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Tuesday
Jun232015

Google marketing: Back to the future.  

In late 2000 I sat down with Tim Armstrong, who at the time was head of East Coast sales at Google.  As head of strategy at the time at Verticalnet, I had been tasked by short-tenured CEO Joe Galli with working through a strategic relationship with Google.  These were the days before Adwords or a Google revenue model or an IPO, but it was the period where the act of “Googling” had recently become synonymous with “searching”.   I remember Tim telling me that at the time Google spent less that $25k per year on marketing and that all of their awareness and traction was viral.  Ultimately, Google and their ad words became the marketing engine that no "new economy" head of marketing could do without. 

Recently I saw a new higher touch Google marketing approach.  A slick white "Apple-like" box with Google subtly embossed on the cover was shipped to a VP of Marketing.  Inside was a classy computer sleeve and a very formal invitation and offer.  “Agree to have a meeting to discuss your advertising needs and we will bring a brand new Chromebook to the meeting to fill the sleeve we just sent you.”

And it worked.  The meeting happened and the Chromebook was delivered.

So Google – one of the most sophisticated companies in the world and the foremost source of lead generation solutions had tossed aside the new-economy marketing playbook for a very old-economy campaign.  Is this a bad thing?  Is this back to the future?

My takeaway from this is that Google continues to prove what a smart company it is.  Just because there are many new marketing plays in the playbook, it doesn’t mean the old plays are dead.  How do you cut through the noise of thousands of emails a week that reach a CMO and get a meeting?  How about sending them mail (snail mail, not email, which does in fact still exist) or better yet – a package.  The funny thing is, when you talk to executives they often remark on how little real mail they get and how they now actually read most of it because it is so rare.  Clearly Google recognized the opportunity this presented.

Maybe marketers need to put high touch strategies back on the list of activities to try and see where the ROI stacks up with other approaches.  For some companies, it may make a big difference.  And that may be the real “new-economy” lesson Google continues to teach; almost any idea, even one that might seem outdated, is worth testing to measure the ROI and expanding if the data is compelling.

Tuesday
May262015

Hiring of Direct Reports: Responses from CEOs

Osage Venture Partners recently published a CEO survey focused on hiring and recruiting.  After reading the initial results, I reached out to a group of CEOs whose hiring practices I respect to get a sense of the process they go through to hire a direct report.  I asked each of 15 CEOS “How much time do you spend with a hire who will be a direct report to you before you make an offer?”.  These CEOs included portfolio company leaders and others in my network, all of whom run B2B technology companies.  Company sizes range from over $100M down to some of our newest investments.  Here are the quotes in no particular order.  They do not need any analysis as they speak for themselves but a couple things of note. 

 

  • Hiring a senior executive is a lengthy process involving multiple meetings and many team members
  • Very often candidates are seen in different social settings and with different mixes of people – restaurants, drinks, with significant others.  All with the goal of getting to know the person at a deeper level
  • The CEO owns this process – hiring a direct report cannot be delegated

 

 

“I spent a lot of time with the two most recent hires out of the office.  Head of engineering’s company was acquired and I had to convince him to walk away from his earn out.  He turned down our first offer but reached back out with interest a month later.  He came into the office 2 times to meet with the team.  We met 5 times out of the office for dinner/beers.  VP of Sales came to the office 2 times to meet the team.  We met 1 on 1 three times out of the office for dinner/beers.  We had ~2 hours of phone calls.  He spoke with 2 members of the board.”

“It has varied:  Folks I "knew from the industry" I have met at least a dozen times and have had dinners/coffees - have even met their spouses – before the formal process which is several meetings and long phone calls plus at least 2-3 visits at the office with the rest of the team.  For CFO who was part of a normal recruiting process, I had 2 interviews and several calls to winnow down my list, then I had him come meet the team and had a separate lunch meeting with him.  Then in his case I had him meet with three directors too, before presenting the recommendation to the Comp Committee “

“We spec the job and write a detailed job description and key requirements.  I review first, usually 90 minutes, broken into two 45 minute periods.  I ask questions for 45 minutes, then the candidate asks questions for 45 minutes.  At the end they are told that if they pass the rest of the interview process there will be one final interview by me.  This is followed by interviews by every member of my direct reports.  If it is not confidential, also will do an interview with a couple of employees.  Then candidate is told that the final interview will be a discussion about their 90 day plan.  They are also offered a phone session with me to get answers to any questions they may have to help prepare.  Final interview, review of 90 day plan, digging deeper into the things that were left over from the first interview and items others raised.”

“Process is pretty loose. At least 2-3 meetings and one meal for sure.”

“Great question. I can’t say that I have a defined process for this...probably should. Almost always there would be 4-5 one-on-one sessions; typically a mix of in-office and “social”, at least one breakfast/ lunch (typically earlier in the process) and one dinner (later in the process).  The initial get together may be 60-90 minutes; follow on sessions would be 2-3 hours.  Having said all that, I still am a bit hesitant to rely on these face-to-face sessions and try hard to find a reference that either I (or a colleague) know or has been sourced independent of the candidate.”

“I was more successful when I recruited, going after someone I knew or who was known by others on the team.  I wanted to know as much as possible before a first call.  Candidates had at least 3 interviews followed by a meal.  First meeting one on one. Next, individual meetings with peers.  Each would discuss their impressions with me one on one.  If everyone unanimously approved, the next step was meetings with outside Board members.  Final meeting one on one to discuss our offer.  Also I often had at least three 20 - 30 minute one on one calls during the process.”

“I probably have spent anywhere from 2-3 hours with them.  Always a meal.  I have a direct report of mine interview with a good percentage of our senior team leads.  We also try to focus at first on can this person be successful and not do we like them.  We measure against 7 cultural fit elements, and I have my own three filters.  Always try for multiple meetings.  One thing I have found helpful at the end was a dinner with spouses. Always seems to provide some additional perspective, especially if relocating. “

“First interview with me following headhunter or network recommendation.  Then with my other directs on phone and one in person.  Phone interviews with key investors.  If successful, dinner with me and directs.  Finally business case, expectations and contract discussion with me.”

“Spend 8-10 hours of time with me.  Usually split over three meetings, a company hour and finally a dinner with significant others.  Process is for me to meet first, then introduce to direct reports for interviews (I interview again as well), then do company gathering like a happy hour to get a sense of culture fit, then dinner with me and significant others and finally negotiate terms.”

“Initial phone call 30-45 min make sure like person generally and sell them story.  In office meeting with me about hour and a half.  If like them.... In office meeting with team about 3 hours (usually meeting with other DR's), 5-10 min close out with them thanking them, seeing if any major concerns, and telling them will discuss with team and be in touch.  If team liked them.  Phone call with me catching up about concerns/thoughts on both sides and creating agenda/deliverables for next meeting (they bring some work, they do an analysis of some sort, i produce financials, i deliver product roadmap, etc).  Reference checking.  In office meeting with me about hour and a half reviewing items from #4 (this may also include meeting some of the more junior members that would be reporting to or working with them).  If we're bought in.  Next social event - dinner and drinks - usually with one other person from team.  Last decision.  This would usually happen over 3-4 weeks. “

“At least 3-4 meetings.   Always have a meal. Also do a working session or two. “

“Skype / video interview filter first with me.  Then, interview on site with select team second.  And me again that round.  Get down to two finalists.  Then Skype with board member.   Two finalists in office back to back for a 3 hour 'working' session where we explore real scenarios to get a feel for working together.  Me, one other executive.  It is a simple filter.  If in a 3 hour working session you don't learn anything or if the candidate reverts constantly back to 'I'd need to get in and take stock of the situation' without ever getting specific or giving examples of what has or hasn't worked for them before?  Wrong person.  The right one will educate, challenge, and surprise you.” 

“Hours of phone calls, multiple in office meetings with me and with team.  Sometimes a coffee but usually not a dinner or alcohol event.  I actually think the best way to hire a direct report of mine is doing it over a long period of time, because I find that you really can understand where they are coming from and how much of a fit especially a financial fit you have.”

 

What is your process? – Let us know, we are interested.

One Note:  We did not ask for the whole process – do you use a recruiter?   How many candidates do you commonly look at?  Are references done?   The question was time spent in the hiring of a direct report and how that time was spent.   Knowing many of these companies, questions on other parts of the process would have yielded similarly thoughtful responses.

 

Tuesday
May192015

Congratulations to 2015 PACT Enterprise Award Winner Sidecar and Finalists SevOne, InstaMed, and Halfpenny Technologies

Last week, PACT – the Philadelphia Alliance for Capital and Technologies – held the 2015 Enterprise Awards, their annual black-tie awards gala. This year the event was held in Philadelphia in the newest wing of the convention center and was well attended by the broader venture community.

Each year top regional technology companies and life science companies are nominated for categories corresponding to different stages of business maturity. The event highlights three finalists in each category and then announces the winners. Osage Venture Partners is pleased to have four finalists and one ultimate winner in our investment portfolio including:

  • Sidecar – Winner – Early Stage Technology Company
  • InstaMed – Technology Innovator Finalist
  • Halfpenny Technologies – Life Science Growth Company Finalist
  • SevOne CEO Jack Sweeney – CEO of the Year Finalist

Congratulations to all four companies for being recognized as leaders in their categories and a special call out to Andre Golsorkhi and the entire Sidecar team on a well-deserved win.  Osage invested in Sidecar in mid-2014 and has been extremely pleased with the company’s leadership, vision, and execution.  SevOne, InstaMed, and Halfpenny have been perennial guests at the Enterprise Awards with each having been named either finalists or winners in three previous categories as each of these companies have progressed from start-ups to more mature growth businesses. 

Congratulations also to all the other well deserving winners and finalists across all the categories.

Tuesday
May122015

First CEO Survey Report

Earlier this year, we sent out the first installment of what we hope will become a regular (and brief) survey to capture the pulse of the most important members of the entrepreneurial ecosystem, the entrepreneurs.

In each survey we will ask questions on the topics that are top of mind for CEOs running a startup, focused on a particular theme each time. The first survey focuses on hiring and recruiting. We would like to share those responses with the community so that you can compare your feelings and experiences with those of your peers.  Thank you all for participating in this survey, and we hope the insights are helpful.

Executive Summary

Survey respondents are mostly early stage, B2B software companies on the East Coast, which is very reflective of the Osage Venture Partners (OVP) strategy. Highlights from the analysis include:

  • None of the respondents have current plans to reduce headcount, and they are planning on hiring more aggressively than they did in the past 12 months
  • Technical skills, raw talent, and cultural fit are considered to be the top 3 most important recruiting criteria; consequently, development / engineering leadership proves the most challenging position to recruit for
  • Respondents are more confident about their own ability to hire versus that of their direct reports
  • Finding qualified candidates is rated the biggest challenge in recruiting
  • The top 3 recruiting channels are personal networks, external recruiters, and job boards; despite the hype about LinkedIn, less than 25% of respondents rated LinkedIn among their top three recruiting channels

When analyzed by demographic groups, very few differences emerged across the various cohorts, and thus that analysis is withheld below.

Demographics

Overall, the survey respondents are very reflective of the OVP strategy, and thus offer a highly relevant cohort for early stage, B2B software companies on the East Coast. Among all the companies surveyed, 83% are located in the Mid-Atlantic region, 81% have fewer than 50 employees, and 84% have less than $10M of revenue, and 81% have raised less than $10M of total capital. The two largest industries represented are B2B software and Healthcare IT.

                

                                           

Survey Results

Respondents indicated an increased optimism about current hiring plans relative to past headcount growth[2], as 74% of companies surveyed are currently hiring, compared to just 61% that increased headcount in the past 12 months. Encouragingly, none of the respondents have current plans to reduce headcount – a surprising finding even despite the typical optimism of early stage technology CEOs and the fact that 10% of respondents reduced headcount over the past twelve months.

   

Investigating current hiring plans by demographic groups reveals takeaways that are in line with intuition. For example, the larger a company’s size, the more aggressively its current hiring plans. Further analysis across various cohorts indicates that these trends remained consistent over the past 12 months.

When making hiring decisions, companies consider a wide range of characteristics, with technical skills leading the way as the most important, followed closely by raw talent and cultural fit, suggested by the score below[3].  Interestingly, past experience is much less important, while details around compensation  and location were deemed less crucial[4]. 

        

Corresponding with the results above, respondents find development / engineering leadership to be the hardest to recruit for (with one equating to a role that is more difficult to hire), followed by developers / engineers. 

        

Overall, respondents are more satisfied with their own ability to hire versus that of their direct reports. 64% of the respondents rate themselves above average, whereas only 39% thinks their direct reports’ ability to hire is above average.  

The pie chart below suggest that the biggest challenge companies face in recruiting is finding qualified candidates.

When asked to identify the three most important recruiting channels, respondents far and away highlighted the importance of personal networks in recruiting, which scored nearly two times higher than any other category.  Interestingly given the size of respondents (and the often related reluctance to spend money), external recruiters were identified as the second most important channel, with job boards not far behind[5]. Despite the growing role LinkedIn plays in recruiting, both LinkedIn Ads and LinkedIn Proactive Outreach are ranked in the bottom half among all recruiting channels.

    

76% of the respondents do not have a dedicated head of HR, and 57% use outside recruiters. Interestly, only 47% of the respondents with no head of HR use outside recruiters, whereas 90% of the respondents with a head of HR also use outside recruiters. This may be because respondents with dedicated Heads of HR are more likely to allocate resources to outside recruiters and to other recruiting methods given the maturity of the HR function.

       

As indicated by earlier respones, engineering leadership, developers / engineers, and sales leadership are the top 3 hardest roles to recruit for. The data below show that these three are also the top 3 roles for which the respondents engage outside recruiters. 

       

Just 55% of the respondents utilize methods other than a traditional interview as part of their hiring process. The most frequently used method is testing. The test can be in different forms including case studies, coding, writing, and presentations. One respondent also mentioned using the Harrison Test, a personality assessment. Other qualitative methods include having the candidate meet the team and perform reference checks and social media checks on the candidate.

       

Overall Challenges

Somewhat surprisingly given the importance of team and culture to success of an early stage software company, finding talent rates as only the fourth most important challenge to the overall business faced by respondents. The top rated challenge was finding new customers. 

     
When analyzed by industry, finding new customers was the largest challenge identified by both Healthcare IT companies and B2B Software companies.  However, Healthcare IT companies cited securing capital as a close second, while finding capital was not one of the top 3 biggest challenges for B2B Software companies. 

      

Conclusion

We thank all participants for the time to fill out the survey, and hope that the results provide some interesting data related to hiring and recruiting trends for early stage, B2B software companies on the East Coast.  Given we intend this series to reflect the top issues on the minds of CEOs, we will let the data speak and explore the challenges associated with finding new customers in the next survey. 


[1]New England: CT, ME, MA, NH, RI, VT; Mid-Atlantic: NJ, NY, PA, DE, MD, VA, DC; Midwest: IL, IN, MI, OH, WI, IA, KS, MN, MO, NE, ND, SD; South: FL, GA, NC, SC, VA, WV, AL, KY, MS, TN, AR, LA, OK, TX; West: AZ, CO, ID, MT, NV, NM, UT, WY, AK, CA, HI, OR, WA

[2]Question 1: Is your company currently? 5. Aggressively Hiring  4. Modestly Hiring  3. Remaining About The Same Size 2. Modestly Reducing Headcount  1. Aggressively Reducing Headcount

Question 2: Compared with 12 months ago, has the number of employees (measured as full time equivalents) at your company? 5. Increased Significantly  4. Modestly Increased  3. Remained About The Same Size  2. Modestly Decreased, 1. Decreased Significantly

[3]To analyze the data from questions in which the respondents are asked to rank their top 3 choices, a score is calculated for each choice by assigning 3 points to a top 1 vote, 2 points to a top 2 vote, and 1 point to a top 3 vote, then normalized by setting the highest score to equal 100

[4]Other includes passion, intelligence, and factors that predict performances

[5]Other includes Angellist, Great hiring executives, and Board of directors / investors

Monday
Mar232015

Remembering David Freschman

I was saddened to learn last week of the death of David Freschman to pancreatic cancer.  David was a friend to many in the venture community and was one of the pioneers of venture capital in Delaware and in the Mid-Atlantic region.  

As the founder and continual sponsor of Early Stage East, an important regional venture event, David used his force of personality to push this region and its entrepreneurial and venture ecosystem to where it is today even though at times he must have felt he was pushing a stubborn mule from behind.  In recent years, other people and organizations, spurred on by David's efforts to prove the viability of the entrepreneurial community, bypassed the stature of Early Stage East, yet David still ran the conference while reveling in all the other parts of the ecosystem which were finally kicking into gear.  We all kept coming to the conference because David innovated and kept it interesting and also because none of us wanted to disappoint David.  

David was a kind and good man.  We lost him too early.  Fifty-two is far too young, but David sure did not waste a moment of it.  I never heard him say a bad word about anyone and he always had genuine smile, making anyone he welcomed feel like he or she was the most important person he had seen all day.  When I first came into venture eight years ago, others made me feel like an outsider to a tight and closed community.  David made me feel like a welcome addition.  Thanks David.  

I first heard that David was sick a couple weeks ago.  We sat on a board together and he dialed into the meeting and we were all told what was happening and why he wasn't there.  On the phone he was the same old David.  Nothing was dragging him down.  

My lasting memory of David is also the last time I saw him.  He was moderating a venture panel in an obscure club near Grammercy Park in New York, and somehow the panel of five he had prepared for became a panel of eight without anyone telling him.  For some this would have ruined their flow and their prepared conversation.  For David it was just more the merrier; if five investors were a good panel then eight made a great one.  He smiled broadly, made the extra three feel welcome, let the audience know how lucky they were and then moderated the best panel I have been on in years.  That was David as we all knew and valued him.  

David we will all miss you.  Thanks for all you did for the region and for Philly.  Thank you especially from all of us who were warmed and welcomed by your smile.