Recruiting and Retaining the Right Executive Talent

Please note that a version of this conversation originally ran on the HR Heretics podcast. This transcript has been lightly edited for clarity.

Key takeaways

• Write a MOC. A MOC document can help you prioritize what jobs you need an executive to do so you can hire against those needs.
• Leading by influence, not directive. Build trust with founders and then offer your own data-backed take on why a founder’s decision might not be the best decision they could make. 
• Betting on potential or experience. When you’re betting on experience, you’re betting on someone to continue on their established growth trajectory. When you’re betting on potential, you’re betting on someone’s ability to learn your company and your product.
• Working sessions. Getting executives out of the 1:1 interview process and into a whiteboard session can help you assess their core competencies and how they’ll work with your team.
• Talent in 2024. It’s getting more difficult to hire great talent at the growth stages because many companies were expected to go public and get the associated capital infusion from going public. 
• Retaining great talent in a tight market. This has more to do with retention issues and less to do with raising new capital. Retaining employees means resetting their valuations, providing additional equity to true them up. 

Transcript

Nolan Church: Matt, thanks so much for joining us on HR Heretics. How are you today?

Matt Oberhardt: Doing really well. I appreciate both of you inviting me to join you. 

Kelli Dragovich: So happy you’re here, Matt. 

How CFI talent partners assess talent

Kelli Dragovich: So Matt, you and I worked together a little bit when I was at Carta. You were the shoulder I would go and cry on anytime I would have some sort of executive-level problem or executive recruiting problem.

Starting with where the world is today: talk to us a little bit about venture’s lens on talent and how does a venture talent partner assess talent?

Matt Oberhardt: So I think it all starts with what your mission and what your role is. And I think the way that we’re structured over here is somewhat different and unique relative to a lot of the other venture talent partners that are out there. We’re coming at it from the lens of not being recruiters. We’re coming at it from the lens of being advisors. We’re coming at it from the lens of being counselors.

When we’re meeting executives, the difference is we’re focusing a lot more on their intangibles, and their soft skills in addition to their functional capabilities, because we’re not really meeting executives and evaluating them for a specific role. We’re meeting them to bring them into our network and be there as a resource to help them further their careers. We’re not necessarily interviewing them for a specific role in the portfolio. 

So when we’re talking to executives and evaluating them, it’s a lot about EQ.For example, how do you take feedback? What are the things that you’re aware of that might be your personal triggers? What do you see as your interpersonal impact in a room? What sort of balance do they have between humility and self-confidence? A lot of those things. We’re also looking at motivations: intrinsic motivations, extrinsic motivations.

We’re doing a lot on critical thinking, like looking at their analytical skills, their business acumen skills. We spend time looking at their org savvy, their leadership skills. All these things that aren’t necessarily role specific, but going to be a lot more relative to who they are as an executive. 

And I think then that also plays in—look, I’ve worked with both of you when you were in the portfolio and the conversations that we had were always a bit more strategic around how to approach the role. How can we help the team get calibrated on the role? Who are the best search partners to use, and let then letting you and that search firm run with the execution. And we remained in that advisory capacity, being there to help you with referencing compensation guidance, our views of people that are in process that we know that type of thing.

So I think our lens on talent is going to be a little bit different because the role as the talent partner is defined here very differently.

Balancing internal and external roles

Kelli Dragovich: Matt, what percentage of time are you spending on external succession planning, meeting new executives versus advising companies inside the portfolio, and how do you balance that?

Matt Oberhardt: It’s a great question. I think it’s probably about 40% with the portfolio, about 40% with the executive community, and then about 20% on work with the veterans community, which we can get into later. But if you look at portfolio versus external in total, it’s probably about 40–60%, honestly. But, as both of you know, in a given week, it might be 80–20% and then it might be 10–90% the following. 

We measure a lot in terms of tracking how we’re spending our time. Where are we putting our energy? Are we putting our energy into meeting new executives? Are we putting our energy into sustaining those relationships by being there to offer counsel or introductions? Are we putting our energy into being on search from update calls? We have a lot of different metrics that we track internally so that we can make sure that we’re keeping a good balance and that there are certain parts of the work that we do that aren’t forgotten or left behind in the heat of the moment.

Measuring success in talent assessment

Nolan Church: That’s really interesting. How is your success measured?

Matt Oberhardt: So, we have metrics that kind of roll up as a team. But within that set of metrics, we have a fair amount of flexibility and latitude where we choose to spend our time.

So, for example, when I first started here back in 2012, there was a ton of energy being put towards building a network of executive relationships that is now somewhat more about sustaining those relationships. So the activity and cadence around sustaining that is very different than it is when you’re building.

We’re also measuring the activity with that network in terms of, “hey, how many new execs have you interacted with this year? What have you been able to do for the executive community in terms of the number of counsels you’ve provided, number of introductions you’ve provided. Hey, how many search programs have you worked on with the portfolio? What’s the value you’ve been able to add there in terms of on the search update calls, helping them with MOCs beforehand? How many subject matter experts beforehand were you able to introduce?” All these different things that just help us really figure out what works and what doesn’t work with the portfolio and the executive community, but also as a way to track the amount of energy that we’re generating in terms of our daily work and making sure that we’re getting done what we need to get done. 

The MOC

Nolan Church: Yeah. You mentioned MOC and the MOC is something I was not aware of before I worked with you all. And it completely blew my mind. I think it’s the best framework for executive hiring that I’ve seen. 

Can you just describe the MOC to our audience, what it is, and why you guys are so passionate about using it?

Matt Oberhardt: What we really tried to do with the MOC—it stands for mission, outcome, competency.

The mission is the elevator pitch. It’s the 1 or 2 lines that dictate exactly what you want this person to really deliver at a high level. The outcomes are basically 6 or 8 things that you want them to achieve in the course of the first 12 or 18 months in the job.

And then the competencies are related to: what are the things this person needs to have accomplished? What are the skills that you need to have that we have evidence, therefore, they can actually achieve those outcomes? 

Now, the thing that you see that’s missing from this is a recitation of responsibilities in the job and largely a recitation of the type of experience a person has in the role.

It’s a deliberate distinction because we have found that, unless you really lay out what almost amounts to that person’s performance review in reverse—which is the outcomes—it doesn’t really matter what you list as the day-to-day responsibilities, because when you do that massive recitation of day-to-day responsibilities, it doesn’t come with any prioritization. And then what happens so often is, a person gets hired off of that list of responsibilities, their onboarding is pretty limited because in a startup it’s hard just to get time to talk through these things. So a person might be in the job 30, 60, 90 days before they have any sense from the CEO or founder they’re working for what the actual priorities are that you want me to get done out of this long list of responsibilities.

If you lay out through the MOC process what the outcomes are going to be, you interview against those outcomes to drive the competencies. Even if there’s some limited comms during the onboarding process, they still know from the position description what the heck the outcomes are that they’re supposed to be working towards.

Kelli Dragovich: That makes a ton of sense, Matt. And we know that the chief people officer role, CHRO—unlike maybe finance or sales—entrepreneurs have a harder time understanding what that role is, right?

Many founders I’ve worked with are like, “well, that’s why you’re here. Tell me what the priorities are.” And so that framework helps think that through before you start talking to folks, which I think is very smart.

Matt Oberhardt: It almost feels a lot like tree rings in some ways. The product and eng stuff is what they always know the best. Then that next ring out is a lot of go-to-market. They have some knowledge of that, but it’s more limited. But when you get out to that last ring, which is the operation stuff, which might be finance, legal, the HR function, manufacturing and supply chain, when you’re talking about companies with that physical product—that’s the area where often they’re most limited. 

What we often try to do is say, “Hey, let’s put a first draft of the MOC together.” And that’s where the subject matter piece comes into play. Because we’ve got this network of executives, and let’s say you have a CFO search. I’ll spend time telling an entrepreneur: okay, there are 3 or 4 or 5 stage- and market-appropriate CFOs I’d love to have you talk to you for the CFO search, so you can take that draft MOC that we’ve started and stress test your thinking with people who are real life in the job. And then let’s also then have you go and calibrate against that, especially on the personality part of it. Because, for the most part, they probably haven’t spent a lot of time with CFOs over the course of their career. 

So the subject matter expertise conversations are really helpful to flesh the MOC out further, but also to start to give the entrepreneurs a sense of: what does the personality profile for this pool of talent look like? And start to get them to think more about: who am I going to click with best from a chemistry and fit perspective?

Because there’s always going be a lot of people out there who could do the job. Let’s go ahead and figure out who’s gonna be able to do the job with you. 

Kelli Dragovich: It’s so funny because you’ve sent a bunch of those entrepreneurs to me over the years, which I’ve loved. 

And one of my biggest advice to those folks is, look, presumably, we all have the technical and functional skill set for this job. That’s not really what you’re interviewing for or unpacking. It’s the personality of that person, the disposition, the fit, what they value. I say we’re all crayons in a crayon box, but we’re all different colors. You have to pick the right one for you, which is usually the kicker and the most important thing. 

Whiteboard sessions for assessing fit

Nolan Church: I totally agree with that, Kelly. And how do you actually assess fit? I don’t think entrepreneurs really spend a lot of time thinking about it. It’s more of a feeling that they have. And when you’re in the executive recruiting process, feeling is not scientific. It’s not strategic. It’s like, “Oh, I have a good vibe.” And it turns out most execs are great talkers. So how do you assess for fit? 

Kelli Dragovich: And let me tack on: how do you help CHROs assess for fit, Matt? Because I’ll be honest, I didn’t do that as well as I should have 10 years ago.  You learn, but: how do you coach the other side to also assess that side, which I didn’t do very well all the time? 

Matt Oberhardt: I think it starts a lot with stepping out of a typical interview process. Look, we’ve all been doing this long enough. We all can tell when someone’s on their best behavior, and you have to test people by putting them in real-world working situations. You can do that in a number of ways.

Go through a whiteboard session with an executive in an interview. Let’s actually take a real-world business situation you’re grappling with as a founder, and let’s brainstorm it together. And people just naturally, without even realizing it, start letting their guard down and start behaving like they truly are when you get into that pretend work session.

We also always advocate, towards an end of a process, get the whole executive team together. You may give a candidate a topic—and if you give them a topic that’s related to your business, you’ve got to give them the data room to back it up so that they can actually put a real presentation together on how they would have addressed the specific issue from a business standpoint that you’re talking about.

Or maybe they come in when there’s no data room, and they come in and do a 120– or 180–day game-planning session on: “hey, here’s everything I’ve learned during my interview process. Here’s how I’m going to approach building out the finance function” or the legal function or the sales function, whatever it is.And you have this working session as a team, which basically allows you as the entrepreneur not only to be assessing the fit between you and the candidate, but you can see how that candidate fits into the room, and then you follow that up. Maybe that goes for 90 minutes, and then you all go out to dinner as a team. And you just continue to see how that social dynamic develops. 

The other thing, which often doesn’t get as much emphasis in the referencing process, is really this question of fit. And a lot of times during referencing, we want to know, what did the candidate do? We need to confirm or dispute things. They’ve said they’ve done assertions. They’ve made about their success at the company, but sometimes there’s not enough time spent on what it was like to work with that individual. And I think that’s the second part of it:, it’s your own real-world experience during an interview process with the working session. But then it’s also, “let me go test out how well they worked with everybody else in prior roles.” 

Referencing as a continuous cycle

Nolan Church: Yep. And then I also think with references, founders are typically showing up with their 5 to 7 reference questions. I find actually running through a process, getting some data on people, and then actually using that data to inform the reference questions specifically in the areas in which we currently have flags gives me better signal. What are the tips that you have for reference processing both on the front door and the back channel references? 

Matt Oberhardt: I think you brought up a really good point there. Referencing should be almost like a continual loop. You’re interviewing, then you’re referencing, you’re interviewing, then you’re referencing.

Referencing should be happening throughout a process. And I think by the time you’re done with an interview process, you probably should end up with maybe 50% to 75% of the references are probably front sheet stuff. And then another 25 to 50% are the back channel. And a lot of the back channel is going to be happening in those early stages where you’re interviewing someone, collecting some data and you’re like, “Hey, I need to go confirm this. Let me go figure out in the market who I may know that can help me with this.” 

And I think we are honestly in a period where people are getting sloppy with back channels. Some of the biggest things I tell our entrepreneurs is: don’t cold call into current employers.Only reach out to people that you know well that are going to probably give you good information. Don’t be out there carpet bombing someone’s network to try to get 15 or 20 or 30 references. It’s just poor form. And it puts the candidate in an awkward position, makes you look unprofessional, potentially poisons the whole recruiting process.

Honestly, and even before you get to outreach, I talk a lot to our entrepreneurs about being precise, like: what is your referencing strategy? First of all, what are we trying to learn and what we’re trying to learn will evolve during a recruiting process. But let’s figure out what we need to learn at each point. And then who are the best people to contact to find out that information? And be targeted and selective as a result of that and only be reaching out to people that you do know. I think the other thing that’s important to is: if you’re gonna be doing the back channel stuff, there’s a strategy where you can simply just tell a candidate, “hey, I may get referred to other people that I may want to call as a reference. And is it okay if I do that without you knowing?” In the course of just talking to them as a candidate, say that to them, and that way nothing’s a surprise, nothing’s a problem, later on.

Nolan Church: And they can identify if there are issues that you would not otherwise know of before you go and reach out to somebody. It’s just such a human thing to do that people just skip the step on. They want to have all these like back alley conversations, which I’ve never really understood, as opposed to just like, “Hey, this is a part of our process. We do back channels. I just want to let you know and give you the opportunity to let me know if there’s any flags that you want to tell me about right now.” 

Matt Oberhardt: Well, and you may find this funny, but in the end, it’s about building a relationship with somebody. You’re going to work with them. And the funny part of it is, if this were someone—let’s say you were going to try to go on a date. You wouldn’t be calling all of their friends who you’ve never met to ask about them. 

There’s a certain way to do this that is constructive and that actually adds to the process rather than causes friction and problems. 

Kelli Dragovich: And using back channels wisely, to the dating example. If you back channel with someone that broke up with them, have the wherewithal to know they’re probably not going to say all great, wonderful things, and have the maturity to filter and understand that back channels are back channels. And you have to vet that out because a lot of people could text 1 person, who could be biased. Boom. And it’s just not complete. 

Putting negative references in context

Nolan Church: I want your take on this, Matt, because people do well in some situations and not well in others. I worked with Tony at DoorDash and he used to say that the Michael Jordan of executive recruiting gets it right 2 out of 3 times.

He’s had incredible stability amongst his leadership team, but that’s not always the case. And sometimes it’s situational context. Sometimes it’s business context. Sometimes it’s my manager context and it doesn’t work. How do you guys think about negative references and when it comes up, as it relates to the specific new role, how do you advise founders on that?

Matt Oberhardt: Eventually if you call enough people, you will get a negative reference on somebody. That’s largely unavoidable. Now you get a negative reference, I think you have to evaluate, as you were saying, is it a state of the situation or as a trait of the individual? That’s really what it comes down to in the end, because if you’re looking at someone and it was a bad fit or they didn’t perform well, or maybe they perform great, but the company didn’t execute like they were a great CFO, but products and sales could never get their act together. You can go through a long list of reasons why somebody may have done well in a job, but it didn’t work out for them. 

And it’s one thing we spend time with our entrepreneurs to help them go. Okay, you’re never going to hire someone who is 100th percentile on everything. They are going to have weaknesses. And let’s look at those weaknesses. And like I said, figure out: were they a result of the situation they were in or is the trait that they have? If the weakness is a result of the situation, let’s parse out whether that’s relevant to your company right now. Are they going to experience those same things that caused them potentially to have failures? If it’s a trait, let’s look at the rest of your team. Is this a trait that you could afford to take on that you could potentially have as a development area for this individual? Or is that trait that they’re weak in so mission critical to the role that it just isn’t possible for them to successfully execute in your company. 

So it’s a lot of nuance and Nolan, that’s I think what you were getting at. It’s just a ton of nuance in the end and rarely are these things black and white. 

Kelli Dragovich: I also think the best candidates—at least I’ve talked to and including myself—is to have the EQ to actually talk through that before you hear it from a reference, right? I think that’s a big sign as well as that self awareness, that reflection to talk through that during the interview process.

Matt Oberhardt: Exactly. And I think also when you’re talking about talking through, I think it’s really a great point. Founders sometimes feel like, “Oh, God, can I actually bring up something to a candidate that I learned to referencing?” Absolutely. Have a conversation with them to get the added context on exactly what may have happened in that situation. Because it may give you an additional set of data that helps you make a more informed decision about what to do with that referencing information. 

Nolan Church: I totally agree. I also really believe that people grow and people change. And the more experiences that you have, the more weathered you get, the better off that you will ultimately be.

I mean, I look back and I’m candidly embarrassed about the person that I was 10 years ago. And I think that’s kind of my general—it’s how I know I’m doing okay. Every 10 years I look back and if I was embarrassed, that means I’m growing really fast. I think that’s when people talk about the negative aspects of their career. That’s how you can begin to assess if they actually have been growing versus if they’re putting some veneer bullshit on it, you could pretty easily suss that out for sure. 

Matt Oberhardt: Absolutely. 

Assessing personal growth vs. mistakes

Nolan Church: How do you guys think about that, though, on the Andreessen side? Because you guys have, I’m assuming, so much data on people. But as they move through their careers, they grow and change. How do you guys think about that? 

Matt Oberhardt: That’s why I think it’s really important to reengage with executives. It’s something I was talking about earlier in the discussion where it’s like, hey, I spent a lot of time in my early years here building a network of executive relationships. And a lot of what I’m doing now is sustaining those relationships and continuing to find ways to add value for those executives.

But in the course of those conversations, you’re getting an update on them and you’re getting an update on their lives, what they’ve accomplished, and where they’ve gone. And I think that’s really an important part of this, these are not snapshots in time. Everyone is on a continuum of personal and professional growth.

And that’s why I always think it’s dangerous to—we talk about this with our entrepreneurs—it’s like, “Hey, I know 3 people that worked with them 10 years ago.” That’s really not going to be relevant data. You may see some things in their past that come up at that point that maybe continue in the future or things that they grew out of.

It’s really for me, what have the last 5 to 7 years been like in somebody’s career? And let’s really hone in on that when we’re really trying to figure out who they are and what they’re going to be able to do for you right now. Because anything that’s earlier than that is just too dated.

Establishing trust with founders

Kelli Dragovich: Matt, in the talent partner role, it’s a slippery slope sometimes in supporting these entrepreneurs and also helping them see maybe what they can’t see for themselves. I’d love any spicy stories about when you’d have to put your foot down and tell a founder they’re wrong or they’re making the wrong choice. And how do you choose those precious moments to do that or not? 

Matt Oberhardt: It starts with how we operate. We’re not over the top with our founders. Our founders run their companies. So whatever you’re trying to do, it’s a lot of leading by influence versus directive. 

So when you’re doing the influence thing, you have to start with a foundation where the founder has to have valued your contribution up until this point. And the founder wants you involved. The founder has appreciated the advice that you’ve provided to their business and that founder trusts you.

So it starts with that basis of trust to say, “okay, I trust you and I look to you as a consigliere or advisor on things.” If that hasn’t been established, there’s no way you’re going to be able to have any impact on the decision. Full stop. But I think once you have that trust established, you can then say, “hey, here’s why I think this is a mistake.”

And when you tell them “I think it’s a mistake,” it has to be grounded and backed up with data. We’re dealing with technical founders who are very data oriented individuals. It can’t be just this subjective “well, I think, or I feel this way.” They’re gonna ask you, “well, what’s the data behind it? Why do you think that way?” 

The objective data points can come in all different flavors. Maybe it’s referencing data, maybe it’s information you have because you’ve met the executive and have a deeper sense of who they are based on your own referencing independent and your own evaluation, independent of whatever may have happened during the process.

You may have company performance data. Let’s say it’s a sales executive. A sales exec is saying, “Hey, we hit this quota,” etcetera, etcetera. Well, guess what? I actually know objectively whether that happened or not. 

So I think that’s what it comes down to really in the end is the trust has to be established. And once they trust and value your role in the process, you then have to be able to provide them the objective data versus subjective feelings or thoughts. 

Kelli Dragovich: It reminds me of our episode with Steve Nolan Cadigan, where he said, “our products are judgment and credibility.” Those two things have to be there before utilizing those chips, Matt, for sure. 

Nolan Church: But at the same time, many founders are in the role because they’re headstrong, they have a belief, they trust their instincts and they follow it. And so what I’m hearing you say, Matt, is you have to very seldomly pull that card just in general and then back it up with data.

But then at the end of the day, it still is the founder’s decision. And I’m sure there’s been times when you’ve actually been convinced that, hey, this person is making a mistake but they went forward anyway. Maybe it actually was a mistake or maybe it wasn’t. And people are tactile learners. They do have to learn by making their own mistakes too, right? 

Vetting EQ

Matt Oberhardt: Absolutely. And I think it also comes down to: we naturally try to work with entrepreneurs—back to that whole conversation we had at the beginning about how we view talent—and one of the things I mentioned at the time was EQ.

You have to have a group of individuals who you’re advising that want your input. They are willing to show vulnerability and ask for help. They have the right blend of humility versus confidence—all those things so that they’re actually open to getting the feedback in the first place and open to hearing differing and conflicting opinions, perhaps on a decision that they’re making.

Because this goes beyond talent. They’re making business decisions every day. And they have to be of the mindset that I’m going to take in as much data as I should and can so that I have the most diverse set of information to work with to make a decision for my company, whether it’s whether we, invest in product A over product B, whether I hire this CFO candidate or another one—they have to have a mindset that is already predisposed to wanting the help and wanting the input from multiple constituencies.

Otherwise, it’s probably not going to work for them as an entrepreneur, honestly, because they’re going to stub their toe a lot of times and eventually, that repeated toe stubbing is going to have a serious impact on the business. 

Kelli Dragovich: And Matt, I’m assuming that’s part of the vetting process and investing in entrepreneurs: that EQ side. 

Matt Oberhardt: We have a whole operating team over here that spends a lot of time helping entrepreneurs learn the nuts and bolts of: how do you hire talent, build teams, market the company, sell product, raise money. All stuff that as entrepreneurs, they haven’t done before for the most part, but it’s all stuff they need to learn how to do well to be successful.

We want to work with entrepreneurs that are going to tap into that. So naturally, we’re going to be predisposed to working with folks that are going to want to leverage all of those resources that are available to them to help them become a better CEO. 

Measuring success of what you can’t control

Kelli Dragovich: Yep. Matt, you mentioned you have a lot of latitude in your role, which is great. It’s also a lot of pressure. Are there any moments where that latitude becomes a little less and you’re feeling the pressure? What is that like in your role when those moments hit? 

Matt Oberhardt: Having worked in startups before, it’s a different feeling of pressure than it is when you’re in an operating role and literally you’re looking at the bank account balance going, “Hey, can we make payroll at the end of the month?”

I think that the biggest thing from a pressure standpoint over here is just: when you’re in an advisory role, again, you’re operating by influence. You don’t really have control over the situation, but yet your own success—I think both personally how I measure myself and also, to a degree, how we measure ourselves here at the firm—is based on the success of these things.

So you’re basically measuring success against things that you don’t have control over. I think that’s the essence of the difficulty of the advisor role when you feel pressure at times. You’re like, “Hey, I think this is how this should go. This is what I would do if I were in your situation. But at the same time, I can’t go make you do that.”

We take a lot of ownership in what we do working with the portfolio because we’re really involved with all of you very closely on a day-to-day basis, and part of the reason we’re able to do that is that we have such a large team, we’re able to be proactive. We’re not just running around reactively putting out fires. When I work on a project with the portfolio, I’m probably investing at least 4 months, sometimes upward of a year, on the whole process.

So there’s a tremendous sense of ownership that comes with that and a tremendous sense of responsibility and pressure to make sure that’s done right, even though I’m only in an advisory capacity. So that’s a big part of it for me, honestly. Probably more self-induced pressure in some ways.

Why hire veterans for startups

Nolan Church: I want to talk a bit about veteran hiring. 2 of my favorite people I’ve ever worked with—shout out to Jeff and then also to Casey North at DoorDash—were ex-military. And you do a lot of work with transitioning veterans into startups. Talk to me a little bit about why this is such a good fit from a skillset standpoint. Why is going from the military into startups—like, why does that work so often?

Matt Oberhardt: If you think about the military environment, especially folks have been in the special operations community, they’re used to dealing with very dynamic, chaotic, very resource-constrained environments where that is very analogous to what happens in the startup world. Obviously, the subject domain and the work environment are very different. But in the end, what a lot of these folks are very good at, especially from the Iraq/Afghanistan generation, is: I’m going to take a disparate group of people, probably some or most of whom don’t even like each other. And I’m going to get that group of people together to accomplish a common mission and a common purpose. How many times can you think of when you’ve been in a startup, or you’ve had a similar situation, where you got to get a bunch of people in a room, you got to maybe bang some heads to get them to work together well, but we have a problem we need to solve that’s cross-functional in nature.

These people are used to dealing with that type of situation. Again, the subject matter is completely different. The process to get to the answer, though, is very, very similar. And when you combine that skillset with the leadership they bring to the table, I think that’s why they’re successful as they usually are. 

Nolan Church: I love that. The 2 guys I was referring to are in operations roles and have ascended insanely fast. I see this issue, though, with founders—especially in today’s job market—who are indexing on people that have done the job before. How do you think about the experience versus trajectory conversation?

Matt Oberhardt: You’re having to buy into a different kind of potential. The potential you’re buying into is their ability to learn your product and learn your business, which is different than the potential you usually buy into, where someone is very good technically, or they’re very good at go-to-market, they’re very good at finance, and you’re merely betting on them to progress and ascend in both the scope and level of their responsibilities as a leader. So it’s almost the exact inverse where you’re already bringing someone in who’s very good on the leadership and the soft skills side, but now you need to bet on their ability to ramp on your business. So that’s how I usually frame it with entrepreneurs. 

The other challenge oftentimes is—especially for folks who’ve been enlisted, not officers—these people are incredibly skilled, incredibly gifted individuals. But it’s very difficult for recruiters to be able to map their skillset to what the open jobs may be in a company. And the translation guide doesn’t exist anymore like it used to because, once we left the draft behind and we went to all volunteer armed forces, most of society doesn’t have regular contact with people who are in the military anymore. So they don’t understand as easily what those folks can do as may have existed 30, 40, 70 years ago, when you had a huge proportion of the population was veterans. 

What I often talk to vets about is: honestly, don’t go through normal recruiting processes, because you’re going to have people looking at your paper that just don’t understand what you’ve done. When you see a company that has a role that you’re interested in, make sure you already have built out the network that allows you to go talk to somebody outside of the recruiting process who can help you, who understands who you are. Maybe someone who’s a vet who already works at the company. We talked to vets a lot about: build your network first, and then the job will follow from that. Because when you see something that looks of interest at a company, you can reach out to your contacts there and they can be advocates for you because you’re going to be an out-of-the-box hire. You’re not going to be someone who checks everything that goes down the list, for sure. So you’ve got to have people who are outside the process who are advocating for your candidacy. 

Kelli Dragovich: Matt, how do you all structure that? Is it more informal? Is it a more formal widespread program for you all? How is that set up?

Matt Oberhardt: We’ve worked with a number of organizations over the years. I’ve been on the board of Commit Foundation now for probably about 7 or 8 years. We do a workshop with them every year. We worked pretty closely in the past with Bethany Coates and what she was doing at BreakLine. We’ve got good relationships with Honor Foundation. We’re investors in shift.org. 

So it becomes a bit of a hybrid. We do these workshops where we have folks that are interested in technology and VC who are coming in. I take a lot of 1-on-1 intros as well, where veterans who I know that I’ve worked with who have transitioned—I can say like, “Hey, you know, there’s this individual over here that you really should meet. I think would be, you know, a fantastic, high potential person in the industry.” That type of thing. So it’s a mix of both, honestly. 

Kelli Dragovich: I love that. Those informal connections are super powerful. So I love that. 

Talent landscape in 2024

Nolan Church: Matt, just transitioning to a little bit about the moment that we’re in today. I am of the belief that at least the beginning of 2024 is still going to be really tough on the venture backed tech space. How are you advising founders on their talent strategy right now? And how are you thinking about 2024?

Matt Oberhardt: We’ve still got a lot of uncertainty out there. I think part of the advice depends on the stage of the company. When we’re talking about the earlier stage companies, a lot of what they’re working on is still those very focused searches, like our first engineering leader, our first product leader, our first go-to-market leader. And I think if you have your funding secured where, for the next couple of years, you’re going to be working on what you’re working on, regardless of what those macro conditions look like—I think moving ahead with building that core leadership team is really important. 

I think the challenge starts to come in on the growth and later-stage side because you’ve got a lot of companies that, in some cases, already expected to be public entities by now within the infusion of capital from that, and others that are stacked up now waiting for that wave of companies to go out. So I think when you’re looking at your hiring plan, it’s really about: we need to be focused on profitable growth. It is not growth for the sake of growth anymore. Companies have to run much more lean and tighter than they have over the last 15 years, and it’s a little bit of a back-to-the-future feeling because we’ve returned, I think, to a macro environment that reflects where we were in the 2000s and earlier.

So, the advice that we provide is somewhat dependent on the stage of the company and where they are from a liquidity standpoint. 

Recruiting top talent in a tight market

Kelli Dragovich: Matt, we talked about this I think a couple of months ago and we chatted on the phone: about the market shifting, especially with those later-stage companies that were close to IPO, valuations changing, coupled with the struggle of hiring top-notch executives in this time, especially with that equity change.

Have you seen any creative ways of reconciling that or thinking about that or anything companies are doing to still get great talent? Even though this market has shifted. 

Matt Oberhardt: I think you do, at some point, just have to recognize reality. 

A lot of the reset that has taken place has had to do with employee retention issues, a lot less to do without going out and raising new capital. So this idea of trying to retain your top employees—and one of the main ways you have to do that—is to reset what their valuations look like, and potentially then provide additional equity to help true them up. I think that’s a really important thing to be considering right now to be able to retain that top talent.

If you do that, then there’s a whole bunch of cascading effects that, of course, then make you more marketable to potential new employees. But I think the core of it starts with, honestly, ripping the bandaid off and going, “Hey, the longer it takes for us to do this, the less competitive we probably become.”

We have to just recognize that and just bite the bullet. 

Nolan Church: I talked to a founder a few weeks ago who had raised a really large round at a really high valuation that no longer makes sense in today’s world. And they’re now recruiting for C-level roles. And I asked him first: how are you talking to candidates about this? And he was like, “well, how do you think I should, because I have no idea?” And my guidance to him was: just be honest, right? We raised in 2021. This was the market price. I know it’s no longer the market price, but we don’t need to go to market today for a new financing round. But my commitment is when we do, we will mark you to market at that new financing price and then re-up your equity. Do you think that’s good advice? And are you talking to founders similarly? 

Matt Oberhardt: It’s very situational. Let’s say you have a very long runway of capital. Let’s say you’ve got 3, 4, 5, 6 years, even some companies I’ve talked to have had 6 or 7 years of runway. I think it’s very dependent on that question. 

Nolan Church: Damn. 

Matt Oberhardt: Yeah. So it’s: how long do you have before you have to go reprice via an equity raise? And if you’ve got a long time—let’s say it’s over 36 months—I think that argument can work. 

Now, of course, the candidate has to buy into everything else. A vision of the company, buying into who you are as a leader and your ability to execute on the vision. Everything else has to be rock solid, because there’s going to be a lot of other opportunities that are going to be out there during that time frame after which you hire this person that are going to be more financially attractive in most cases. The last thing you want to see is a candidate who you hire who’s constantly looking over their shoulder going, “Hey, oh, that looks interesting. Oh, that over there looks like a lot.” 

So you don’t want to go win the battle that way, but then eventually lose the war because you brought this person in, but they weren’t totally on board with everything and therefore they’re always going to be looking for the next best thing.

Hiring the “operational glue”

Kelli Dragovich: Really well said. 

So Matt, I know we have a few minutes left. Just to transition to our rapid fire round called Talent Rules. A couple of quick questions for you.Who has been your best hire in your career and why? 

Matt Oberhardt: So I think y’all will appreciate this. There was a woman I hired in the third startup I worked for. When you’re still like under 50 people or even 100 people, there’s always someone who’s that operational glue, and it was a woman named Rochelle. And I hired her, she was my first hire when I joined the company. And she basically did all the QuickBooks work, was the office manager, handled all the HR paperwork, was the company confessional as to everything that went on—and we had a lot of drama. That one person basically did 5 or 6 jobs. And I always find those people are incredibly short supply in startups. There’s not a lot of them out there, but when you find one, they are a true gem and they can do so much to help the company.

So probably not the answer you were expecting—

The value of tough feedback

Kelli Dragovich: I can feel what you’re explaining though. I love it. I can. 

What has been one of your most favorite interview questions over the years that has given you the biggest, best signal on candidates? 

Matt Oberhardt: Really good signal I get is: I ask people, “what’s the toughest piece of feedback they’ve received in the last 5 years, and how did they respond?” That’s always one that I find gets at a lot of issues related to EQ, critical thinking, organizational savvy in a lot of cases too. 

Nolan Church: Growth mindset. Yeah, that’s also my favorite question, Matt. I feel like when you ask somebody about a tough piece of feedback, not only do you get like all the soft spots, you also get what, tactically, did somebody give them feedback on? What did someone else think that their biggest area of growth is? And then, were they able to learn from that and make it a strength?

Matt Oberhardt: And then when someone also basically answers with that, classic, looks like a backhanded compliment to themselves by the time they’re done, you’re like, okay, you are no good to me.

Nolan Church: That just makes me throw up. Like, I throw up in thinking about that. 

Kelli Dragovich: We’ve heard that on like multiple episodes. So like, when is that just going to die? Because everyone knows now. And so to Nolan’s point—

Nolan Church: Just be authentic.

Matt Oberhardt: Yeah. There are slow learners out there.

Nolan Church: Matt, this has been so good. Thank you so much for the time. Our audience is going to take away so much about exec recruiting from this episode. We can’t thank you enough. 100%. 

Kelli Dragovich: Thanks, Matt. 

Matt Oberhardt: My pleasure. Appreciate you both inviting me on and do it again anytime.