October 15th, 2010 - Open Knowledge — LiveJournal
Oct. 15th, 2010
07:10 pm - Cult Creation
Try Before You Buy (TBYB) - (principles: interviews don't work and hire slowly and fire quickly)
After building so many companies, I now advise that, for as many people as possible, candidates are never hired after being interviewed.
I urge founders to offer people a one-month, auto-terminating, consulting contract that pays the person the exact amount of cash and equity (but in NSOs instead of ISOs) that the person would get if they were an employee.
During the month, the team, including people that didn't get to interview with them, would be able to interact with that person. After a full month, everyone in the company would at least have a strong opinion on whether or not the person was a cultural fit and the team that directly interacted with the person would have a strong opinion on the competency of the person.
At the end of the month, I had three options:
- Let the contract expire without giving them an employment offer. Notice, in this case I set myself and the candidate up so that the default was they were terminated, so the candidate who doesn't get an offer doesn't have to go through any embarrassing situation - they could simply claim they let the contract expire, minimizing the impact on the team and them. In reality you are firing this person, but this way there are no worries of getting into a lawsuit for wrongful termination or anything like that - really only employees can sue for that kind of stuff, and believe me... it is a real risk when you are firing someone these days.
- I may simply offer to hire the person and then offer to convert their NSOs earned as a signing bonus of ISO or RSPA 83b'd stock.
- I may make adjustments to their offer. It is not uncommon to love a candidate, think they are competent, but either under-assess or over-assess their skill level. In many cases, I have seen a person come into their try-before-you-buy contract assessed at a Junior 1 level, but after one month, their team tells me the person is really a Junior 3. Only one time have I had it go the other way... but in all cases the candidate accepted the changed assessment.
TBYB is perhaps one of my most powerful tools. It lets you slow down the hiring process, speed up the firing process (or rather the termination process) and it let's you use interviews not as a hiring decision, but rather as one gate in a multi-gating process of a candidate getting an offer letter.
Fabulous article on building a high quality business.
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