Finding Candidates Who Will Succeed In A Start-Up

The candidate had a stellar track record at one of the industry’s largest and most highly respected companies. Impressed with his accomplishments, the Board of Directors of a promising start-up jumped at the chance to hire him as CEO. They believed his pedigree and high profile would give the company instant credibility, and his extensive contacts would open doors with potential clients and partners.

But the new CEO didn’t work out. Removed from the life support system of a big company, he struggled to get things done. He added unnecessary bureaucracy, spent too much money, and didn’t want to get his hands dirty. He was gone in a year, and left the investors scrambling to get the company back on track.

Stories like this happen all the time. Like plants that thrive in one ecosystem but die when transplanted to a new environment, many star players at big companies wilt in a small company where they have finite resources and little or no supporting infrastructure.

Candidates who have successful start-up experience are an excellent and obvious alternative to candidates without it. But it would be a mistake for start-ups to avoid candidates from big companies. As evidenced by the executive rosters of countless start-ups, many executives from big companies succeed in emerging companies. Start-ups that won’t consider hiring them are missing out on a large and valuable pool of talent.

How can you identify the big company executives who can achieve start-up success? Look for these traits:

• Passion. Look for candidates who are frustrated by bureaucracy and the glacial pace of change at big companies. They have high energy and want to work in an environment where they can get something done and create something new.
• Undeterred by Possibility of Failure. Good candidates are comfortable with risk – the best thrive on it. No one goes into a start-up planning to fail, but good candidates do not dwell on the possibility. They know that if things don’t work out they can pick themselves up and move on. 
• Team Players. The best candidates are team players who don’t need perks or lots of subordinates to feel validated. They focus on results and work well with their peers and subordinates. 
• Focus on Equity. No one does a start-up for the cash compensation. Good candidates focus on the upside opportunity and, within reason, will trade cash for equity.
• Understands the Game. The best candidates ask savvy questions about the business plan, team members, investors, board members, and financing. They understand the goal is a profitable exit, and can put themselves in the shoes of investors. 

In addition, look out for red flags such as these:

• Risk Aversion. Beware of candidates who want a compensation deal that eliminates risk. They may ask for severance terms or bonus guarantees that are excessive in the context of a start-up company. The underlying message is that they do not have the stomach for risk.
• Naïvité.  Eliminate candidates who demonstrate poor understanding of priorities at a start-up. They might show excessive concern for administrative support or working hours, or pose questions that illustrate ignorance of what start-ups are really like. 
• Status Seekers. Stay away from candidates who want all the perks they enjoyed at big companies. Desire for high end perks shows a lack of appreciation for the financial constraints of emerging companies, and granting them undermines team culture.
• Bureaucrats. Many big companies are so highly matrixed that it is hard to figure out who is responsible for what. Weed out people who can’t point to concrete achievements for which they were directly responsible. 

In summary, be cautious and methodical when evaluating candidates who have never worked at a start-up. If you proceed carefully, you can identify some great talent, and avoid costly hiring mistakes.