'Hire Based on Values' by Jim Franklin (CEO of SendGrid)
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The Founder Institute (http://fi.co) is the world's largest idea-stage incubator, with over 500 companies launched since 2009. These slides on startup HR are from the Denver Founder Institute program, in a talk by Jim Franklin (CEO of SendGrid). To see the video of Jim reviewing these slides, visit http://fi.co/posts/318. In this talk, Jim describes the ideal roles that need to be filled in a startup, how to divide founder equity and options across your company, and how hiring and firing based on values is key. To learn more about the Founder Institute, and to apply to the more than 26 worldwide locations, visit http://fi.co/join/slideshare.
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'Hire Based on Values' by Jim Franklin (CEO of SendGrid)
- 1. Jim Franklin: HR and Founders
- 2. Agenda 1. Founders (cool) 2. Hiring (slow) 3. Firing (fast)
- 3. What is a Founder? ‡ Business Designer ‡ High Risk ‡ Not an employee ‡ Before funding, POC, etc. ‡ Quasi-founder ‡ Unpaid See mark.weakley@hro.com for Venture Labor 101
- 4. Founders 1. Complimentary Free 2. Complimentary Flattering 3. Complementary Balanced Pick Two
- 5. Founders 1. Complimentary Free 2. Complimentary Flattering 3. Complementary Balanced Pick Two
- 6. the Founding Team ‡ Coolest thing you can be ‡ 3 big enough to do something, small enough to coordinate ‡ Pick a leader
- 7. My Take on Three Roles Arbiter Champion Skeptic ³Six Hats Thinking´
- 8. Another Take on Three Roles Mousetrap GTM VP Stuff
- 9. Yet Another Take on Three Roles You Customer Financing
- 10. Examples ‡ RFR ‡ Webfamilies.com ‡ Doubles Tournament Use your ability to recruit co-founders as a vetting tool for your business concept. Most funding obstacles are really team-building obstacles: why can¶t you recruit the team to make this fundable?
- 11. Team Stages of Development 1. Forming 2. Storming 3. Norming 4. Performing If you keep fiddling with the team, you keep re-setting yourself to the Forming/Storming phase.
- 12. Red Hill or Blue Hill? ‡ Do you recruit Been-There-Done-That͛s or Rising Stars? ‡ Do you recruit for SME or for something else? ³First Who, then What´ Jim Collins
- 13. Dividing up Founders͛ Equity ‡ Not 50/50 ‡ Relative Cash Contribution ‡ Example: $10k start up costs ± Founder 1: $4k ± Founder 2: 3.5k ± Founder 3: 2.5k ‡ Keep cap table clean
- 14. What͛s up with options? ‡ 4 year vest; common, 1 year cliff. ‡ Hired-in CEO 5-8% ‡ .8-1.2% for CEO directs (VP) ‡ .25% for first-line management (Director/Manager) ‡ .1% for individual contributors ‡ .25% outside Board members ‡ Sum 15-20% Should founders get options? True-ups? Repricings?
- 15. Hiring ‡ Makes all the Difference ‡ Business is about People ‡ Slowly ‡ Cost Driver ‡ Not a variable expense, but͙ ± Base Supplement ± Mgmt v. IC ± Accruals ± Across the board v. RIF ± Use Unemployment benefits???
- 16. Hiring process ‡ First, know thy self ‡ Second, articulate it ‡ Third, develop hiring techniques for it ‡ Fourth, sustain it ‡ Fifth, test it ‡ Sixth, fire on values Do you hire for values or skill?
- 17. Know thy self ‡ Where have you had conflict with others? This reveals values conflict. Use it to define your values. What do you always do? Does values harmony mean that everyone agrees? Or has the same point of view? No. Just the opposite. Develop a foundation of Trust and the sparks will fly.
- 18. Articulate Values 4H: Honest, Humble, Hungry, Happy ‡ Honest: What you see is what you get ‡ Humble: learn from others ‡ Hungry: ambition ‡ Happy: this too shall pass Consistency is Key No Slogans, don¶t write them down
- 19. Hire for Values ‡ CEO͛s job ‡ Panels: different angles and times ± Subordinates, peers, managers ‡ Blink: ͞I can tell if they are a Decisioneer when they walk in the door͟ ‡ Behavioral: What is the candidate doing in the interview? ‡ You͛ll know the first day on the job, so͙ ‡ Ask the Director of First Impressions
- 20. ͚Hire͛ beyond employees ‡ Partners ‡ Customers ‡ Managers ‡ Shareholders
- 21. The offer letter ‡ What͛s in it ± Name, title, direct manager, location, base pay, eligibility for benefits or variable pay, summary duties Plus Other Duties as Assigned. ± Non-competes ± Non-solicitation ± IP transfer ± Recommendation for equity/options ‡ What͛s not ± Promises of employment ± Compensation agreements ± Promise of options or other equity
- 22. Other hiring thoughts ‡ Been there-done that͛s v. Rising Stars ‡ Rested Racehorses ‡ Don͛t Change the Stripes on a Zebra ‡ Contract of ͞Employability͟ ‡ Title Inflation
- 23. Exceptions? ‡ Should you ever make a hire knowing that there is not a values fit? ± What about a customer, partner or shareholder?
- 24. Role of recruiters ‡ Expensive but ± Get a short list of good to great candidates quickly ± Negotiate the fee & terms ± Get access to those who aren͛t looking ± Have a greater chance that the candidate will stick ‡ Finance: Coloradosearch.com amy@coloradosearch.com ‡ Sales/Tech: Lori Joy Lori@32-Solutions.com
- 25. Between Hiring & Firing Reinforce Values All Hands Reviews Tribal Stories
- 26. Sustain Values ³The Five Temptations of a CEO´ Patrick Lencioni ‡ Quarterly Review Process ± Four questions ‡ What did you do? ‡ What will you do? ‡ How can I help you? ± Work? ± Health? ± Family? ± Passion? ‡ How are you, I and we doing against our values? ‡ Weekly All Hands Meetings
- 27. Tested ‡ You will be tested. ‡ Is it Honest to send out pro forma invoices? ‡ Is it Honest to underreport royalty revenue? ‡ Is it Honest to keep a customer͛s double payment? ‡ Is it Honest to book a deal with a customer who already owns the product?
- 28. Fire on values ‡ The paradox, flaw of the ͚essential personnel͛ ‡ The prima donna who does 80% of your business, but is a jerk. ‡ Finger in water ‡ Others rise to the occasion ‡ If you͛ve done it right, the remaining employees will get it.
- 29. Severance ‡ In exchange for a waiver ‡ 2 weeks, plus a week a year IC ‡ 4 weeks, plus 2 weeks a year Mgmt ‡ Cash for x; Benefits for 2x
- 30. Fire process ‡ Document, Document, Document ‡ Have the hard conversations ‡ Never on a Friday. ‡ First thing in the morning. ‡ Monday after Thanksgiving ‡ RIF ‡ Soft Landings ‡ Never sue
- 31. Firing ʹ Additional Thoughts ‡ Document, Document, Document ‡ Fast ‡ Black Monday ‡ PIP ‡ Protected Classes ‡ Amy Hartman amy@hartmanHRlaw.com
- 32. PEO͛s Outsource much of the employment relationship Dan.Cutler@Trinet.com
- 33. Who runs HR? When? ‡ Strategic v. Tactical ‡ CEO owns Strategic ‡ Controller/CFO owns Tactical ± Compliance ± Offer Letters ± Process ‡ At 75 employees͙dedicated function?
- 34. Additional Resources To see the video of this talk, visit http://fi.co/posts/318