might gave me some pretty good

references on you but the reality is the

references you want are from people who

have worked for somebody with somebody

and hopefully uh who they've actually

been you know managing if they're in

that kind of position so I would say the

important thing here is to go and get

the kind of references that can be

honest with you the challenge with

references often is people feel like

they can't really tell you what they

think so you need to obviously figure

out where you've got trusted connections

where you can get to somebody and you

can ask questions that there's no fear

of if you like retribution associated

with whatever they're going to tell you

they're going to give you the real truth

about somebody it's probably what I

spend most of my time on in my job

amazingly is uh hiring and then going

and getting those real references it

makes such a difference

difference okay next tool and this is

the one I'd ask you to pay attention to

because we're getting close to our

Workshop um and you're going to have um

some opportunity to actually put these

into practice is what are some of the

questions you'd

use uh for your own interviews and for

each of these three areas for the

experience Knowledge and Skills for the

IQ and the CQ these are not the

questions they are example questions so

first of all for eks this this is a

question I love to ask and there's a key

word in here can anybody tell me what it

is relevant exactly right people got

loads of experience the question is what

experience have they got that is

relevant what knowledge or skill have

they got that's relevant to this

particular job and you'd be amazed how

many people trip up on that they go into

they launch into telling me their entire

life history okay I'm sure their history

is really interesting but I'm hiring for

this job what have you got in the way of

experience Knowledge and Skills that's

relevant to this job second L this is a

favorite one for me too which is rather

than tell me how smart you are just tell

me about a situation or a problem that

you've solved that is your favorite it's

your favorite example of what is it that

you did that you're just incredibly

proud of that shows off who you are most

people will light up at that point

because there's usually something that

they're excited about they did and if

they didn't well that tells you

something too but if they can explain it

to you in ways that are you know simple

to you maybe you don't know their field

that tells you that they're articulate

that's helpful and that makes it obvious

to you that they were Innovative and

clever in their problem solving then you

probably got you probably got a pretty

good answer to how smart they are I

actually have a sheet that I call the

seven levels of problem solving and if

we get another opportunity I'll do a

lecture on it even here because it's

fascinating it's all about how people

solve problems and what level they get

to but the bottom line is I will assess

people on the spot as to what level they

are are they a level one which is

basically they can identify the problem

or are they level seven which is they're

so far ahead of the problem they're

thinking about what might reoccur and

how to avoid it in the future a lot of

steps in between and I learned a lot

from just asking that one question and

then the CQ question the cultural

quality fit what have you most enjoyed

in your previous jobs what's the key

word there enjoy enjoyed exactly yeah

what if you most enjoyed what what was

it that you were really excited about

that you just had a great time doing

maybe the answer is it was going off you

know partying with the the team at Aqua

it's fine there might be a really good

reason behind that you're going to learn

about again what people are interested

in what they're passionate about when

you bring out a word like that as

opposed to you know tell me about the

last 20 things you did over the last 20

years it's not really going to get you

to the cultural fit you're looking for

so I'm not saying these are the

questions I'm just saying these are

example questions and I think if if you

told me I had only three questions to

answer to ask those would be the three

questions I'd ask and by the way in a

lot of interviews

those are the only three questions I ask

because I should be listening more than

talking fact ideally I'd listen for 98%

of the interview and that's obviously

other

trick now sometimes I only get a chance

to ask one question I meet somebody

literally you know on the

road this is my only question if if uh I

have only one question what are you

passionate

about and and you would be amazed how

many times just that one question boom

it all comes

out all the things about what they love

doing what they're good at and what

indeed you know makes them a great fit

or

not here's my personal conviction around

this people who are passionate about

what they do tend to take pride in their

job the results and the rewards all

follow from

that if you're not passionate about

anything okay there may be a reason for

that maybe we could figure out what that

is but it sure helps if you know and if

you do know and you find people who are

really intensely involved in that job

you'll usually find there a tremendous

passion behind it you also tend to find

people are good at what they're

passionate about because they tend to

just involve themselves in a way that

that gets them more and more engaged in

figuring out how to be better and better

at it and that therefore obviously rise

to the top so for what it's worth those

are my three questions well that if you

have to so now I'm going to ask uh the

the team at acan Tom if you can pick

somebody and maybe tell me a little bit

about how you hired aqu and what's

important to you it's going to be one of

our newest

hires this is Evan hi um so I started at

Aqua about a year ago last April and um

one of the reasons I wanted to come to

the company is I wanted to learn and

Aquia has by far exceeded my

expectations because not only can you

learn but you're expected to and um if I

want to test something out if I want to

try something new I'm empowered and

encouraged to do that and I I love that

um we've got a bunch of internships at

aqua and we love our interns we want to

hire them eventually our belief is that

internships are should be mutually

beneficial we want to give these um you

know this younger generation a stepping

stone and we want to teach them and we

want to help them grow and hopefully

come join us full-time uh we've got a

program that we just launched this

quarter back in January uh called aqua

AAU and basically what we find what we

find every day is that the world needs

more people that are involved in in

working with Drupal and sometimes we

just can't hire them fast enough so what

we decided to do is create this program

called aqua U where we hire people that

don't necessarily have a lot of

experience with Drupal and what we do is

we train them in Drupal and then we

bring them on full-time so that we're um

we're helping to fill that demand in the

market um and Tom and Chris and

everybody have kind of mentioned the fun

environment and the great benefits but

that's another awesome thing about

working at Aqua we mentioned the Puerto

Rico trip um we Tom mentioned our our

monthly happy hours and we've got great

benefits too the company really takes

care of us and we love that um we have a

take it as you need it vacation policy

and great benefits so it's all good

thank

you so every company's going to come up

with their own way of doing this of

hiring and and putting out their

benefits and so forth uh I would say the

important thing is that you should be

again very crisp about what it is you're

looking for and and what it is that when

you get that than a

award so on to the last section now I'll

be quite brief on this uh cuz we're just

about coming up on time for you to get

on your workshop for the next 5 minutes

and that is team teaming is really part

of what it takes to make a bunch of

individuals come together to execute

successfully and how I would put this is

as simple as as follows which if you can

get everybody for their own reasons not

your reasons but their reasons because

they've joined this company out of their

excitement for it to get behind the same

vision mission goals objectives Etc and

imagine that that passion is around the

things we've been hearing about learning

for their own reasons growing getting

their own experiences having fun and

imagine that everybody's pulling in the

same direction as a team now because

they're self-aware so they're supporting

each other they're figuring out okay

that person's good here and they're weak

here and I'm good there I can compliment

them then imagine what's possible

I would argue that everything's possible

at that point and that's why teaming is

so

important it's not what dbit might have

you

believe so but believe me I see this a

lot in companies uh in fact there's a

simple question I ask good execs which

is do they know the difference between

ownership and responsibility and

accountability you'll often say well you

know everybody ears this problem meaning

keeping customers happy okay uh and

everybody's responsible for that yeah

everybody's responsible oh who's

accountable in the company for a

customer being successful there should

only be one person for that those of you

read Jobs's book they have their own

definition of that uh inside Apple but

it doesn't matter the point is in order

for teams to be successful you

ultimately also have to have people

understanding how they interrelate and

work together simple sense of that for

me is I started with self-awareness

earlier if you don't know what your

strengths and weaknesses are it's very

hard to team because you don't know

where to go to look for support but if

you know you're good at something and

somebody else is you know needing help

in that area great that's a great

teaming opportunity right there the

other three qualities I always look for

openness in a team because if

everybody's so closed in and they don't

want to share stuff it's going to be

very tough if they're very open and

willing to engage and easily for example

admit that they're wrong as I'm

frequently pointed out by my

entrepreneurs how little I know and what

I need to learn then guess what you

probably have somebody who's going to be

helpful in a team and giving and

receiving constructive feedback is

probably the hardest part about it what

you're looking for is is a way to

actually help people constructively

engage when they are problems or when

you see issues with other people and

find ways to help them understand what

the problem is not in a way that is just

here it is but what can you do about it

how can you learn from it how can they

support you to learn from it and move on

and become more successful as a team so

my startup secret here is maybe an

obvious one but I'm going to split it

down at one level and I think you'll

have heard people say this building a

great company is not a Sprint it's

really a marathon in fact Let Me Be

specific about it on average it takes s

to eight years to build a successful

outcome in a startup company not my

numbers these are numbers straight out

of things like the national Venture

Capital Association but our portfolio

mirrors it too in fact it went up to

nine years when the bubble burst and we

had a very tough decade starting in ' 01

so you better be ready for that marathon

and here's where the team plays in and

this is my

secret I I love this term secret it's

like I'm telling the world this thing

and it's supposed to be a secret it's

just a catchphrase har they came up with

to that credit to market the thing but

the point is what I've learned is if you

really work as a team then what you'll

see good teams do is they'll break that

Marathon down into a whole series of

relays and they'll find ways to hand off

to each other so that it doesn't feel

like just a n-year marathon it feels

like hey you got a Sprint to get that

product out and then the next one and

then the next one and by the way you

hand off to the the team that's actually

going to go create the product marketing

literature to it and they hand off to

the people who are going to go sell it

and they hand off to the people who are

going to support it and they hand off to

the people who are going to go upsell it

and the next thing you know you're

building a company and it didn't feel

that hard cuz actually you've got some

really interesting and exciting smaller

uh Sprints within that that are making

up your relay that makes up ultimately

your Marathon so if you can find a way

to do that in terms of the way you both

build your team and indeed you execute

on your plans I think I think you'll

find is actually your time in startups

goes really quickly and suddenly what

seemed like a 7year long stretch becomes

what I'm about to see in the next month

which is an IPO and people going wow

that was a seven-year overnight

success it's just the way it plays out

so again results of this are very

obvious when you go look at U benchmarks

if you see for example the top five

again that I was talking about earlier

you'll see that in fact turnover is down

by 50%

for companies that have great

environments that have great teaming uh

so I don't know who knows this at Aqua

but but maybe you could share it with me

again I asked you the other day what is

our turnover rate for

example a voluntary turnover rate yeah

um practically zero so there you go and

practically zero was the answer and

something's got to be going right when

you hear that and trust me it's one of

the first questions I ask as a board

member if I feel some Vibe when I'm

walking around a company is you know

have you got high turnover

and if you do obviously you're probably

not teaming well you're not probably

figuring out how to develop your people

it's a real big uh red flag for me if if

uh companies have high

turnover uh I think we actually covered

this Chris but if if you want to add

anything to it about the way you build

teams is is there anything you needed to

cover um jeez trying to think other

things yeah you know I think one of the

other key things is yeah sorry one of

the other key things is uh you know

we're all going to go into like three

week battles or longer battles together

and I think one of the other key things

that we want to make sure is you know is

this person that you're going to be

adding to the team going to be somebody

that you're going to trust to cover your

back in a really difficult situation and

uh we always ask that of the team

members that are interviewing each other

and great question you know if uh if you

don't trust them viscerally at that

level whether it's cultural fit or

capability or something like that then

that's a a key sign great question thank

you very helpful

okay yeah I just want to throw one more

thing on this question just to question

back to all of you guys how many here

actually have a hope an open wreck you

know an open position that they're

hiring for right

now okay the guy's in

aqua all right fair enough how many

people are looking for a co-founder for

their company okay how many people are

looking for mentors anybody you everyone

should be raising their hands um how

many people are looking for

investors okay talk about

um so my the point here is that um

everything that Michael said about

hiring and everything that the guys from

uh Aquia said about teams they don't

this doesn't apply just to your

employees you know just to like oh the

developer I'm going to hire when I

figure out what my company is and I get

some funding and I find a few customers

and I get out of school it it actually

applies to all the people who you're

going to start surrounding around the

company you in a sense will hire your

mentors you will choose people that will

work with you and help support you just

as uh as the example we got um uh around

the investment round you're going to

hire in a sense your investors the

co-founders you work with so the

questions that Michael have been talking

about are really present right now as

you start to think about even forming a

group of people to kick around whether

or not you should start a company or to

come up with an idea for something to do

to do these principles apply um in those

situ as well very very good advice thank

you Adam and it's it summarize it by

saying choose all your stakeholders uh

so whether that's your customers

employees Partners or as Adam said

mentors or investors or board members

apply these same techniques to them

because it's all just as important so I

I try to bring this to Life by saying

well so how do you you know personify a

culture I had a hard time when I first

moved to uh America because I had such a

different culture and even my wife to

today will tell me that my accent can

sound like occasionally I know what I'm

talking about when I

don't or things like I have this

incredibly uh you know passionate

interest in something and it convinces

people that it's right and again it's

not so uh I learned that in in uh in in

this situation of starting a company I

needed to come up with something that

would actually physically bring culture

to life so in the company I started out

there every employee we hired and I mean

every single employee even we got to

like 300 people went through orientation

and every executive in the company that

was present if we weren't out in the

field was expected to be at orientation

every Monday when we were hiring people

or once a month if it was a slow month

and go through that orientation and help

people get there and at the end of it

sometimes we found people didn't

actually fit even despite all the great

hiring and they would leave and we were

okay with that but if you decided to say

you physically signed your name on the

wall saying you are up for building this

company so it was a physical

manifestation of it and so here are a

few pictures of people doing that this

the wall got pretty crowded initially

you can imagine people trying to find

Space until we spread out to another

wall and then eventually around the

corner and uh up and down the building

but by the way when we moved building

everybody's number one concern was who's

moving the

wall that was how important the culture

became at the company and to me that

meant something it meant that people

really cared about the company and about

building it right and I hope that you'll

find a way from what we've talked about

today to get your culture with that same

kind of condition yes

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