Thursday, October 19, 2006

The Best Advice I've Ever Received About Hiring Talent


About 8 years ago, I met Glenn Fuhrman of MSD Capital in New York. At the time, I was in the midst of writing my dissertation at Columbia on what drives pre-IPO and post-IPO success in venture-backed firms (the tome is here if you are interested). I was getting a little glazy-eyed from reading all the academic papers on the topic in the Columbia stacks, so I set out to sit down and chat with as many NY VCs and managers from VC-backed firms as I could. I find the best research and writing on business combines facts with relevant color commentary from subject matter experts.

Glenn has a unique background for a hedge fund manager. He’s got the requisite Wharton and Goldman pedigree. What makes him unusual is that he was an Art History minor at Wharton and remains an active patron and supporter of the arts in New York. (He serves on the board of MOMA’s Junior Associates.) Now, he runs MSD Capital with his partners and they have one very important client: Michael Dell.

Every VC you meet will tell you the importance of management in the success of a start-up. I heard lots of comments during my interviews like “In real estate, it’s ‘location, location, location,’ here it’s ‘management, management, management’” or “We’ll only do the deal if we like management; all our failed deals were when the market and product was great but the management sucked.” These days, it’s become almost cliché in business circles to utter a variation of Jim Collins’ aphorism: “Get the right people on the bus.” However, these comments fail to provide much guidance on exactly how to do this.

Glenn gave me what I think is the best advice I’ve ever heard about hiring new people into an organization. It’s about as good as a few sentences can get. Here it is:

“I only ever hire ‘A’ players for me and my companies. If I hire ‘A’ players, they will hire ‘A+’ people below them. If I hire ‘B’ players, they will hire ‘C’ players below them. ‘A’ players don’t get threatened by better people below them; ‘B’ players do.”

Whether you’re building a VC-backed firm or filling one of the 1000 daily open jobs at Yahoo! (as Libby Sartain talks about here with Guy Kawasaki), you would do well to heed this advice. A bad hire today can lead to a legacy of bad hires for that particular company, function or group. Something not easy to undo down the line.

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1 comments:

The Pulse said...

I can't agree more. I am a headhunter, and I have this discussion with clients often. More often than not, companies are tied down to money and what they can "afford" in a person, vs. looking at the true talent and what an "A" player will bring to the table. The smart companies do what it takes to "Get the Best Athletes on the field" and let them play ball. The other companies, the ones who are stuck either not being able to hire anyone, or who are back at the Hiring table when the "bargain" they hired doesn't work out need to get with the program. "A Players Hire A Players, if you hire a B player, you get stuck with a bunch of C's...and the business world is much to competitive to be average...and that is all a "C" is....Average....