Over the last year, we saw many portfolio companies trying to hire a strong leadership team to augment the impact they create. Some sought CTOs, some sought CROs, and some sought CMOs. There were some hits, some near misses, and some glaring issues. A majority of the issues stemmed from not being the right cultural fit - talent and hard skills are almost never the issues.
What were some issues?
a) A CFO wanted to bring and manage her own team, without any input or interference from any other team members
b) A CTO wanted to work alone - without the need for an extended team
c) A CMO coming from a large organization wanted to delegate rather than do it herself
d) A Talent Head did not think it was his prerogative to proactively solve team issues as they were all adults
None of them was bad at what they did. Everyone had glowing resumes, and fantastic inputs to do the job - but almost every one of them failed to adapt to life at a young, unstructured, fast-paced startup.
On the other hand, there were CXO hires which went fantastically well. The right people, the right attitude, the right team spirit, the ability to fit into the startup culture - all of it.
The one difference between the two is detailed reference checks conducted by the founders themselves. Want to know what founders did right in conducting the reference checks?
1. More reference checks
Founders asked for 3-4-5, sometimes more references. Not exactly as references - but as ways to connect with people in the network of a potential hire
2. Drilled on specifics
There were instances when references waxed laurels about the candidate, and founders chose to drill down on specifics to identify if it is the correct input backed by data or anecdotes
3. Sought discomfort
Some founders directly started with "I have heard glowing references for a couple of people, however, some also said X..." And then waited for the ball to drop, or not. Founders were hoping to get positive responses but did not want to be blindsided.
4. More examples
After a couple of calls, good founders understood a pattern and led calls with that pattern. They asked, "Some people said THIS about him, what is your opinion on how it can be improved?" They did not want binary answers, they wanted opinions and colour to understand the depth of the relationship and the quality of the reference.
5. Indirect references
Some brilliant founders got indirect references. Someone who was not a directly listed reference. Someone who might have had nothing to win or lose, and was more likely to be honest. Founders ended the call by asking "Hey thank you so much for this call, they did mention X worked with you in a team of 4. Can you please help me speak to someone else in that team as well?". Good founders went ahead of the plan and dug deeper.
Hiring a CXO is a very difficult job - especially in the early stage when you expect the candidate to take over significant responsibilities, handsome pay, and precious equity - you might as well take considerable time and effort to get it right.