SaaS Interviews with CEOs, Startups, Founders
How to Convince High-Performers to Take a Pay Cut & Work for You
04 Oct 2023
Chapter 1: What challenges do founders face when hiring top performers?
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I'm Drew. I'm from a company called Crystal. So we've got a personality data platform. Been around for a little while. But for this talk, I... It's kind of funny how I guess when you're in a startup slash kind of bootstrap mindset growing over time, how you realize, wow, I've just interacted with a lot of people at my company. And I reached that point.
And this talk emerged out of an email that I wrote to another founder who was in this position where he just felt like, especially this was kind of like during the bull market when it just felt like every software engineer was asking for like a quarter million dollars. He's like, how am I supposed to do this? Like, I don't have the money to pay the people.
Like, I need to figure out how to get them in my company. So I wrote like a very long email that ultimately turned into like my own little personal note. And there's a lot of ideas that emerged. So this is just like... a talk with a lot of these ideas that I've refined and implemented over the last five-ish years. And I can get something out of it.
So first of all, when you're running a company as a founder or as an executive, The thing they don't tell you about is just how emotional it is, like he was just saying at the talk. So I want to ask about these three heartbreaks, three types of heartbreaks I can think of. So who in the room has lost someone they really wanted to hire, and then they chose a different job for another reason?
All right, it's a couple. And was it ever because of money, like better offer? Yeah, it's always like, all right. What about someone that unexpectedly quit, and you really didn't want them to? Anybody? OK.
And then someone you had to let go, mostly because either you, not necessarily strictly because of performance reasons, but basically, has anybody had to do layoffs before because they got over their skis? OK. Got it. All right. So people in the room have felt this pain. I should have asked this. How do I, what's the button? Yeah. Got it. Oh, the middle button. Green.
I swear I'm a tech guy, right? All right. First of all, I have one of my employees in the room. Did everyone sign the non-solicit as well, just in case? No? Nobody recruit Neil. He's making plenty of money. No, but this talk is mostly for people who are trying to pay their people well.
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Chapter 2: How can emotional experiences impact hiring decisions?
but have encountered that pain point. And that pain point I kind of loosely describe as you are operating with far less resources than your better funded competitors. Therefore, you need to give people a reason to come to your company that is not all about the offer, not all about the financial package. There's a couple of points in here that I'll kind of get into.
But largely, I kind of stick with this idea that I want employees to stick around my company twice the amount of the average startup tenure, which tends to be around 1.8, 2 years, depending on how you measure it. That's my goal of measure of success.
So I'm going to go into a couple of these parts, share some stories, share a couple of the hard lessons and mistakes that I have learned over the last few years in hopes that maybe you can pull from that, and then a couple of the specific things that I go to in interviews and policies that I've implemented at Crystal, some of which are pretty new, some of which have been for a while.
They're kind of like, I think working. Because we have a pretty strong culture now and
The way i've talked to people about why they work at my Company now we can pay people like more much more Competitively than we were earlier on so it's not as much Of a struggle to like be able to get someone a compelling Offer but it's still you know working at a startup is or a Early stage company of any kind is a higher risk so you need To package you need to put together something that's Compelling to them so i'm going to go into a couple of these Strategies so 2023
We're not in 2021. So money is not flowing abundantly. We're not in zero interest rate environment where every company can fund themselves. So startups all of a sudden became more risky again, kind of like they used to. They actually carry real career risk because everybody sees, oh, yeah, X company did 20% layoffs. And is your company going to do the same? So startups kind of carry, in my view,
carry the risk they should because startups are inherently volatile. And that means that I think this problem is going to get more acute as top performers also experience risk aversion. And they also are going to look at, all right, what are my options in these safer environments? So as a founder, There's no real alternative to having A players because you're fighting against inertia.
You're building something from nothing. It's very hard to do that, especially when you're trying to grow quicker than would be natural. So you just need those kind of top performers. And now those top performers are experiencing the same types of economic stresses that a company is. So they're looking just as founders are looking for ways to be more secure with their future, as are these people.
So I think this is going to become a more acute problem. How do I actually convince these people to join my company, knowing that they might have to take a salary cut, knowing that they're probably definitely taking more risk with their career? And here's the unfortunate truth.
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Chapter 3: What strategies can be used to attract talent without high salaries?
So on the vision. Got really far in the process. He accepted my offer. And then ultimately his old company, he sent this email and Was like, hey, i was really not in their best spots with that. Basically they offered me more money and now they convinced me Otherwise and now i can come back. That one hurt. That one really stung.
Here was one where this was a product leader who, yeah, you can see, basically, my decision ultimately came from working at a company that was larger and much more well-established, which mitigates some of the risk for myself and my family during these uncertain times. I'm like, oh, I wish I could say something enough, but you're kind of right. Really wanted that one.
You know, we'll stay in touch, blah, blah. Haven't talked to him since, of course. Yeah, this was a more recent one. This was a job applicant. We got really far into the process. And this is why I wanted to include this one, because it's not like this doesn't happen to us now, because this was just last month. And I think in evidence of the economic climate, this was another case.
And I dug in a little bit more, because I talked to him after. This is another risk aversion thing. You're a small company. I had this huge offer from this big company. Salary was slightly higher. I'm going to go with this. So I think this is going to come into play more and more, that whole risk aversion thing.
So every one of these, though, has a lesson, like whether that's one that got away or someone unexpectedly quitting. And I've experienced multiple of those heartbreaks for like eight years doing my current company.
But I've also gotten, I think, better at not just the front end of it, the recruiting part of it, but building real policies at our company that I now share in the interview process and actually really helps.
And i think it's also helping retain it's really helping Retain people for the long term now i'm not i'm not i'm not here to Say okay this is all i think i don't write our company is still Pretty small um so granted this is a lot of ideas that are stolen One of the one of the ideas actually a lot of these ideas i Stole from this book i'm not sure if anyone read this book before It's really good you'd recommend it um it's by reid hoffman and uh
Ben , I don't know how to say it. But he outlines a whole philosophy of hiring and talent management. Some of the ideas I've taken, some of them I haven't. But it's just a really, really good read. So a lot of my ideas kind of stole from that. I also stole some ideas from my dad. He's a carpenter. He's got this really thick Long Island accent. So he's got these one-liners.
One of the one-liners, I used to work with him when I was a teenager, and he has his guys. My dad's best friends, I never knew their last names. I just know Ray the plumber, Bob the electrician, Dave the lumber guy. That's who they are. And he always told me, you treat your guys good, they treat you good.
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Chapter 4: How does risk aversion affect potential hires in startups?
So I try to lead with that. And there's this really famous Ernest Shackleton quote about like he was going to Antarctica and put this ad out in the paper. I try to use that approach in my interview process in the very first time. So I say, like, these three things to make it really clear. Like, hey, I'm going to kind of lead with the hard and just see what happens.
So first of all, I, like, will... speak in longer terms than they're probably ready for. I'll say, hey, I just want to be clear with you. I'm recruiting you for the long term. I'm trying to build my team that I build many companies with together. I talked to Neil about this, and that's part of the expectation. I don't know how long Crystal's going to last. We could succeed, be huge.
We could fail. Doesn't matter. I'm recruiting you now because I want to work with you for a very long time. And if we share that, let's continue this conversation. If not, maybe it's not the right fit. And I want us both to sign up for a four-year commitment to each other. Not legally binding.
I'm going to get a little bit into this, but setting the expectation that this is kind of the time frame that mutually probably works best for us, and then let's revisit. And then I really am up front like, hey, this is actually probably going to be harder and more ambiguous, and you're going to make less cash up front than your other opportunities.
And I think most of our, especially our senior people, I've had this conversation with, and it's made them more excited about joining the company. Because I think in their mind, it clarifies why they're doing it, too. And it also helps filter through the actual other most important parts of the job. So that's in the interview.
Now, that four-year thing, this is something I stole directly from the alliance, that book. And I've implemented it at Crystal. I think it has helped people just think with a more structure about their tenure of employment. So it's still like we haven't had many people go through this whole process. it's been pretty cool to see just the effect that the policy itself has.
So very upfront that we want to do a four-year kind of, not a promise legally, but a four-year commitment to each other. Like, the company's going to invest in your growth, and you're going to invest in the company's growth. This is a mutually beneficial thing. And if something is not working along those lines, we don't hold it back and then, you know...
just send you a breakup text one day like hey we need to talk it's it's a it's a it's a vocalizing of the issue and giving the other chance to fix it whether it's from the employee to the company or the company the employee and then there's actual real teeth to it so like at the the big thing is after four years there's a one month sabbatical a paid sabbatical with like two and a half thousand dollar travel stipend and that's not just a perk it's also because we want to
Give you a reset and allow you to, like, all right, let's think about the next stage. And at that point, you have an official meeting where you can determine, okay, is it time to sign up for another tour of duty? Maybe another tour of duty in a different role.
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Chapter 5: What role does founder-led recruiting play in attracting talent?
into the agreement with a very sober mind and clear eyes, I think you can immediately filter out the conversations you shouldn't be having and then really affirm the ones you should because the right people, they'll go right into that and say, okay, tell me more about the hard things you're working with, and I want to solve those problems.
And depending on stage, there's just a little part of it because we're in this phase right now where we're actually shifting from trailblazers to bricklayers. This is kind of how I think about the two stages where you can filter out. Like, if you're at a phase that's startup and you really need the trailblazers, you need to be able to
understand that if you bring in bricklayers, they're going to be very frustrated. And bricklayers kind of think about like, no, we are building to scale, building for the long term. And likewise, if you're in a bricklayer phase and you start hiring trailblazers, they're going to blow the thing up and create chaos.
So having those questions up front, like if we're in a startup saying, hey, we have a lot to figure out. I might completely change the business model without really much planning in the next three months. Would that be OK with you? And some people are going to be like, no, I'm going to go work at Adobe. All right. This one's pretty obvious.
It makes sense, but I keep having to remind myself over and over that most people have a motive that's a lot stronger than money, but it's very different for each person. And if you can identify what that is, you can really structure either a package for them on the front end or just policies on the back end for the long term that
that really help them get what they want that might not be financial. And these are just some of them. And each one, like I said, each person has a different one. One of the specific ones that I've learned a lot about is, I guess the first one up there, especially on the technical and engineering side,
learned a lot about hiring, like, really great developers, because I've made a lot of mistakes with it, is that the best developers are so attracted to just the idea of them pushing code and then seeing it impact customers quickly. That's, like... It's more valuable than money to most developers, or most of the best developers that I talked to.
And I didn't really understand that at the time because we kind of think of people in these buckets as like, oh, you're in engineering. You're not really thinking about customers and user experience. You're thinking about the code. But that's not the case at all. We think both ways. So this is like one example of that. And oftentimes we use our product as a way to kind of detect this out.
So people that care about people and our products are personality things. So it kind of helps determine that. Fourth principle. And how much time do I got, Ben? About two or three minutes. Two or three minutes. OK.
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Chapter 6: What are the benefits of setting long-term expectations during recruitment?
And I've seen that really become a great way for people to grow alongside their companies. That's one thing. Something we started to do was just start building those blocks, so give people resources to have on their own personal websites, their own social media, grow alongside the company.
And then ultimately what this translates into is well after the employment tenure is tapping into the alumni network. Because when people are proud of working at your company, even afterwards, you're building this compounding network of people that becomes a recruiting funnel. So part of that is When you part ways, not screwing up and burning bridges unnecessarily.
So parting ways gracefully is an art that takes a long time to learn. Thinking about like writing a whole thing on that specifically because I think we focus so much on the hiring and nobody talks about the firing process and that's where everything gets messed up like half the time. A couple of ways here. We're running low on time. But to get that alumni network. One minute. All right.
Basically sum it up. When you fire people, put just as much thought into it as when you hire them. Asymmetric trade-offs. I'll finish off here. Our company is like eight years old now. So we've been able to have a couple of these situations where some of our top employees, now about 30% of our employees came from an alumni referral. And we've actually had some boomerang employees come back too.
And this is an example of one of the situations where alumni basically goes, finds a great designer at his company, ends up selling it. Now we've got a great designer because he was looking for a place to put her. And we had one of our first employees come back recently, and he actually referred a couple other employees.
And basically creating that alumni flywheel is like a great asset that I didn't understand until doing this for a while. So anyway, just a couple steps if you want to take a picture of it before the time's out. And thank you.
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