Worshipping Success

Whenever a talk to a client about building their executive team and the candidates they’re considering, one specific theme is always dominant. You might think it’s the quality of the interview, or the team he could bring with him. Both good concerns.

For myself, I often ask what kind of leader she is apt to be, or how she thinks about the trade-offs between growth and frugality.

But what my Founder clients most care about is whether her last company had a massive exit; Was it a unicorn? 

They are well within the norm in being focused on this. Tech is fascinated by its own successes, and prefers not to think about its failures. But for every successful exit, there were probably 100 abject failures. And for every success and every failure, there are often another 100 very successful, sustainable businesses that haven’t become household names. 

What is the logic behind looking for someone who was associated with those rare massive successes? On the surface it has a logic to it:

If they did it there, they can do it here! 

That might make sense if we could somehow demonstrate that any one individual —or even any one team was the root cause of a massive success. But we can’t. Even teams that have repeat successes are not a controlled experiment proving their brilliance. Once an executive has a huge exit, she is worth more. More money, but also more credibility, more investment, magnetic to new partners, and customers. That adds a brick to the scale and makes it even harder to attribute success to the team’s ability. 

The market benefits bestowed on someone who had a big exit are worth obtaining. If my clients told me that the reason they wanted to hire a former early Google executive was to gain their marketplace advantages, I’d accede. Yes, their name might be beneficial to the next funding round. 

But, that is never what they say. Instead, they believe that simply having been an early member of a unicorn team ensures ability and results. It doesn’t. 

There are innumerable elements that lead to a massive explosion of growth. Some can be traced to the savvy of the team. But most are more closely correlated to luck, the type of industry and business, the trends in funding at that moment, the character of the investment team and board; Likely, as much as 50% of the outcome comes down to timing. 

Consider the start-ups operating in today’s conditions. They are contending with a massive slowdown in VC funding, a collapse of their primary bank (and probably more to come), supply chain stoppages, and high interest rates.

This moment of current founders will not produce a banner crop of massive exits in the near future. Theirs will be a longer, slower trajectory. They may still get to unicorn status, but not as fast or dramatically.

It seems less magical. So, the early teams in those companies may never become “hot properties”.

Timing matters. 

What’s my point? This entire fever for candidates who were at FAANG companies or other celebrated successes is driven by survivorship bias. It’s a cognitive bias that makes us believe in winners rather than losers.

But, it sends us chasing the wrong things. When a startup is lucky enough to be funded by (say) Y Combinator or Sequoia they end up with masses of advantages. They are positioned on the “inside track”. They have better advisors, more resources, access to first-rate partners, an entire alumni network and the ability to raise more money if needed.

While still certainly no greased slide, it also is not the school of hard knocks that might create real grit and scrappiness. 

But if you are hiring an executive who you need to make something extraordinary happen with limited resources, isn’t scrappiness and grit what you need?

Choosing someone who worked in an environment with plenty of resources and ready help is not the obvious place to look. The scrappiest candidates probably come from near failures or businesses that have sustained themselves over time despite obstacles. Those candidates were in the trenches and have the toolbox of tricks to show for it.

Despite long odds they found ways to survive and eventually gain stability. They are resourceful and tough. 

Survivorship bias afflicts us all. But in tech hiring it is at its most extreme. So, if you are a founder and building a team, this is something to keep in mind. It’s more important to find candidates with the skills you need, regardless of how famous the company where they learned them.

When you see a “big name” on the resume, dig in. Hiring someone without the resilience to deal with difficult circumstances will make the company itself less resilient should times get tough. Given today’s macroeconomic conditions, it’s reasonable to assume that may happen.

Build to last, not to impress.

Is your team contending with tough challenges? Schedule a call with me to chat about how Beyond Better Coaching-as-a-Service can equip them to be more resilient, more strategic and better able to meet the moment!