The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Why Hiring in Tech is Broken and Founders Need to be as Good at Firing as they are Hiring, Why Product Differentiation is Unsustainable & Why the Current Generation of Tech Employees are Entitled and What Needs to Change with Jean-Denis Greze @ Pl

Fri Jul 21 2023

Tech IndustryHiringFiringWork EnvironmentCultureCareer SuccessProduct DevelopmentStartup ChallengesGrowthInvestmentAdvice

Description

This episode covers various aspects of the tech industry, including the relationship between tech employees and employers, hiring and firing practices, work environment and culture, career success and product development, startup challenges and growth, and investment and advice. Key insights include the importance of being good at firing, evaluating talent through online projects and interaction with the interviewing team, identifying the right time to let go of an employee, the impact of work environment on productivity, the role of hard work in career advancement, the significance of competitive advantage and product-market fit for startups, and the challenges of building successful products. The episode also discusses investment opportunities and provides advice for founders.

Insights

Tech Employee-Employer Relationship

The relationship between tech employees and employers is similar to that of a French citizen and the French government. Joining Plaid and Dropbox were significant turning points for Jean Denney.

Hiring and Firing

First-time founders often overlook the importance of being good at firing. Red flags in a CV or career include staying too long at one level, frequent job hopping, and lack of success. Evaluating talent through online projects and interaction with the interviewing team is crucial. Hiring for the present and transitioning to hiring managers as the company scales is recommended. Recognizing when someone stops scaling and making necessary changes is important. Identifying the right time to let go of an employee requires providing feedback and addressing performance issues.

Work Environment and Culture

Going against the grain rarely accelerates the business. Leveling, titling, and organizing the organization don't significantly impact business success. Speed of execution is crucial. In-person collaboration is beneficial for creative work with local customers, while remote work is effective for incremental improvements. Hybrid models can provide benefits in terms of culture and productivity. Being in Silicon Valley still has advantages despite internationalization of startup knowledge. Work-life balance may not be important for those willing to work long hours.

Career Success and Product Development

Startups and independent companies have an advantage due to their willingness to work harder. The tech industry now values a 40-hour workweek, but some employees feel guilty about working hard. Unequal treatment in promotion cycles may occur for new graduates based on performance. Hard work is often a differentiating factor for promotions. Maintaining work-life balance while achieving great success requires significant effort. Product differentiation alone is not sustainable; user experience is crucial. Stripe offers a quick and easy sign-up process for credit card processing. Integrated suites and tying vertical products together create value. Setting the right core metric and investing in potential multipliers are important for product development.

Startup Challenges and Growth

Judging progress based on judgment and gut, along with metrics, is important. Incremental work and home runs both contribute to business success. Competitive advantage and extending the window of competitive advantage are crucial. Angel investors should prioritize founders and ideas at an early stage. As a company grows, competition becomes more important, and differentiation is key. Distribution, reputation, and network effects contribute to growth. Founders need to evaluate if pursuing a startup without product-market fit or venture growth potential is worth their time. Limited runway and low chances of reaching product-market fit may require resetting the idea or returning funding. Understanding market conditions and technology bounds is important for business leaders.

Investment and Advice

Building a Slack-like product at Dropbox was a big flop. Predicting success at the Angel stage is difficult but founder growth can be surprising. Rupa Health and Atlas are recommended investment opportunities. Advice should be tailored to individual situations. First Round focuses on helping founders reach product-market fit, while Sequoia has a strong track record for series A investments. Working on what has impact for the business but leadership doesn't care about is valuable. Having impact is challenging due to internal forces, but it's what matters. Being remembered as a leader who helped people do their best work is a source of pride.

Summary

Transcript

Tech Employee-Employer Relationship

00:00 - 06:16

The relationship between tech employees and employers is similar to that of a French citizen and the French government.
Jean Denney, CTO of Plaid, reflects on his career and highlights joining Plaid as a significant turning point.
Joining Dropbox was also a pivotal moment for Denney, opening doors and opportunities in Silicon Valley.

Hiring and Firing

05:48 - 17:28

First-time founders often overlook the importance of being good at firing.
Red flags in a CV or career include staying too long at one level and not having a good trajectory, and jumping around from company to company without finding success.
Looking at online projects like GitHub, shipped projects, and blogs can be exciting when evaluating talent.
Interaction with the interviewing team is important to quickly assess a candidate's fit.
When hiring, consider if the candidate's experience matches what you're looking for in your business.
For early-stage startups, hiring for the here and now is recommended until around 15-30 employees.
At that point, it's advisable to hire managers who can handle the unique challenges of scaling a company.
Two options for manager hires are the four-year candidate who has managed larger teams or the two-year candidate with experience managing smaller teams.
Shorter-term hires can provide faster impact, but it's important to recognize when they stop scaling and either support them or make changes as needed.
When someone stops scaling, they may move on to another opportunity that aligns better with their growth stage.
Identifying the right time to let go of an employee is crucial for the success of a business.
Delivering the news should be focused on what's best for the business, even if it may not be well-received by the employee.
Providing feedback and addressing performance issues before making a decision is important.
Mistakes in hiring can be avoided by clearly defining role requirements and having an aligned interview panel.
Interviewing multiple candidates helps establish a benchmark for what great looks like.
Setting employees up for success requires objective evaluations at regular intervals.

Work Environment and Culture

17:09 - 23:20

Going against the grain rarely accelerates the business.
Leveling, titling, and organizing your organization don't make a significant difference in business success.
Speed of execution is crucial for success.
In-person collaboration is beneficial for highly creative and fast-moving work with local customers.
Remote work can be more effective for incremental improvements to existing products with clarity of roadmap.
Remote work may negatively impact belonging and fun at work, but not quality of work or productivity.
Hybrid models can provide benefits in terms of culture and productivity.
There is an exodus from New York to SF due to AI opportunities in Silicon Valley.
The knowledge about building and scaling startups has become internationalized, but being in Silicon Valley still has advantages.
Work-life balance may not be important for people who are willing to work long hours and compete with those who don't.

Career Success and Product Development

22:55 - 34:12

Startups and independent companies have an advantage over larger competitors because they are willing to work harder and be more available to clients.
The tech industry has evolved from a culture of long hours and no work-life balance to one that values a 40-hour workweek, but this shift has led some employees to feel guilty about working hard.
New graduates entering the tech industry may experience unequal treatment in terms of promotion cycles, with some people advancing faster than others based on their performance.
Hard work is often what separates those who get promoted from those who don't, especially when everyone is equally smart.
While it's possible for someone to achieve great success while maintaining work-life balance, it generally requires sacrificing personal time and making significant efforts.
Product differentiation alone is not a sustainable advantage; great products can become outdated or surpassed by competitors with better user experiences.
Processing credit cards with traditional methods requires a large down payment and a lengthy contractual process, while Stripe offers a quick and easy sign-up process.
There has been a lot of competition in UX, but not many 10x innovations.
Some companies, like Ripple, are copying the best features from vertical products to create integrated suites.
The value now comes from tying all the vertical products together rather than focusing solely on UX.
Salesforce may struggle to stay number one due to its focus on being a database rather than an innovative UX platform.
Setting the right core metric is important, but it doesn't solve all product challenges.
Incremental work with guaranteed payoff is easier, but investing in potential multipliers can lead to significant product improvements.
Sometimes ambitious projects take time to show success and may feel like failures initially.

Startup Challenges and Growth

33:46 - 44:23

When starting a project, it's important to have a way to judge progress and make decisions based on judgment and gut, rather than solely relying on metrics.
Incremental work can lead to significant wins for the business, but home runs are still important.
Competitive advantage is crucial for long-term success, and companies should focus on extending their window of competitive advantage.
At an early stage, angel investors should prioritize founders and ideas over competition.
As a company grows and becomes more successful, competition becomes more important, and having things that are difficult for others to replicate is key.
Distribution is often the most important factor in company growth, but reputation and network effects can also be valuable.
Founders need to evaluate if it's worth their time to continue pursuing a startup that lacks product-market fit or venture growth potential.
Founders need to be careful when they have limited runway and are working on a product with low chances of reaching product-market fit.
Some founders may need to consider resetting their idea or returning their funding if they are not close to achieving product-market fit.
There are companies that have some revenue but lack venture growth, and turning them into lifestyle businesses may not align with the original goal of starting a company.
Product-market fit is not binary; it exists in degrees based on how easily people buy a product.
Snowflake's current customers' rate of usage is not increasing as much as before, indicating a potential decrease in value for the data warehouse industry.
Companies like Gong, which make teams more efficient, may see less intrinsic growth due to fewer companies hiring salespeople.
The zero interest rate environment has changed, making it necessary for businesses to generate higher returns on their investments.
Products that were once top value creators for businesses are now lower on the list due to changes in market conditions.
Understanding the bounds of technology is crucial for business leaders in order to know what problems can be solved with software.
Building a Slack-like product at Dropbox was a big flop due to being too far from customers and making incorrect early product decisions.

Investment and Advice

44:03 - 50:16

Building a Slack-like product at Dropbox was a big flop
Predicting success at the Angel stage is difficult but founder growth can be surprising
Top companies to invest in are Rupa Health and Atlas
Advice should match your situation, not all advice is applicable
First Round cares about helping founders get to product market fit
Sequoia has a strong track record for series A investments
The best thing to work on is what has impact for the business but leadership doesn't care about
Having impact is hard due to internal forces, but it's what matters
Being remembered as a leader who helped people do their best work would make me proud