In Europe, most sports leagues participate in a system of Promotion and Relegation. At the end of each season, the top three teams in the second league get promoted to the first league and the bottom three teams in the first league get relegated to the second league. This maintains the intensity of games for low ranked teams at the end of the season, among other things. Now here’s an odd fact: The very best players only play in the first league — it’s in their contracts. If their team gets booted to the second league, these folks roll off and immediately find first-league work, typically with some of the recently promoted teams.
If you’re a newly promoted team, you need to augment your roster quickly in order to compete. Rock stars that were impossible to attract in the second league suddenly want a tryout. Winning in the first league is all about signing a few new superstars and integrating them effectively with your existing team.
You can get Beckham
There is a similar analogy with the talent wars at technology companies. For recruiting purposes, when a company’s metrics start to explode and they raise a significant round of capital, the company has effectively been promoted to the “first league.” When a company hits a sustained plateau or is acquired by a large public company, they get relegated to the second league.
As far as talent goes, Silicon Valley is akin to 15th century Florence: The best of the best have moved here to work in technology. For all the talk about how hard it is to hire in the Valley, first-league companies can literally have their pick of the best people in the world at every function. This phenomenon is especially true of CFOs and sales VPs, as these leaders are usually hired later in the company’s lifecycle and the best people can be extremely picky waiting for the right first-league company to come along.
One of the biggest mistakes I made as a CEO was not hiring these rock stars as soon as it was obvious we had been promoted. I was overly worried about the cultural fit and hegemony of the team. Specifically, after I parted ways with my first VP of engineering, I tried a number of experiments with my existing team. I promoted some director-level managers and then moved the responsibilities under another VP. Things didn’t go well, and we ended up slipping a major release by nearly a year. My reluctance to bring on a “been there, done that” executive almost tanked the company.
After royally screwing this up myself, I have some hard-earned suggestions to pass along to others in this situation:
- Act fast. Once you have a sense that you need to make a change, start the process immediately. It almost always takes longer than you want it to (think 6-9 months, not 2-3 months)
- Aim high—higher than you think you should. Work with your entire network (mentors, investors, customers, partners and friends) to help you triangulate on the top ten people in the world for the role. Try to meet every single one of them, even if they are not looking. It helps to know what to aim for. I was surprised how many superstars were actually very humble, approachable and culturally compatible with my team. This was not my assumption going in.
- Don’t be cheap. Use great recruiters who will know—or will unearth—the crazy-great candidates who are often stuck vesting out at larger (second-league) companies.
- Interview the hell out of them. When we were adding members to the executive team, we did 20+ interviews with the finalists. That process included lunches, dinners and drinks. The very best need to be pushed back on their heels a little bit, not just sold.
- Make the time to integrate the new executive a priority. I learned (through several mistakes) that as the CEO, I needed to be all over making the new person successful during their first few months. Plan on being in the office, actively managing introductions and role definitions, checking in with peers and coaching the group toward success. Don’t do it alone—the whole executive team should actively participate.
But what about…?
I sent a draft of this post to a first-league CEO who is grappling with this exact situation and had some very relevant questions. Here are my answers:
When do you know which of your existing players no longer make the cut?
If there’s some reasonable doubt about anyone’s ability to scale, you are probably right and you have an obligation to go meet some rock stars to compare. Few CEOs ever say, “I was too fast in making a key change with an existing player.” I certainly waited too long on several occasions.
Do some players deserve the chance to keep playing in their current role because of history, dedication, effort and loyalty?
I’m all for keeping hardworking, dedicated and loyal employees on the team, but they may need to be coached into a different role that is more suited to their abilities. I think every CEO knows who’s “beyond a reasonable doubt” in their roles. If there are people on the fence, then you need to start scouting.
When is it appropriate to bring in rock stars underneath existing execs who are not scaling to help make them successful?
There are very rare occasions when your existing exec’s strengths are so outrageous that they give you confidence the exec can make it over the hump. Is the existing exec special enough to get a few rock stars interested in reporting to him? That’s a good test.
Clearly this logic, taken to the extreme, without any qualifying criteria, would leave you shuffling your entire organization. Is that what you are suggesting?
If you are playing in the NBA, then you have an obligation as a coach to put the best talent you can find on the court. That said, running a business is a team sport, so team chemistry is crucial and you also need role players. But talent is talent, and if you are overly loyal to players who don’t have the skills to compete in the first league, then you will put your company at a disadvantage. It’s a balance.
Finally, once you get to the “premier” level, how do you separate the “mercenaries” from the big-league people who want to build the company with you?
This is a big risk that is mitigated by interviewing and reference-checking. This was one of my biggest fears that I later came to believe was unfounded.
Scott Weiss is a general partner at venture capital firm Andreessen Horowitz. He is the former co-founder and CEO of IronPort Systems, which was acquired by Cisco in 2007.