How to Create the Next Facebook: Seeing Your Startup Through, From Idea to IPO (19 page)

Be nice to nerds. Chances are you’ll end up working for one.

—Bill Gates

From the early days, Mark Zuckerberg knew he needed to snag super-smart engineers, and he spent a good amount of time on recruiting. But he also knew that intelligence isn’t everything. Zuckerberg wanted
all
employees to fit into the corporate culture, which emphasized collaboration, excellence, and moving fast.

Hiring is a core competency at Facebook, and headcount soared from 2,126 to 3,539 from 2009 to 2011. And that’s not the end of the company’s growth. Facebook’s headquarters in Menlo Park, CA, is about 2.2 million square feet. On the wall is posted an interesting phrase: “This journey is 1% finished.”

In this chapter, you also take a journey: to understand the nuanced process of recruiting talent. It’s a critical part of success—and extremely hard to pull off. You can learn from some of the techniques that have helped Zuckerberg put together a world-class team.

Many of your hiring decisions will be mistakes. That’s a fact. Get used to it.

Zuckerberg learned this lesson quickly when he brought on Eduardo Saverin as his co-founder. Saverin was supposed to provide the business savvy for the company, doing things like creating the ad business and raising capital. But his efforts turned out to be underwhelming and even a hindrance to Facebook’s progress. The company wasn’t his top priority—he didn’t even leave Harvard in 2004 to go to Silicon Valley with the rest of the team. That was a big-time red flag.

Zuckerberg took swift action and forced out Saverin. It was messy and gut-wrenching, but it was the right move.

Zuckerberg still needed a strong business partner, and he found that person with Sean Parker. It’s true that Parker was wild and something of a party boy. For example, he hired graffiti artists to paint Facebook’s offices (including risqué images in the men’s bathroom).

Despite this, Parker proved to be invaluable during the company’s initial success. He set up a Delaware C-Corp and put in place the mechanisms to give control to Zuckerberg (provisions in the shareholder agreement gave Zuckerberg the power of choosing the board members). Parker also made some key hires, including Matt Cohler, Kevin Colleran, and Aaron Sittig. He also helped with funding: he made key introductions to Reid Hoffman, Mark Pincus, and Peter Thiel.

But after a while, Parker turned into a liability. He was accused of questionable personal behavior, so Zuckerberg had to move him out. (Parker went on to help start companies like Spotify and become a billionaire from his stock in Facebook.)

Zuckerberg wanted some “adult supervision” to make sure Facebook would continue to grow. In September 2005, he hired Owen Van Natta, a former executive at Amazon.com. When he came on board, Facebook had only 26 employees and about $1 million in revenue. But Van Natta knew how to scale the organization and wasted little time in adding hundreds of employees. He also created the crucial infrastructure to accommodate the explosive growth, particularly in the sales organization and finance department. After a couple of years, Facebook reached $150 million in revenues. It certainly helped that Van Natta was a great dealmaker and negotiator.

In the meantime, Zuckerberg focused on the product, with the help of standout people like his school buddies Dustin Moskovitz and Adam D’Angelo. They were a tremendous source of energy and innovation, which helped to fend off rivals like MySpace.

By early 2008, problems were emerging. The launch of Beacon was a total disaster and hurt the company’s credibility. Zuckerberg had no choice but to pull the product. Going forward, he knew he needed someone who could get the company to billion-dollar revenue levels. But Van Natta was the wrong person—his skill set was for early-stage ventures.

Zuckerberg went on another search and found Sheryl Sandberg. Even though she was only in her late 30s, she already had a stellar career. After earning an MBA at Harvard, she went on to be chief of staff of the US Treasury Department. In 2001, she joined Google; she eventually became vice president
of global online sales and operations, where she helped to build the company’s incredible business model.

Zuckerberg saw that Sandberg would be the perfect fit. But it wasn’t easy bringing her on board. He spent several months wooing her with dinners, meetings at conferences, and lots of phone calls.

In March 2008, Sandberg agreed take the post of chief operating officer for Facebook, which was the number-two spot at the company. It turned out to be a great move. Within four years, Facebook hit $4 billion in revenues and $1 billion in profits.

It’s important to understand that it’s incredibly hard to find someone with the skill sets to scale a business to the levels Facebook has reached. It took about six years for Facebook to reach $1 billion in revenues.

Managing this growth is extremely difficult. What is it like to hire 500 employees in a year? More important, how do you manage them all? To be successful, you need a company with a strong organization, with people who can work at breakneck speed. The employees need to understand how to deal with the biggest problems. There is simply no time to waste on trivial issues—it will only slow the company’s growth.

It’s true that big-time risks are associated with hyper-growth. But when you’re approaching a new market—such as social networking, social gaming, or daily deals—it’s a race to get to dominance. Once that’s achieved, it becomes tremendously difficult for others to threaten the market.

As you can see, building a team and scaling for growth is an evolving process. A CEO needs to realize that certain people may be best for only part of a company’s life cycle. This means a new person will need to come on board to take the venture to the next level. This process requires a lot of strategic vision, but it’s essential when creating a breakout company.

Before diving into the best practices of recruiting, let’s first look at the topic of bringing on a co-founder.

There’s no easy answer to this question. It’s true that many great companies have had co-founders, including Google, Yahoo!, Apple, and Microsoft. But other great companies haven’t, such as Amazon.com and Dell.

There are certainly advantages to having a co-founder. You have someone to bounce ideas off, and you can benefit from the extra help (the work of a startup is enormous).

VCs will be encouraged because they will see your focus on teamwork, which helps minimize risks. But they also want to see co-founders with complementary skills. Often this means that at least one person has a technical background. At Facebook, Zuckerberg filled this role, but Dustin Moskovitz provided critical help with operations and the business strategy.

You need to be extra careful when finding a co-founder. Keep in mind that breakups are common, which can prove to be fatal. Ideally, you want a co-founder you’ve known for several years and with whom you have chemistry. They should also share your values and outlook on life.

Once you have the right co-founders, it’s time to put together your core team. Let’s look at some strategies.

Over time, you’ll come up with your own style of recruiting. You’ll learn from your co-founders and advisors, and you’ll develop your own techniques. But to get things going, here are some ideas to consider:

• Big-resume people:
  When you grow, you need these types of employees. But when you hire them, put them at a level below what their skill set can handle. This is a good way to test the person and see if they truly believe in teamwork.
  
• Walks:
  Zuckerberg got this technique from Steve Jobs. He took long walks with potential recruits, which was an effective way to get to know the person and see if they fit with the corporate culture. Zuckerberg would often walk to the edge of a hill and say to the recruit that Facebook’s best days were still ahead of it.
  
• HR department:
  Zuckerberg didn’t believe that an HR person should be in charge. He hired a top engineer to run the department.
  
• Interviews:
  Resumes mean little. They don’t give you any insight into key things like resourcefulness, ethics, and the ability to communicate. But an interview helps. It’s good to include many people in the interview process: five to ten from across the organization. This may seem like a lot, but it’s worth the effort. The costs of hiring the wrong person are much higher.
  
• Hypothetical:
  A good way to get a sense of a potential employee is to ask a question in the following format: “What would you do if …?” The answer should give you a good idea of the person’s approach to decision-making.
  
• Experience:
  It’s often not important. If anything, deep experience may mean that a person is set in their ways.
  
• Work environment:
  Create an environment that you would want to work in. When your employees see that your company is a great place to work, they will tell their friends. Some of the best recruits come from referrals.
  
• Reviews:
  The first six months are critical for a new employee, which is why you should have monthly reviews. But they shouldn’t be just rundowns of employee progress. Employees should be empowered to provide their own feedback; and criticisms should be encouraged, not penalized. This is the best way to grow and to correct lingering problems.
  
• Onboarding:
  This sounds very corporate—and it is. But that doesn’t mean it’s a bad idea. From the start, you want to get your new recruits on the right track, which means providing intensive training. Facebook has a program called Bootcamp that all new engineers are required to attend. It involves courses on how to code the Facebook way.
  

Even if you wind up making a good hire, you must realize that the person probably won’t be around for the long haul. Keeping top talent is never easy, especially when a person has so many opportunities.

Although it can be disruptive to have a key person leave your company, it should ultimately be healthy. Having new people come into the organization brings in new perspectives and skills, if only for a little while. This has been common for Facebook. One example was the hiring of Steve Chen, who only lasted a couple weeks; he then went on to co-found YouTube.

As you begin your entrepreneurial journey, you’ll see that there are many ways to recruit—and it can be overwhelming. It’s a good idea to test new approaches, but stick to a few that have a tendency to work the best for you. Otherwise the hiring process can become cumbersome, especially for the candidates.

You also need to refine your recruiting process for the roles you want to hire. Some of the trickiest include engineers and salespeople. Let’s look at each.

It’s easy to find uber engineers. The hard part is convincing them to join your firm.

Even a few uber engineers can make a huge difference for a startup. Their productivity levels are quantum leaps above those of good programmers.

This is why Zuckerberg spent so much time trying to get talented people like Adam D’Angelo, who was a graduate of the California Institute of Technology in computer science. While attending, he entered the Association for Computing Machinery International Collegiate Programming Contest, where he won the top spot in 2003 and second place in 2004. Zuckerberg believes that D’Angelo is the best programmer he has ever met.

While at Facebook, D’Angelo was critical in providing the underlying technologies to scale the company’s tremendous growth. In a way, he helped avoid the kind of implosion that crushed Friendster.

How do you convince uber engineers to come on board? You need a compelling story. Zuckerberg had the advantage of Facebook’s success, but he also had a grand vision. When he talked to people like D’Angelo, he told them they could have a huge impact on the world.

When recruiting uber engineers, you are competing against great companies like Google, Microsoft, and Zynga. You can’t win by offering more money—you can’t compete on this level. Success is a matter of getting an uber engineer excited about your company. It’s that simple.

A good way at looking at this is via Abraham Maslow’s hierarchy of needs. The most primal ones include food, air, and water. But as you move up the ladder, the needs become more ethereal. At the pinnacle, they include self-actualization and transcendence. This is where an uber engineer lives.

Another way to get the attention of an uber engineer is to show them the disadvantages of working for a larger organization. For the most part, the work won’t be as impactful as it will be with a startup, and the person will probably occupy a cubicle.

As the CEO, you also need to convince the uber engineer that you will provide the support and tools necessary for success. This means investing in software, training, and other resources.

Despite all this, you should not hire an uber engineer at all costs. The person must believe in your mission and be willing to be a team player. It’s far from easy to get a sense of this during interviews, but you can use some techniques to help:

• Avoid an uber engineer who talks mostly about compensation and exits. You instead want them to focus on ideas, the industry, and building great products.
  
• When discussing compensation, is it primarily about cash? If so, this is a bad sign. You want someone who wants stock.
  
• Can the engineer communicate complex ideas? To be successful, they will need to work well with others, and this means having strong communications skills.
  
• If your gut is unsure, this is a telling sign. Trust your instincts. You are probably talking to someone who won’t work out.