Entrepreneurial Mistakes #2: Only the very best talent

I've rethought that Friday afternoon so many times.  I had been asked by a trusted customer--a partner, really, to come visit them on a Friday afternoon.  Alone.  He had something he wanted to talk with me about.  Let's call him Scott, after my wife's grandfather.

Scott was about the same age as my father, and after working with him for a couple years, I'm sure he thought of me fondly and wished the best for me as I did him, even as he knew that his company wasn't the best customer for our product.  They did development, worked with our terrible early product to make fabric, taught us was was wrong so we could improve it.  To this day, I don't think they've sold any.

"It's just this simple," he told me.  "If you work with him, we won't work with you."

"Him," in this case, was an employee I was considering hiring, who had been working with us as a consultant.  Let's call him Allen.

Allen had quite the resume.  He had worked for a customer, running a business that, depending on when you asked him, was either $60 million, or $260 million.  Whatever.  In any case, he was without a job, and knew the industry quite well.  Players took his call.  He could get meetings set up.  Open doors.

I have on many cases given the advice not to hire Rolodexes, but rather hire people with integrity and talent. 

In any case, I didn't listen to Scott.  For over an hour I asked the nitty-gritty questions.  Did he sleep with the help?  No.  Hand in the cookie jar?  No.  Cheat?  No.  Lie?  No.  Then why?  He was competitive.  I like competitive.  Silence.

There were two of them in the room--one was a vice president I didn't know.  I'm very straightforward, and don't like to read between the lines.  But they were not going to lay it out straight.  "You need to listen, Brian.  I'm not going to say anything more than this:  If you work with Allen, we won't work with you."

I'm still friends with Scott.  I did hire Allen, and they stopped working with us.

Just so you know I had more than one data point, I'll relay a story that Allen had told me prior to me hiring him.  They had a big customer that had been putting price pressure on them for a couple years, and forced several concessions.  Then the market tightened up.  Allen invited his customer to a nice dinner--several people eating filets over dim lighting.  He pulled out a bag with boxes wrapped in thick paper and ornate bows, and walked around the table handing one to each customer.  They opened the gifts to find inside a nice new tube of KY Jelly.  "Gentlemen, you're going to need this when you hear your new pricing," he said.

My only defense is that, coming from Hendersonville, North Carolina, that was so far outside of my experience realm that I had no idea how to take it.  I had no reference point.  I still don't...and don't want one.  And he bragged about it.

Two other people who had worked with him in the past came to me and told me, in no uncertain terms, that if I made them work with him they would quit.  I told them he would be completely customer focused, and they wouldn't have to deal with him.  I was true to my word, but hired him anyway.

Here's how it worked out.

Within weeks, I heard back from a trade show that he had screamed at the CEO of one of our larger customers on the trade show floor.  Two people called me, and two others confirmed it

Two weeks later, he set up a high level meeting with a customer.  They were presenting to us--sharing their market data and their feelings on the size and position of an opportunity of one of our products.  In the meeting, Allen didn't let them get more than a few slides into the presentation before he had stood up and was making the presentation for them.  At one point, I interrupted Allen and asked the customer a direct question, "What do you think?"  Allen walked over behind him, put his hands on his shoulders, and said, "I've got this one," then proceded to answer.  This, in front of the CEO of the customer's company.  The customer, who should have been presenting this to us and his CEO, sat there, red faced and tight lipped. The conversation digressed onto a side point, and we decided to reconvene at another time after we'd come to a conclusion on that point.  The customer never finished his presentation.

I said not another word during the meeting, but decided to try to coach Allen on the ride home.  How to let customers speak, to ask pointed questions, learn from them, let them look good in front of their bosses.  He didn't take it so well, to say the least.  I don't lose my temper, but I know what it looks like.

I asked the customer to send me the presentation.  The last slide was, basically, "Your new fiber rocks, is exactly what we have been looking for, has huge market potential, and we are the perfect partner."  They never got there.

By that time, Allen had flown to Europe to be introduced to our partners there.  I shared the presentation with another of our salespeople, then left the office around 5pm.  About five minutes later, my phone rings, and it's Allen, screaming at me. I let him go on for several minutes, then when he paused, asked quietly, "Have you been drinking?"  He admitted it, then lept onto second semester of Scream University.  When he came up for breath, I suggested that he go to bed and call me in the morning, and hung up while he was still yelling.  I called a board member, and, taking his advice, decided I had to fire him.

The story doesn't end there, but that's where I'll stop.  Hiring is never simple, but there is no excuse for hiring anyone about whom there is any question, or even a hint of a question.  Hire only terrific people, and pass on anyone who even possibly could be anything less than perfect.  You cannot be too picky, and unsolicited negative recommendations absolutely cannot be overlooked.

I will end with this:  among a few terrible hiring decisions, I've made some very, very good ones, and will be forever grateful for the sacrifices that these folks made and the loyalty they showed.  I wish I hadn't made a few of the decisions that I did, because if I could take back just a few key ones, these folks would have achieved the success they deserved.

Postscript:  I wrote this last night, and it's so hard to think about.  Innegrity was a technical success, a market success, but a financial failure.  There are a lot of structural problems with how thing happened--we spent too much too soon, took too long to figure things out and make things happen in both production and the market, took too long to learn where our pricing needed to be.  But at the end of the day, the biggest mistakes, the ones that couldn't be undone, were people mistakes.  I was blessed with a terrific team that worked well together and was very capable, but there were a few participants that I invited in (so it's my fault, my responsibility at the end of the day) who were like a cancer eating at the company from the inside.

I wanted to be able to have them get along, to work with the team, but a couple seemed so bent on conflict, on redirecting things to suit themselves...it is tough to think about, and difficult for me to understand.  But it does underscore the point of this post, which is that in a start-up environment, you are not seeking the top 10%, but the top 0.1%--the very best of the best, the ones who will for absolute certainty put all their energy into pulling on the same rope.  And if you are not certain that this candidate is in that top 0.1%, you have to pass and wait for the next one.