EP 119: The ABCs of hiring quality leadership talent: Attraction, management, and retention for early to mid-stage organizations

Join host James Mackey and his guest, Sandeep Bhadra, General Partner at Vertex Ventures, as they discuss the critical topic of hiring quality leadership talent.

James and Sandeep share their expertise on various aspects of leadership hiring, common pitfalls to avoid when evaluating leadership talent, and the importance of operational roles in the hiring process. Learn about the relevance of having a well-structured onboarding process and the value of an annual operating plan for sustainable growth.

   0:34 Sandeep Bhadra's background
   1:54 Hiring quality leadership talent for early to mid-stage organizations
10:50 Importance of hiring operations personnel
17:50 Feedback and communication in managing employees
26:19 The value of having an annual operating plan
31:22 Scaling challenges for Founder & CEOs

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Our host James Mackey

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Transcript

James Mackey: 0:27

Hello, welcome to the Breakthrough Hiring Show. I am your host, James Mackie, and today we are joined by Sandeep Bajo. Sandeep, thank you for joining us.

Sandeep Bhadra: 0:35

It's a pleasure to be here, James.

James Mackey: 0:37

Yeah, it's great to have you, and before we jump into it, could you please give us a little bit of a background on yourself?

Sandeep Bhadra: 0:43

Yeah, sure thing. I'm one of the three partners and five investors at Vertex Ventures US. We're a seed series and investing firm based out of California, out of San Francisco and Palo Alto, and we invest in B2B software companies at the very earliest stages. So we were investing at the seed and at the Series A and we're partnering with a lot of technical founders and we're helping them to become like truly great entrepreneurs, managers and leaders of their companies as they grow the business and grow their companies. So that's a little bit of what I do and I've been doing this for six and a half years now at Vertex and I love waking up in the morning and A finding great entrepreneurs and be helping them figure out how to grow their teams and grow their businesses.

James Mackey: 1:31

I love it, and we have some really cool topics outlined today, and I'm really excited to get your insight as an investor, from your point of impact within working with your portfolio companies, saas companies, tech companies.

James Mackey: 1:43

I think it's going to be really beneficial for our audience of executive leaders.

James Mackey: 1:47

We do have investors tuning in, but we also have a lot of founders, ceos, chief people officers, coos a really a range of executives tuning in here, so I'm excited for us to be able to provide that value to them. The first topic that we wanted to discuss today is really how to ensure the quality of hiring, management and leadership talent for early to mid-stage organizations and some of the more topical aspects of that in terms of growing efficiently and thinking about folks that not only potentially have a good understanding of go to market or growth right when it comes to building teams or whatnot, but also having an understanding, a deeper understanding, of potentially business fundamentals when it comes to financials and economics and really being a little bit more, I guess, well rounded, if you will, when it comes to operating businesses efficiently. So I would love to, let's like, start high level right, like when you think about hiring quality leadership talent. What are some of the things that you think about or that you're prioritizing off the top.

Sandeep Bhadra: 2:54

Yeah, look, let's suppose that we're looking to hire a head of sales or a head of marketing or even a head of engineering right at one of our companies. Obviously, the fact that they've had progressive roles in their careers where they have come through the engineering ladder and become managers and directors that's always helpful or been a vice president of sales or sort of sales managers and sales directors, that's obviously helpful. But, candidly, like that's table stakes. The most important thing I think that we look for is their ability in attracting followerships so that they can hire, manage and sort of retain excellent talent. Basically, that's the number one goal, because these companies are scaling very rapidly and you want to make sure that you have a leader in place that is able to attract great people to the business. That's like priority number one. I'd say priority number two is that they have some sense of a cross functional perspective. Ultimately, this person is going to report to the CEO, like you just talked about. They need to have this sense that, hey, I'm excelling in sales, but I also need to be able to have a perspective on what I need from marketing so that I can be successful at my role, or what kind of feedback I need to provide to the VP of products so that we are all successful together. So that sort of cross functional perspective is pretty important and always great to have.

Sandeep Bhadra: 4:09

And finally, a lot of senior engineering or sales or marketing leaders don't really think about finances as such. We've seen this new emergence of sales ops or marketing ops roles where metrics driven sort of supporting roles within those functions. I think we've seen a great deal of good leaders figure out how to complement their managerial and leadership skills in sales or marketing with having analytical skills with a good ops person to join their team. I think that's wonderful to have. And then, last and not the most important thing is actually market or domain expertise. We work with a lot of first time entrepreneurs or technical founders and they oftentimes are like oh, I'm starting a database company, so let me find the marketing person who has database expertise. Or hey, I'm starting like a marketing SaaS company, let me find a sales person who has marketing SaaS experience. I think that's a lot less important than the kind of skill that the person has in doing the job well, managing their peers and actually attracting great talent to the organization.

James Mackey: 5:16

Yeah, for sure, I feel like domain expertise is what it comes, particularly to industry. I guess for some industries it's probably more important than others.

Sandeep Bhadra: 5:22

But Right, yeah. Yeah, there are some niche industries like industrial manufacturing or healthcare where it might help to have, but I still think it's a solid might. I think that somebody who's truly skilled and a craftsman at their job will architect a great team in whatever situation that you throw them to.

James Mackey: 5:44

Yeah, I think so. I think a lot of it does come down to experience, particularly on the hiring people front. There's a few primary mistakes and pitfalls that I think CEOs can make when evaluating leadership talent, and I think it's just really like understanding the individual's competency when it comes to. For me, it's like understanding, okay, what are actually the company's North Star metrics? What are the things that we have to achieve, whether on a product side or revenue side or whatever it might be? How good are they at really developing a headcount plan around that, and are they really prioritizing appropriately? Are they really able to hone in on a couple of key initiatives that are actually going to drive success, and do they know how to table the rest of them? How good are they at defining the causal relationship between the work they're doing and how that's actually going to make the biggest impact on the growth of the company? It sounds basic, but I think that finding folks with that that really are able to do.

James Mackey: 6:41

That is like it's so critically important.

Sandeep Bhadra: 6:44

Yeah, and I think that forms the basis of delegation as well. Right, because we want to see your own partners of our companies to hire extremely talented individuals and give them the autonomy to operate. And then what that means is that you're not telling your senior leader how to do something. You're just saying, hey, these are the results that I'm looking for at the end of the day, and can you help me get there, basically, and can you figure out how to translate the company's objectives into your objectives for your own team? And then how do you sort of grow and manage a team so that it meets these objectives?

James Mackey: 7:19

Yeah for sure, and so like on the talent side. The reason why I feel like this is so important is that there's a lot of talk about companies over hiring in the past year and I think in some cases that's accurate and in some cases I actually don't think it's accurate. I think when you're scaling rapidly and you have to fulfill business and you have the opportunity to become a category leader, sometimes you've got to take risks and hire people and we had a correction and that happens. That's going to happen in tech. So sometimes I think that feedback is warranted, other times not so much. I'm not going to jump in the bandwagon and say every time it was the case.

Sandeep Bhadra: 7:47

But yeah, also, there's no point in playing Monday morning. I don't care if we're back, right, because it's what is the point. Like you might as well, you take the decision that you think you need to take a CEO as a board to grow the company when it is required and when times set up, you decide yeah, sure, we'll have to pull back a little perhaps, but yeah, yeah.

James Mackey: 8:06

I think it's just like we're. I think folks are looking at how do we learn from this experience, and so that's one of the pieces of feedback or that comes up often is like, oh right, like okay, yeah, maybe in some cases, sure, but I think, though, that the risk is that there can be over hiring, and I think that's why prioritization of objectives and really understanding calls relationships to what drives North Star metrics is so important, because a leader says, hey, I got to expand my team by five or 10 people, or whatever it might be. It's like, well, wait a second. Like what exactly are these folks are going to be doing? What are they going to be working on? Are they really working on the most important stuff? Do we have to hire 10? Would we hire five? If we're really dialed into what we need to do?

James Mackey: 8:42

It's those types of conversations that like there's just a huge cost associated with hiring too many people or the wrong people. Just such a time drain, a resource drain. It's a huge. It's a huge missed investment, right. It's like as an investor, right. Like the way that I would like to think about is like, if you're going to invest in a company, right, you obviously want to see a clear business plan and how there's going to be a return on that investment and how the company is going to grow. I think it's like when it comes to building teams, we should be just as critical as like okay, we're going to invest a million dollars in hiring these folks, how clear of a plan do we have that we're going to get the ROI on these people, and I don't think all the time that sometimes leaders miss that and we have to avoid hiring those people, right?

Sandeep Bhadra: 9:23

I think you hit the nail on the head with ROI, because I think that good finance teams and good senior leaders work together to figure out hey, what are the aspects of the business which are running very efficiently, where we need to scale? And there there is no such thing as hiring. If I'm investing a dollar and making $5 every year, then I should go for it and try to invest as many dollars into that aspect of the business towards growth. There might be other aspects of the business where we still haven't achieved efficiency and the solution there is not that, oh, if you throw more money at the problem, it'll magically become more efficient. In fact, it's quite the opposite.

Sandeep Bhadra: 10:02

People, organizations get bloated and fat and happy rather than actually more lean and mean and efficient. And so I think the importance of sort of the financial planning or the sales ops or the marketing ops person is greater than ever before in organizations, I feel for this particular reason, because they can actually help the CEO decide hey, where are the levers of the business where I should put in more money? Where are the levers of the business where we still haven't achieved the efficiencies in the ROI bang for buck that we're looking for, and perhaps it's time to tighten up the organization.

James Mackey: 10:34

Yeah, for sure, man. There's a sales influencer advisor on LinkedIn, pretty popular. His name's Scott Lees. Have you heard of Scott?

Sandeep Bhadra: 10:40

No.

James Mackey: 10:42

You're only a stage advisor. He buys a ton of copies I think it's like a four or six X, like BPS sales, and now he just does this nice consulting stuff.

James Mackey: 10:49

He's the advice, secure vision for a few months on putting together our go to market. And one of the things that he said that stuck with me is like if I were to go back into a sales leadership role, I would, before accepting an offer, make sure I have approval to hire an ops person. It's like that would be the first hire I make, Like I'm not going to go in there unless I have somebody to come in help me optimize Salesforce, my tech stack, because I just am not going to have the visibility and efficiencies to actually hit the J curve year of year growth, whatever that you're expecting me to. I'm at a severe disadvantage if I don't have an ops person.

Sandeep Bhadra: 11:20

Absolutely. In fact, it is one of my questions that I asked, like the visa, sales and marketing, like when they're about to hire them, like hey, who are the first two or four critical hires and oftentimes the best ones always like, oh yeah, you know what? I don't think I'll have time to actually set up all of these processes or do all the analysis for all the numbers. I'd really like to hire an ops person and it's miraculous how many people are sheepish when they answer that question because they think that it's wasteful to have a person who is just your sort of analysis person in the organization. But if we're, if our sales budget is like 10 million or 15 million for the year, like it's great actually to have somebody who can tell us, hey, where's the money going and like what impact is it having on the organization.

James Mackey: 12:01

Yeah, for sure. It's just like again, it's like we have to look at hiring in the same lens of making an investment right, and we should be just as critical and thoughtful about when we make those investments, because it's like you go out and hire 10 salespeople or something like that but you really don't even have the data surrounding the ROI of that. You could literally be losing money if your CAAC ratio, your customer acquisition cost ratio to lifetime value, is so screwed because you have such a bloated revenue organization Like and maybe you're willing to sacrifice that in the short term, maybe for growth, but like you got to know those things that should be part of the investment criteria.

Sandeep Bhadra: 12:39

Yeah, and it helps. It actually helps inform faster growth as well. Right, like you could suss out like from the data that, hey, there are particular segments of the market which are like ripe for this product and we should go and go after them. And so, yeah, I think I had not a lot of great appreciation for sales and marketing office leaders, I would say about like four or five years ago when I just started at Vertex, but now that a bunch of our companies have grown substantially and I sit on the boards, I can see how instrumental these people are. These execs are in actually helping everybody see ROI and see the point of like where the dollars are being spent. It's wonderful, yeah, and they help instill good processes and organizations, which is super important.

James Mackey: 13:26

Yeah, I think the other thing that I really love about ops too it's like when we're thinking about like, a market correction, like what we've seen in tech right, with all the layoffs, hiring freezes, all these types of things over the past year it's like when you invest in operations and process, let's say that you do have to cut right and you have to go through layoffs, that fundamental machine is still in place, like if all of that stuff lives in somebody's head and then they leave. It's like you're starting from scratch. Not only is it the efficiency gains where you can like you're going to be more successful, it also ensures, like in a down market, your structure is in place so that when you start to grow again, you can plug somebody in. You always have to tweak, but you have a better foundation built for growth.

Sandeep Bhadra: 14:04

Absolutely Manual support. It's also the more human way about it. It also helps you deal with the fact of layoffs very humanly, because you have a rational sense for why you need to cut back on certain parts of the organization and while growing other parts of the organization and all of a sudden it's an exercise that is for the good of the company, because there's a rationale behind it, versus what can oftentimes become sort of political gamesmanship between leaders as the jostle for optics in tight environments. And so you cannot overstate the need for having great visibility and processes and metrics.

James Mackey: 14:44

Yeah, for sure. And one other point that I wanted to tie back to in terms of hiring great leaders, I think the other part that is often this, when it comes to capacity planning and org chart planning is actually taking in the time and consideration for how much time they're likely going to need to hire people, if they have. You got to factor that in to like you're not only the leadership role but the managers. If they have a full plate without interviewing anyone, but they have to grow their team by five or 10 people, then we're not really managing our org planning properly, are we? And I think that's another thing that's often missed.

Sandeep Bhadra: 15:22

I'm curious what have you seen like for a fast-flowing company let's suppose that's something that a company does doubling in a year. For instance, how much time are managers sort of first-line managers spending on recruiting people as a fraction of their, the number of hours they work each week?

James Mackey: 15:39

It's not like for hyper growth companies. It's not uncommon for them to be spending 50% of their time. We're talking category leading companies that have the right.

Sandeep Bhadra: 15:47

Yeah, category leading companies, yeah, exactly which are like just growing which are the grouping yeah, and I think that's yeah, yeah, okay, yeah.

Sandeep Bhadra: 15:56

I think we, for our companies which are growing reasonably well, we say at least 20% of your time should be dedicated to hiring and trying to find, like, the right person. But I can totally see how, if your business is absolutely ripping, you spend as much as half your time like recruiting, because talent is everything at the end of the day. I'm curious actually on that note, like what are some mistakes that you see VPs of VPs of marketing or sales and engineering or CEOs make in hiring sort of that first-line manager or hiring like a director level person in fast-firing companies?

James Mackey: 16:29

I think there's a few things that come to mind, but I think one it's relevancy of experiencing from a hiring perspective, one of the things that if they were working for a large tech company where there was a lot of inbound candidate flow and a huge brand behind them, it's much different building a team in that type of environment.

James Mackey: 16:50

When, then, when you're like a seed or a series A round, so when we see like and this is true like a founder level too if you get founders that have come from like Google or Netflix or something like that, and they're approaching hiring, as they did for those organizations, to how they're doing it for their earlier stage company, they're probably not going to be very successful. So unless they're the type of person that's adaptable and understands the mindset shift that needs to occur. So I'm not saying that they can't, but I think it's like uncovering, and that is. It goes beyond hiring, it goes to how they're leading a team right, like at a big company, you're going to be more siloed, it's going to be more consistent and, as a smaller company, their role at the department objectives are going to change, they're going to evolve. That's a huge issue that I see a lot of those a lot of companies make, or the mistakes that I fully agree with you.

Sandeep Bhadra: 17:36

Like yeah, this is sort of big company culture versus like hey, how am I adaptable, how am I scrappy and how am I adapting to the fact that, yeah, this is a new organization and a lot has to be done and we don't have necessarily the brand behind us to attract the best of them?

James Mackey: 17:52

Yeah, and we actually. I did a recording the other day with a chief HR officer, gianna, and she runs the company's XOB. It's about 800 person companies.

James Mackey: 18:01

She's a run HR people, and one of the things she was talking about is that it's not uncommon when you're starting to scale and you have more managers and directors, like one of the biggest threats is getting people that are not culturally the right fit, meaning that maybe they're very competent in terms of their skill set, but they just they're not great leaders right. They're not necessarily like they don't. The way that they interact with their team is not positive. It might be toxic these types of things and really trying to be able to nip that in the bud too because if the leverage that a leader has over an entire team, if you have one kind of bad person in that seat, then it impacts everybody within the department. So she said that when you're tracking manager's success, you have to look not only into metrics, because beyond metrics because sometimes metrics can be a lagging indicator, right?

James Mackey: 18:52

Where it's like you're seeing after a year, like, okay, metrics might start to decline but everything might look good on a monthly basis and, as we know in the startup game, like every week, every month matters, and so really staying close to those managers and making sure, like, what's the team sentiment? Like, are people engaged in their work, what's the attrition within the specific department? Again, attrition is a lagging indicator but you're trying to cover, like those types of issues proactively. That could be another big problem, absolutely.

Sandeep Bhadra: 19:18

Yeah, I think that I was reading this book by Claire Hughes Johnson, who was COO at Stripe, and the book is called Scaling People. It's pretty good. It basically lays out a set of very practical templates and frameworks. It's like an organizational management textbook, almost taken from her time scaling teams at Google and then at Stripe. She basically lays out this sort of cadence of one-on-ones and weekly and sort of quarterly meetings that organizations of different sizes and sub-organizations should have, such that there is a good sense of how people are feeling, because every organization is likely to have friction when tons of friction as they grow quickly or deal with adverse market conditions, as we are going through right now.

Sandeep Bhadra: 20:06

I think what is most important obviously is alignment so that we can get the best job done. I think it's equally important to Just make sure that leaders have the ability to listen to what people working in their organizations are most concerned about and what's keeping, what's blocking them and what's making them frustrated and sort of unblocking those, and that just requires A lot of one on one time and a lot of like periodic work basically, which is just managerial and has nothing to do with sales, has nothing to do with marketing, has nothing to do with engineering or finance or any of those things is just like, hey, like it's a coordination problem for sure.

James Mackey: 20:45

so.

James Mackey: 20:46

So for my company's here vision, one of our partners is greenhouse right, we do actually a lot of partnership on the show as well, but we Daniel cheat, the co-founder CEO, is coming on the show once a quarter.

James Mackey: 20:57

He jokes, right, says hiring managers usually struggle with two things hiring and managing Right, it's so what he talks about is like the managing side having that consistent feedback loop with, with employees is critical and I to me, I think earlier in my career I understood it, but I didn't really Only see the implications of like, okay, like, yes, we need to do surveys, engagement, but really, let's just we hire the right people and they're going to take care of it. What's interesting is like now that on the show, we've been doing this over a year and I've had sea levels from so many category leading companies on here and what I've noticed is that the most successful sea levels that come on the show or like, there's a constant feedback loop. We're sending out an email every Friday, we're doing surveys, we're doing one on ones, we're doing it's a constant communication weekly, monthly. It's been very interesting to see that level of consistency amongst the top companies. They're investing a lot of time communicating with employees being transparent, getting feedback, implementing feedback Across the board. Like I, literally not one category leading company executive that I've Spoken to has said otherwise like they're all obsessive communication and feedback.

Sandeep Bhadra: 22:07

Absolutely, and with work becoming more hybrid is just become more and more important. I'm curious, like have you implemented any of these processes in your work, because you're a manager for large organization? Like? I'm curious, like what are some of the things that you've implemented?

James Mackey: 22:20

Yeah, I think we're consistently asking for feedback from our employees and we really make them part of building the company, so their impact is not only as the individual contributor, but there.

James Mackey: 22:32

Here's what I've done right, it's also so, it's that and rewarding that. But it's also like, hey, everyone should know how their job impacts the high level company objective. Like there should be a clear cascading down and up Calls and effect impact on what were and, if you like, here's the other thing when it just comes to hiring in general, like this is just good leadership management advice in general when you're hiring, it's like If you cannot show that relationship between the person's work and how it's achieving that top line metric, why are you hiring for that role? There shouldn't be a correlation, a causal relationship, and every role should be critical and it's not critical if you can't show that relationship. Right, yeah, yeah, absolutely.

Sandeep Bhadra: 23:15

It's the best way to find motivated employees because they want to find meaning in their work.

James Mackey: 23:19

Basically, Right, right, but when it comes to feedback, like we'll tell them the company north star metrics, they know their point of impact and how they're going to help us achieve that. But it's also like what else, like what can we do to provide a better experience to you?

James Mackey: 23:30

I see customers and if we can implement it. Sometimes, like based on their point of impact, they might have a blind spot and of course, we can't Implement everything they say, because they may not understand 100% why we try to explain, but also it's everybody has different points of impact. So, but by and large, if we can implement something, we really try to, because People will stop giving feedback if we don't actually implement what they're doing. So it makes us better and it's also important to show that hey, we're listening, we're implementing this change because of what you, just as we would do a customer feedback right, like To be absolutely. It's equally.

James Mackey: 24:03

I see, like Companies running in parallel between customers and employees and both are of critical importance, and we talk a lot about optimizing customer journey and these types of things. We have to be doing the same to the employee journey, because I think a lot of folks don't Sometimes make the connections that Candidate and employee experience is tied to the hip with customer outcomes. There's really no difference, like when we talk about Investing in like a better recruiting process, for instance, or a better onboarding process. If you improve the experience of the interview process, you're going to have better people that make it through your funnel that you hire to prove on.

Sandeep Bhadra: 24:45

Yeah, like, if you prove onboarding right, like the safer sales, people will be more successful that will be more successful at their job and they'll be Exactly, and it's good for your organization and they'll attract better people to the team, and that's just as important.

James Mackey: 24:57

Yeah, it's so freaking critical, like it's we always think about investing and Removing friction from the prospects of the sales funnel to make onboarding incredibly smooth. I think companies understand the importance of that, but the same leverage For success can be found when we optimize like the people motions to.

Sandeep Bhadra: 25:20

Do you guys end up? Do you recommend that hiring managers have onboarding process before they start recruiting for a particular job?

James Mackey: 25:29

Yeah, man Like I, it's an investment, right? So if somebody comes to me saying that they need money to do something, I want to understand what the plan is. Why are we hiring for this role? Why does it matter? Right, what do we have in place? Do we have a clear? Do we have alignment first on what we need? Do we know exactly what they're going to be focused on? Do we have a clear onboarding plan in place so we know what success looks like? Have we agreed upon compensation? Everything else, like all of that, should be done upfront.

James Mackey: 26:01

I think a lot of companies could be a lot more effective if they invest a lot more time to turn up front, determining if they even need to hire, because what ends up happening a lot of times at early stage companies that don't have as much structure is they're doing that after a role is open, they're tweaking things, they're moving a lot of shit around. It just waste so much time and resources and they might end up hiring the wrong person. For instance, imagine if a CEO, a founder, came to you and says hey, I want a million bucks. You're like okay, what's the plan? They're like well, I don't know, I'm going to hire some people. Yeah, exactly.

Sandeep Bhadra: 26:32

You know it's like hey, sometimes you do that.

James Mackey: 26:34

Sometimes you do that and the idea is totally wow.

Sandeep Bhadra: 26:41

But it doesn't apply for sure when companies are scaling Right like we've got companies which are making millions of dollars of revenue, as they make that these all good companies go through an annual operating plan exercise where they plan out hey, here's the budget for various departments for the next year and these are the KPIs that we look for, to see which are forward looking, whether things are going the right way or not, and you'll tweak and adjust as necessary over the course of the year. But, yeah, like good companies at scale do an excellent job of sort of laying out in advance what is the plan? Why are we hiring people? How do we know if our experiments are successful or not? How do we know where we need to tweak? Yeah, absolutely, you've got to have a plan.

James Mackey: 27:25

Yeah, it's just, it's and it's really. It saves so much time, right, like, I feel like sometimes leaders, right, they feel like they might not have enough time or they don't want to spend the time doing this, these motions upfront, but the amount of time that they would spend interviewing, possibly hiring the wrong folks, whatever it just so far exceeds that. And so much can be saved by just slowing down at the beginning. Like I would say, if you look at the time it takes to hire in terms of a percentage basis, right, maybe right now we see 90, 95 to 90% of the time focused on after jobs open. Right, like, well, what if we say we're going to spend about 50% of the time, 40% of the time before a role is open, to really be certain to get everything ironed out, have a great structure in place, and then you can make sure that you're, when you're ready to hire, like you're actually going to hire for a role that you really need, the right person, and if you have the better structure in place, the interview process is going to move faster.

James Mackey: 28:22

Anyway, I think there has to be a mindset shift to do. A lot more of the work occurs before it's. I guess, even like a sports analogy would be. That's what you do in practice, right? It's not a direct analogy. It's all the work you do off the field that is going to make the difference in the game. And it's same here, just a lot more time should be going into planning and stuff's going to happen. In the start you need to hire and then three months later you miss a revenue target.

James Mackey: 28:46

That's to some extent it's unavoidable, but we should try to avoid those things as much as possible.

Sandeep Bhadra: 28:50

Absolutely you can. You should control whatever it is that you can control by having a good plan.

James Mackey: 28:55

Yeah, for sure, for sure, and so one of the other topics we wanted to get into today is there's the, as you put it, the notion of founders should be CEOs, and I think, too, it's like we work with a lot of early stage companies we both have, and there are, of course, a lot of cases in which it does make sense for founders to continue on as CEOs, but I think that it's important for us to it should be something that it's like an intentional decision and there's probably a framework to be in terms of how we should be thinking about this, and I'd be curious to understand your approach to this topic and how you think about this notion.

Sandeep Bhadra: 29:32

Sure, it's a pretty topical conversation right now, as many companies have suddenly realized that the days of easy capital are gone and all of a sudden, there's this emphasis on building organizations which are very capital efficient. I think that companies which are run by CEOs definitely have a greater capacity to take bold moves and make innovative decisions Right, and you cannot take away from that Like I think it takes a sort of founder CEO vision and sort of cultural capital to make really big bets in a company. Oftentimes, that said, being a founder is not a job. Being a founder is sort of what you did to get things off the ground, whereas being a CEO is definitely a job, and it's a job that involves setting up all of these organizational processes that we talked about focusing on building, growing and managing your career, senior leadership, focusing on communicating with investors on the board and doing all of the more sort of mundane tasks of making sure that the organization is running in a very efficient manner. And oftentimes that is not something that some founders actually enjoy, and there are great examples in history of founders who've decided to bring in a CEO because they just didn't want to have that job, simple, just as they hired a head of sales because they didn't want to do the sales themselves. Or they hired a head of engineering because, despite being like a great engineer, they didn't want to manage. Like hundreds of people, the Google guys founders brought over an outside CEO. More recently, the founders at HashiCorp decided that they wanted us an external CEO and they hired David McDonnell to the role.

Sandeep Bhadra: 31:25

I think that just takes a lot of. I think it's tough to hand the reins of this aircraft that you've just started constructing to somebody else and trusting them with it, and so I think it's a trust and emotional maturity exercise primarily more than anything else. But, by the way, there are other cases where We've seen founder CEOs succeed and excel because they have managed to surround themselves with excellent people who can teach them these processes and systems and sort of the organizational culture to build and grow like high performance teams. So I think it's really like one of two options. One is you either hire people who experience scale and who can act as your advisors, basically, and then your job as CEO founder is to make sure that these people are kept happy and that you're actually listening to them and they feel heard and their impact, recognizing the organization.

Sandeep Bhadra: 32:28

Or it might just be that you step aside and say, hey, you know what, I'm going to be a chairman, or I'm going to be CTO or like the chief evangelist of this company, and hire somebody who enjoys the day to day job of being a manager, which is substantially different from necessarily the day to day job of being a technical visionary or a product visionary or a founder Right, of course, the best founders figure out for themselves that they need to scale as leaders and managers and spend a lot of time honing that practice is building a muscle, basically, and so they spend a lot of time doing this diligently. But I think that if you feel like you don't have the appreciation or the interest in doing it and not everybody has to want to do that then I think it's probably a good time to sort of step aside and just have an honest conversation with yourself and your board and say, hey, you know what I think we'd really appreciate like having somebody actually manage the day to day of running the business.

James Mackey: 33:27

Right. Yeah, I think it's for founder CEOs and founders in general. It's challenging and it's not like there's an exact formula here, in that there's best practices, but it's going to be different for every business, is what I mean. However, I think we should, as founders, we should, always look at the business as an investment, right, and ultimately, if today our job is to maximize the value of that investment, and we should be looking at it from the perspective of what's going to give us the best, the highest likelihood of maximizing our investment here, and that's really how decisions should be made, regardless of what decisions made Right.

Sandeep Bhadra: 34:09

But, james, it's also a very personal decision which is like what gives me energy?

Sandeep Bhadra: 34:13

Like if I wake up every morning and say, oh, you know what, like being a CEO and running one-on-ones and doing quarterly reporting and QBRs and all of these other things gives me energy because I feel like I'm helping the business grow and I feel like that's where the greatest way for me to have impact is, then by all means you should stick around, because it means that you are interested in doing it and so, by definition, you will put energy and time into it and you'll be good at it. But if you feel like, no, I really want to be in front of customers and evangelize my product, right, and that's the only thing that gives me energy. Or sitting and actually thinking about the technology of this business is the thing that gives me the most energy, then that is the right thing to do, right, and I think it just comes down to sort of seeing hey, like you said, where does the business go and what is the right decision for the business. And two is my personal goals of what I want to achieve in life and how do I want to grow as a human. Is that aligned towards me doing that job, or is it better for me to actually spend my time doing something else, rather than force myself into sort of being CEO just because I have to be?

James Mackey: 35:31

I love it. It's really good advice. It's a tough topic to cover and, I'm sure, for people to think through. It's a tough one, right, when you start something from scratch and you're building, as you said, to really be able to slow down and determine if it makes sense, if it's the right fit for the futures. I'm sure probably one of the most challenging, if not the most challenging, decisions a founder would need to make Probably yeah, yeah, well, very cool. Look, we're actually coming up on time here. So I wanted to say thank you so much for joining us today. I had a lot of fun chatting with you and thanks for sharing your insight with our audience today.

Sandeep Bhadra: 36:01

Absolutely, James. It's been a pleasure and I'm glad to hear your perspective as well in helping a variety of companies grow and scale their talent and management teams. So thanks a lot for inviting me to your show.

James Mackey: 36:12

I appreciate that and for everybody tuning in, thanks so much. We'll see you next time. Take care.

Sandeep Bhadra: 36:17

Bye.