a seattle startup

This is a continuation of my previous post on recruiting & hiring in a startup. In Part 1, I shared my thoughts on recruiting tactics – Part 2 will focus more on what I believe are qualities to look for in a lead developer for an early stage startup. Unlike recruiting in a large firm, hiring the right people in a startup is critical – there’s no one to carry someone else’s dead weight and everyone plays a vital role in the success/failure of the company. I came from a boutique consulting firm and had the opportunity to be a part of the recruiting process. We had a very stringent system that tested for 3 primary characteristics in a candidate: intelligence, ethics, and fit. These were the same metrics we used to look for in a lead developer.

Our approach to recruiting a lead developer:

1. Find someone that loves our idea

• It’s no secret that we’re better at what we do when we love the work. When we were looking for our lead developer, we wanted to make sure he/she loves the idea, believes in the idea and is excited to work on the idea. If they’re a fantastic developer but not into our idea, they won’t make it good.
• What closes the deal for me is when the developer comes up with ideas on how to improve your product during the interview. They don’t have to be phenomenal ideas now, but I know they will keep innovating in the future as opposed to just building what you tell them to build.

2. Someone who knows what they don’t know

• One of the most valuable pieces of advice I’ve gotten in recent years is that “a part of being smart means knowing what you don’t know”. As I developed my professional career in the past 2 years, I’ve learned a lot about business, analysis & structured problem solving. In addition to that, I’ve learned that even the things I’m good at, there’s a lot I don’t know.
• Relating this to recruiting, we’ve came across a few developers who thinks they know a lot about the business side of thing but were dead wrong on issues and too stubborn to see that. Definitely not someone we wanted to work with. (don’t get me wrong, not all developers are business idiots, I’ve met several business savvy ones)

3. Ability to deal with disagreements & move forward when a decision is made

• In a startup, decisions need to be made quickly and work needs to get done even faster so you can’t afford to have disgruntled, stubborn teammates who refuse to do things another way.
• Disagreements will arise, we wanted to make sure whoever we hired is able to handle disagreements and quickly move forward even if decisions are made against their preference.

4. Ability to not take things personally

• Again, disagreements and arguments will occur & stress levels will be high – everyone is trying to do what’s best for the company so we wanted someone who won’t take things personally when their ideas get shot down.

5. A good fit for the culture of the startup

• At a small company, there’s nothing worse than having someone who doesn’t fit in with the culture. Before we started recruiting, Adam & I sat down and discussed the culture we wanted to build: young, fun, work hard/play hard, high on initiative, low on rules, always do what’s right.

6. Integrity & sincerity

• This is harder to explain since I’m not a psychologist but we judged this based on their responses to questions. Whether it’s a question on how they like to work, how they handle disagreements or asking them to estimate time needed to complete the project, we looked for people who gave us honest answers rather than what we wanted to hear.
• Checking references and asking the same questions you asked the candidates is also a good test.

7. If you’re not a technical founder, get a technical person to help you interview

• If you’re not a technical founder, it’s definitely challenging but not as big of a road block as some make it out to be, just a bit more time consuming. Adam & I share some knowledge of programming languages, website design, IT infrastructure and other basics but we’re not developers. We can’t accurately assess the technical capabilities of a developer so I got a friend of mine who had spent several years as a lead developer at another startup to help us interview.
• However, we did the initial interviews ourselves to make sure we have someone who is a good fit for the culture of our startup.

8. Give the developer equity & don’t be stingy

• Regardless if you’re able to pay a developer at their market rate or not, give them a fair share of equity because it’s a big risk to join an early stage startup – especially one that doesn’t have a single line of code written in our case.
• We came up with 3 different scenarios for a salary/equity mix and allowed our developer to choose the comp package he wanted.
• If the developer prefers a high salary and no equity, don’t hire them. Anyone who believes in the idea should prefer equity.
• Don’t be stingy. Do the right thing and offer a salary/equity mix you would personally accept if you were on the receiving end.

Techcrunch & VentureBeat both wrote about a Xobni acquisition rumor today and I decided to dig up my draft Xobni review and finish the post. I got my Xobni invite about 2 weeks ago and installed it right away. After a week of use, I’m feel that existing features are a bit bare but see tremendous potential here to integrate social networks into Outlook. Here’re my initial thoughts on Xobni:

• The product is still in closed beta so it does run a little slow at times but not a huge issue
• During initial install, it goes through this one-time “sync” process and had me a little worried about privacy – “sync” strikes me as a cross device process and I wondered if any of my info/emails were uploaded to a server somewhere. After emailing feedback@Xobni.com, one of their “QA Rockstars” responded pretty quickly to assure me that no usage data or personal info is taken.

Features I like:

• Sidebar is clean and doesn’t take up too much space. I am using a 30″ Dell monitor but I think you’re fine on most widescreen LCDs and there is an option to minimize the sidebar
• The “Files Exchanged” section is by far my favorite – it’s saved me time looking for files when a contact calls to discuss. Our accountant called me the other day to discuss some files I sent him last week and I was quickly able to pull up the files I wanted. Downside is it’s linked to your email attachments, not the actual file stored on your computer so any edits I make requires me to Save As to the appropriate directory.
• “Conversations Panel” is also useful. It gives me a quick view of all emails exchanged with a specific contact in reverse chronological order. Saves me from having to use Outlook’s search function or scroll through my entire inbox.

Less useful features:

• “Contact’s Network” section of the Sidebar shows who you and your contact have both exchanged emails with. Because this info is only derived from emails that have passed through your inbox, I don’t see a huge benefit here because I’m not discovering new relationships that I wasn’t already aware of. That doesn’t mean I’d like to discover new relationships this way, I prefer to keep my emails private.
• “Xobni Analytics” is by far my least favorite. It’s scratching an itch that doesn’t exist. Stats like hourly mail traffic distributions and contacts by email volume are borderline interesting and not useful. Other stats such as Response Time doesn’t even make sense. What does it mean to have a 60day response time for Sunday? I have 2 email accounts in Outlook, one is a Pop mail account and the other is a Gmail IMAP account. For some reason, some stats only reflect the Pop account whereas others reflect both accounts. Might just be a beta bug.

High on potential:

Up to this point, Xobni isn’t a necessity – I’ve tested this by uninstalling Xobni and I don’t miss it. Nonetheless, I see tremendous potential in the product and would like to see greater integration with social media and social networks.

My friend Derek wrote a blog post today on “Get Stuff Done in Facebook“. Not surprisingly, people are spending more time on Facebook and unlikely getting much real work done unless you’re a marketer. After reading Derek’s post I caught the Xobni acquisition feeds in my Google Reader and thought to myself, why not “Get Social in Outlook”? Not many properties on the web are as sticky as Facebook & MySpace where users average 15min and 23min per stay respectively (according to Compete). Many users likely have multiple visits per day so average daily time on site is even higher.

What desktop application is most similar to Facebook & MySpace? Outlook! And Outlook is inherently social with high market penetration. If most people (excluding high school and college kids) are like me, I spend a lot more than 23min/day in Outlook and it’s the only application that I never close. This value of Outlook if huge because I can’t think of any other application or website that I never close and am constantly prompted with new mail notifications to focus on the app. Xobni has the potential to tap this value.

With a data point of one, myself, here’s how I think Xobni can become a necessity. My desktop is cluttered with IM clients, Twhirl and a browser window with tabs for Facebook, FriendFeed, etc. If I can consolidate my IM client, Twitter client, Facebook newsfeeds and FriendFeed updates into a Xobni style sidebar in Outlook, that would be golden!

Update: Xobni to integrate with Yahoo Mail according to this techcrunch post. This is really cool especially with the lack of IMAP support and YahooMail/Outlook integration options. I’m tempted to reinstall Xobni once this feature is live!

It’s been over two months since Adam & I started doing this startup full time and I had sometime this weekend to reflect on some of our initial ups and downs. Our lowest point to date was the first week of work – we lost our first teammate on day one. We knew a lot of people would say no to us but we weren’t prepared for our first teammate/employee to say no to us so quickly. I won’t go into too much detail on why our first developer decided to back out, but I will say that startups are not for everyone. When the reality of the risk kicks in, some people develop an apprehension towards that risk and I completely understand that. Nonetheless, I’m thankful that he was honest and quit on day one before any progress was made.

Not a great way to get started. Adam and I sat here with our work plans and project scopes in hand starring at each other and wondering what to do. So much for the work plans, we set everything aside and made recruiting our #1 priority. We scoped out our recruiting strategy and started executing. On the 3rd day of work, I still vividly remember walking in the rain from college campus to college campus posting flyers on bulletin boards. It was a shitty feeling and the uncertainty of when we will have a complete team made it worse.

Looking back, I’m glad all this happened. Through the recruiting process, we had the opportunity to sharpen our pitch, develop recruiting skills (which we will surely need again) and most importantly, I strongly believe we ended up in a much better position with Hedley as our lead developer.

For those of you who are just here to find recruiting advice for a low budget tech startup, here’s a few things I would recommend from our experience:

1. Develop & test your pitch before you start recruiting
   1. This is a tough one because you get better as you pitch more people and get more feedback & reactions. I think it would be helpful to pitch to some smart close friends you can trust and get some honest feedback and reactions from them first rather than testing the pitch on potential hires.
2. Don’t waste money on a recruiter
   1. You can do whatever the recruiters do. One thing I learned from working at Lake is you can figure out just about everything – if you’re smart, you can figure out most things 80% of the way by being aggressive and creative – sometimes you can even do it better than the “pros”, especially on something like recruiting.
   2. Jason Calacanis has a good article on how to save money, he also believe recruiters are a waste of money.
3. Leverage your personal networks
   1. Dig deep in your Outlook contacts, Facebook & LinkedIn profiles and you’ll likely know someone who is in the field or has connections in the field.
4. Target college campuses
   1. Post job descriptions on bulletin boards in common areas as well as specific departments
   2. Talk to career departments and ask for mailing lists – sometimes they will ask for a job description and email blast departments for you
   3. Look up school directories for students and professors and email them for interest & referrals
5. Look up local developer groups and forums online
   1. We found Hedley through a Ruby on Rails group – there’re plenty of these for all kinds of professionals
6. Use Craigslist cuz it’s cheap – milk the expensive ones creatively
   1. It’s only $25 to post a job on Craigslist, much cheaper than Monster.com and CareerBuilder
   2. Use the free trials on recruiting sites like Monster.com or CareerBuilder – some of them will give you a few free resumes. Others will let you search for resumes but not give you names & contact info – instead of paying for the contact info, you can Google keywords from these resumes and find these people’s personal websites, LinkedIn profiles or other public online presence.
7. Write personal emails whenever you can
   1. If you have the time, read a few blogs and websites and write a personal email to potential recruits. Even if these people aren’t looking for jobs, they’re more likely to respond to your emails and give you referrals if you make the emails personal.
8. Don’t stop recruiting until you have someone on board
   1. It’s easy to feel a sense of relief and get lazy on recruiting when you meet someone good. After all, recruiting isn’t that fun. However, even when you find someone who seems like a great fit and shows an interest in the position, there’s still a high chance they won’t work out for a number of reasons. Keep recruiting until someone gives a full commitment with all the terms worked out.

Adam sent me this picture with the subject line “Your Mecca”… thought it was really funny. $5 for anyone that can name what it is, $5 more if you provide the address…
If your initials are “TJ”, you’re not qualified to enter (and obviously, Adam, you can’t enter either)…

Happy commenting! =D

Fred Wilson wrote a great article recently, “Hitting the Reset Button on Mortgages” with examples that clearly deciphers what’s actually going on. His thoughts on the impact of the Fed’s decision to bail out financial institutions compelled me to give more thought to the subprime mess and motivated me to write this post. I’ll briefly summarize a few key points but encourage you to read Fred’s article instead:

•  Lenders (banks) are trading in their non-performing, subprime backed, loans & bonds for federally insured loans & realizing a loss on the value of the loans
• If the gov’t didn’t insure these loans, then the lenders will be forced to foreclose on the mortgages for liquidity & send homeowners into the rental market
• Gov’t insurance of the non-performing loans allows homeowners to stay in their homes and alleviates some of the banks’ liquidity problems – this is good because the home owners will continue to pay a portion of their mortgages (Fred’s example says home owners will pay $1200 instead of the $1500 they’re supposed to pay)
• This also keeps housing prices from plummeting from an excess of inventory if you start foreclosing – another plus.

This all sounds good if three things are true:

1. the gov’t can accurately set the value of these non-performing loans
2. we are at the bottom of this subprime fallout
3. homeowners will continue to pay a significant portion of their mortgages.

To the 1^st point, I’m not so confident that these loans can be accurately priced because there’s no market for them. But, because there are tangible underlying assets (the land & the house), you can safely assume that once you lower the price enough, people will buy them. To use an extreme example, if you sell a house for $1, the checkout line will be longer than the line for iPhones. Still, how can the gov’t accurately assess the value? The most accurate way to do this is to have the individual homes appraised, but that doesn’t sound reasonable.

Secondly, this article is largely true if you believe we’ve reached the bottom of this crisis, but what if we haven’t? If the government insures these loans at a value of $x, what happens if the value declines another 20-30%? Would the government be forced to foreclose on those mortgages, cut back on other fiscal budgets, or issue more debt and continue to hold onto these garbage loans? Regardless, the impact on the US economy will be catastrophic. Stocks are also getting beaten down and companies look to slash jobs as a way to reduce cost & boost earnings/valuation. Low skill level jobs are usually the first to go so a subset of subprime homeowners will no longer be able to pay any of their mortgages. This creates an excess of inventory on the market as homeowners are forced to foreclose or sell at a loss to downgrade. At that point, would the gov’t have to take a significant loss to liquidate these homes. On top of that, these former homeowners will be collecting unemployment (though that money comes out of state tax money, not federal) – one would still beg the question as to what would happen to the US economy if home values & employment continues to decline. How much debt can the government float before they go belly up too?

Third, it’s great if the gov’t can insure these bad loans, allow the homeowners to stay put and continuing paying a portion of their mortgages. Paying $1200 instead of $1500/month is still better than nothing, but how much are people actually paying? There’s got to be a threshold where it makes more sense to foreclose than to keep holding the debt.

Is the government simply delaying the inevitable? I’ve read a lot of opinions but haven’t seen compelling numbers & comprehensive analysis. This would be a cool modeling project if I was still at Lake…