Latest / Deep Tech Germany – AI, Robotics & Frontier Innovation by Startuprad.io™ / Why Startup Executive Hires Fail: The Diagnostic Hiring Method
Transcript
- WEBVTT 1 00:00:00.160 --> 00:00:00.400 Foreign. 2 00:00:09.280 --> 00:00:12.800 Your podcast and YouTube blog covering the German 3 00:00:12.800 --> 00:00:16.480 startup scene with news, interviews and 4 00:00:16.560 --> 00:00:17.760 live events. 5 00:00:20.080 --> 00:00:23.920 Hello and welcome everybody. This is Joe from StartupReady IO. Today 6 00:00:23.920 --> 00:00:27.580 we're flipping the coin on leadership hiring. The did you know 7 00:00:27.580 --> 00:00:31.220 more than 50% of startup leadership hires 8 00:00:31.220 --> 00:00:34.660 fail within 18 months? That means founders are 9 00:00:34.660 --> 00:00:38.060 gambling with the company's future and often are losing. 10 00:00:38.380 --> 00:00:41.980 Today's guest, Dominic Roth has concluded over 11 00:00:42.140 --> 00:00:45.860 400 executive searches. But he's 12 00:00:45.860 --> 00:00:49.660 not your traditional headhunter. He's a diagnostic based CEO 13 00:00:49.660 --> 00:00:53.020 selector using psychology insights and 14 00:00:53.020 --> 00:00:56.550 behavioral prediction, not just glossy resumes to spot 15 00:00:56.550 --> 00:01:00.230 winners. In this episode we will explore why 16 00:01:00.310 --> 00:01:03.910 startup leaders fail, even if they've scaled before 17 00:01:04.390 --> 00:01:07.590 the personality patterns of high performing 18 00:01:07.590 --> 00:01:11.350 CEOs, what to do before you hire 19 00:01:11.350 --> 00:01:15.110 your first VP or C level exec, and how 20 00:01:15.110 --> 00:01:18.430 to avoid a €250,000 21 00:01:18.430 --> 00:01:22.190 mistake. Hey guys, welcome to Startupgrade IO. Today I'd like 22 00:01:22.190 --> 00:01:25.510 to welcome Dominic Hort. He's one of Europe's top 23 00:01:25.510 --> 00:01:29.010 executives search professionals with 400 plus 24 00:01:29.250 --> 00:01:32.930 leadership placements across VCPE backed companies. 25 00:01:33.330 --> 00:01:37.090 He specializes in diagnostic hiring, predictive behavior 26 00:01:37.170 --> 00:01:40.930 and fit beyond the cv. He's also host of 27 00:01:40.930 --> 00:01:44.050 the number one dach leadership podcast, CEO 28 00:01:44.130 --> 00:01:47.890 Career Code. I think we'll link it down here in the show notes. 29 00:01:47.890 --> 00:01:51.330 Dominic, welcome. Thanks for having me here Joe. 30 00:01:52.580 --> 00:01:56.340 My pleasure. We're speaking about the founders folk in the road. 31 00:01:56.820 --> 00:02:00.340 When a founder approaches you about hiring a 32 00:02:00.340 --> 00:02:03.860 vp, Vice president or C level executives, 33 00:02:04.020 --> 00:02:06.900 think about Chief Marketing Officer, Chief Technology 34 00:02:07.220 --> 00:02:10.820 Officer, leaders. What's the biggest red flag 35 00:02:10.900 --> 00:02:14.500 you listen for in the way they ask for 36 00:02:14.500 --> 00:02:18.180 help? That's a good question because it's not exactly 37 00:02:18.180 --> 00:02:21.900 a red flag, but more of an expectation that I need 38 00:02:21.900 --> 00:02:24.330 to question. In general we have the saying. 39 00:02:30.010 --> 00:02:33.570 It'S something that can do everything like it gives you wool, it gives you milk, 40 00:02:33.570 --> 00:02:37.330 it gives you meat. That's right. And in the context of hiring, 41 00:02:37.330 --> 00:02:41.170 it describes candidate who is required to have competencies in various and 42 00:02:41.170 --> 00:02:44.970 often unrelated fields such as finance and also deep knowledge 43 00:02:44.970 --> 00:02:48.330 in technology at the same time. As an example. Yeah, 44 00:02:48.980 --> 00:02:52.020 and this is the one challenge. The other one is that founders often 45 00:02:52.180 --> 00:02:55.940 overestimate the ability to choose the right executives for the companies 46 00:02:56.580 --> 00:03:00.300 while underestimating the failure rate of executive hires in the 47 00:03:00.300 --> 00:03:03.980 startup environment by data because the data we have on the 48 00:03:03.980 --> 00:03:07.820 cost of failed hires is quite alarming as you said also 49 00:03:07.820 --> 00:03:11.140 in the intro, but I guess we will deep dive into that later. 50 00:03:11.540 --> 00:03:15.220 And if we talk about they overestimate, it's 51 00:03:15.720 --> 00:03:19.240 that they often hire for their family and friends 52 00:03:19.800 --> 00:03:23.440 and that comes along with a lot of biases. In the selection 53 00:03:23.440 --> 00:03:27.160 of executives. I see. So 54 00:03:27.560 --> 00:03:31.240 what I like the film is so can be translated I just looked it 55 00:03:31.240 --> 00:03:34.960 up is something like a jack of all trades, a Swiss army knife 56 00:03:34.960 --> 00:03:38.360 or one size fits all solution. That's. That's what you've been 57 00:03:38.600 --> 00:03:41.000 prefer referring to. Yes. 58 00:03:42.480 --> 00:03:45.960 You've said 50% of external startup leadership 59 00:03:45.960 --> 00:03:49.680 hires fail. Can you share cases where 60 00:03:50.000 --> 00:03:53.720 on paper everything looked right but diagnostics told 61 00:03:53.720 --> 00:03:56.800 you a different story? Of course I can. 62 00:03:57.520 --> 00:04:01.200 But what I would like to introduce you first is a study because it 63 00:04:01.200 --> 00:04:04.960 doesn't come from myself. It's like not a claim that I 64 00:04:04.960 --> 00:04:08.240 say that's realistic. It's a study conducted by 65 00:04:08.820 --> 00:04:12.340 Kiefer, Martin and Hunt from 2022 66 00:04:12.500 --> 00:04:15.860 on 2020 and it says that in 67 00:04:15.860 --> 00:04:19.380 approximately 50% of cases an executive turns out to be a 68 00:04:19.380 --> 00:04:23.220 misfit within the new company within 18 months. This is quite important. 69 00:04:24.020 --> 00:04:27.820 The result results are based on representative sample 70 00:04:27.820 --> 00:04:31.060 of 20,000 hiring processes. And 71 00:04:31.700 --> 00:04:35.420 these hiring processes even involved headhunters. And 72 00:04:35.420 --> 00:04:38.980 that is the point. Headhunters have not been able to reduce 73 00:04:39.060 --> 00:04:41.940 this 50 failure rate through the 74 00:04:42.180 --> 00:04:45.980 conventional methods I would name it. So in 75 00:04:45.980 --> 00:04:49.220 fact you could flip a coin and have the same result 76 00:04:50.100 --> 00:04:53.220 and. Yeah, and save money by it. Right. 77 00:04:54.740 --> 00:04:58.180 It's like in my cases I often have 78 00:04:58.820 --> 00:05:02.580 technology companies that approaching me in order to 79 00:05:02.580 --> 00:05:06.320 select executives and sometimes the fit 80 00:05:06.320 --> 00:05:10.080 in the CV and the. The interviewing part is 81 00:05:10.080 --> 00:05:13.720 so well done and well perceived by the decision makers. Also VCs, 82 00:05:14.440 --> 00:05:18.200 NPS that yeah. That they would like to hire this person 83 00:05:18.280 --> 00:05:21.880 because of that. And then later we find 84 00:05:21.880 --> 00:05:25.640 out that maybe this person comes from other environment 85 00:05:25.880 --> 00:05:29.160 more politics, has not the right capabilities in 86 00:05:29.240 --> 00:05:32.960 personality traits to perform. I have a lot of stories about that. I cannot 87 00:05:32.960 --> 00:05:36.800 name a company of course because I'm quite confidential but 88 00:05:36.800 --> 00:05:38.840 we can come to that a little bit later. 89 00:05:45.960 --> 00:05:49.000 I'm just curious, what kind of diagnostics do you do here? 90 00:05:49.480 --> 00:05:52.840 Yeah, there are a lot of tests out there. Right. 91 00:05:53.160 --> 00:05:57.000 So we all know them. And it is 92 00:05:57.320 --> 00:06:01.100 that it is not about the test. In a 93 00:06:01.100 --> 00:06:04.620 nutshell, how does valid diagnostics work? 94 00:06:05.100 --> 00:06:08.660 So it is the combinations of tests. So the 95 00:06:08.660 --> 00:06:12.500 combination of statements from personality questionnaire on 96 00:06:12.500 --> 00:06:16.220 the one hand and the result of cognitive performance test on the other 97 00:06:16.220 --> 00:06:19.980 hand. And this only provides hypothesis 98 00:06:20.220 --> 00:06:24.020 to need. They need to be further validated in an in 99 00:06:24.020 --> 00:06:27.860 depth interview and should not be taken as a fact only if the 100 00:06:27.860 --> 00:06:31.680 person states yeah those personality traits on his or her 101 00:06:31.680 --> 00:06:35.440 self perception and this makes a difference. The test results 102 00:06:35.520 --> 00:06:39.040 are not final and must be further challenged through 103 00:06:39.280 --> 00:06:42.880 behavioral based interviewing. And also 104 00:06:42.960 --> 00:06:46.800 we need to Consider the situation and the cultural aspects of the company. 105 00:06:47.360 --> 00:06:51.040 And this procedure leads to accurate behavioral 106 00:06:51.040 --> 00:06:54.880 prediction, so to say. Yeah, so if you 107 00:06:54.960 --> 00:06:58.400 ask someone how is your empathy level in a test? 108 00:06:59.550 --> 00:07:03.070 Can you imagine someone, Joe, who will, who will state him or herself 109 00:07:03.070 --> 00:07:06.750 like. Yeah, it's two or three out of 10. So that's the 110 00:07:06.750 --> 00:07:10.470 problem with those tests. Yeah, it's. It's basically only 111 00:07:10.470 --> 00:07:14.110 for people who don't want the job. That's right. Yeah, but they need 112 00:07:14.110 --> 00:07:17.950 to, they. They tend to sell themselves of course, and 113 00:07:17.950 --> 00:07:21.550 that's also okay. But it is our job to 114 00:07:21.550 --> 00:07:25.320 figure out what is the real behavior states. And 115 00:07:25.320 --> 00:07:29.000 it's not about personality and description, it's about behavioral 116 00:07:29.480 --> 00:07:32.760 aspects of the job and of the performing person. 117 00:07:33.480 --> 00:07:37.160 Founders do have to convert from operator 118 00:07:37.160 --> 00:07:40.920 to evaluate because they say I know what looks good, 119 00:07:40.920 --> 00:07:44.760 I just trust my guard in German. Bauchefuhl What? 120 00:07:45.080 --> 00:07:48.680 Why is this dangerous? Is this a dangerous mindset 121 00:07:48.760 --> 00:07:51.750 for hiring executives? That's a good question. 122 00:07:52.550 --> 00:07:56.150 And maybe I forgot that to mention with your 123 00:07:56.150 --> 00:07:59.750 first question as an answer because after 400 executive 124 00:07:59.830 --> 00:08:03.550 searches and thousands of interviews, plus having studied 125 00:08:03.550 --> 00:08:07.190 psychology beforehand, I cannot even trust my 126 00:08:07.190 --> 00:08:10.870 gut feeling. So let's assume there's 127 00:08:10.870 --> 00:08:14.310 already a solid job profile where 128 00:08:14.550 --> 00:08:18.030 the company is. This has a distinction between technical 129 00:08:18.030 --> 00:08:21.270 criteria and personality. Personality related aspects 130 00:08:21.440 --> 00:08:25.200 upfront. So this is already existing. Right. What I 131 00:08:25.200 --> 00:08:29.000 believe is that nobody would just conclude from gut 132 00:08:29.000 --> 00:08:32.840 feeling hiring a CTO without having done a deep 133 00:08:32.840 --> 00:08:36.640 dive in the technical competencies of this person. Yeah, 134 00:08:36.800 --> 00:08:40.560 but we are all experts and that is quite superficial if 135 00:08:40.560 --> 00:08:44.120 it comes to the evolution of the personality only by our 136 00:08:44.120 --> 00:08:47.640 gut feeling. So they're required superficial and 137 00:08:47.640 --> 00:08:51.410 required confident. But they've come if it comes to the technical, technical requirements 138 00:08:51.570 --> 00:08:55.410 we always need experts, we need cases etc this is 139 00:08:55.410 --> 00:08:59.210 the common case. But we should in at least invest 140 00:08:59.210 --> 00:09:02.850 the same effort to get a deep understanding of the personality and 141 00:09:02.850 --> 00:09:06.050 behavior and not only in the technical 142 00:09:06.050 --> 00:09:09.330 expertise. And what I 143 00:09:09.730 --> 00:09:12.450 often see is that there are several 144 00:09:13.010 --> 00:09:16.770 HR questions referring to strength weaknesses 145 00:09:17.490 --> 00:09:20.690 and the interpretation of the answers are based on several 146 00:09:20.690 --> 00:09:24.010 biases that come from like what we call 147 00:09:24.010 --> 00:09:26.850 shortcutting in psychology, stereotyping or 148 00:09:27.010 --> 00:09:30.690 subjectivity. And that is what we mean if 149 00:09:30.690 --> 00:09:33.970 we talk about gut feelings in fact that are 150 00:09:33.970 --> 00:09:37.330 biases and I say personally I'm not 151 00:09:37.330 --> 00:09:40.610 immune against them to be honest. I also need management 152 00:09:40.690 --> 00:09:44.360 diagnostics and methodology to take a good decision 153 00:09:44.360 --> 00:09:48.120 or to give a recommendation. Founders, 154 00:09:48.520 --> 00:09:52.040 when did you first doubt your gut in a hiring decision? 155 00:09:52.360 --> 00:09:56.120 Drop your story in the comments or DM us for example on threads 156 00:09:58.679 --> 00:10:01.960 we're talking about here Dominic, because this is very 157 00:10:02.200 --> 00:10:06.040 expensive. You've talked about the cost of a 158 00:10:06.040 --> 00:10:09.800 failed exec hire could be up 159 00:10:09.800 --> 00:10:13.240 to 28x their 160 00:10:13.240 --> 00:10:16.680 salary in a startup. What does that actually 161 00:10:16.840 --> 00:10:20.200 look like? Is there a story that shows the real world impact? 162 00:10:21.240 --> 00:10:24.920 There are a lot of stories and studies about that. And 163 00:10:24.920 --> 00:10:28.480 of course I'm not the one to examine 164 00:10:28.480 --> 00:10:32.280 this study or evaluate it. I just trust 165 00:10:32.440 --> 00:10:35.960 in studies that are there out there. And 166 00:10:36.500 --> 00:10:39.540 you know you need to take into account different 167 00:10:39.620 --> 00:10:43.460 aspects in terms of costs. It's that we have 168 00:10:43.940 --> 00:10:46.820 internal external costs. Yeah. You have like 169 00:10:47.540 --> 00:10:51.060 client retention costs often. Or reputation. 170 00:10:51.540 --> 00:10:54.700 Yeah. And also in Germany we should not forget it. It's 171 00:10:54.700 --> 00:10:58.500 severance pay. I think that's the term. Severance pay. Yeah, 172 00:10:58.580 --> 00:11:02.380 severance pay. Right. Sorry for that. And of course cost of 173 00:11:02.380 --> 00:11:05.940 recruiting, costs of onboarding the next employee. And if 174 00:11:05.940 --> 00:11:09.580 we talk about real costs we also need to include 175 00:11:09.660 --> 00:11:13.020 opportunity costs. Yeah. And that is those 176 00:11:13.260 --> 00:11:17.100 costs that, that we, that we need to take into account 177 00:11:17.100 --> 00:11:20.220 if there were someone who did the job right 178 00:11:20.700 --> 00:11:24.220 like winning new clients, doing business development, especially in the 179 00:11:24.220 --> 00:11:27.940 startup environment, being hands on. So what are the 180 00:11:27.940 --> 00:11:31.670 missed out opportunities by hiring the wrong person? And then 181 00:11:31.670 --> 00:11:35.510 it comes to a quite high number. And this is 182 00:11:35.510 --> 00:11:39.310 what studies said. What I would indicate for you as 183 00:11:39.310 --> 00:11:43.070 a startup founder is at least to have with a 184 00:11:43.070 --> 00:11:46.710 senior executive on VP level and or 185 00:11:46.710 --> 00:11:50.550 on C level. That is the real minimum. That's the other study 186 00:11:50.550 --> 00:11:52.870 I could found. It's 250 or 187 00:11:52.870 --> 00:11:56.570 240.250k euro for. 188 00:11:56.640 --> 00:11:59.960 For small caps. Yeah. For a mishire. So that's the real 189 00:11:59.960 --> 00:12:02.160 minimum we can state here. 190 00:12:04.560 --> 00:12:05.280 I see. 191 00:12:08.880 --> 00:12:12.479 What is a common personality trait in 192 00:12:12.479 --> 00:12:15.760 startup founders that like clashes with 193 00:12:16.000 --> 00:12:19.800 traditional corporate style execs and how do you 194 00:12:19.800 --> 00:12:23.610 screen for it in advance? Mm, 195 00:12:23.610 --> 00:12:25.050 mm, mm. 196 00:12:27.690 --> 00:12:31.530 I think looking at backgrounds alone is not sufficient 197 00:12:31.530 --> 00:12:35.010 in this case. I often See also VCs conclude that 198 00:12:35.010 --> 00:12:38.690 candidates from a large cap won't perform well in a starboard 199 00:12:38.690 --> 00:12:42.130 environment. While there is some correlation, we 200 00:12:42.130 --> 00:12:45.730 shouldn't exclude these candidates too early in the process of the 201 00:12:45.730 --> 00:12:49.520 recruitment. A candidate's personality might 202 00:12:49.520 --> 00:12:53.200 enable them the candidate to adopt to a startup 203 00:12:53.200 --> 00:12:57.040 setting. And the desire for change could come from a motivation to break free 204 00:12:57.360 --> 00:13:01.080 from the constraints of established structures and processes in a 205 00:13:01.080 --> 00:13:04.640 large cap. Right. So I guess 206 00:13:04.640 --> 00:13:08.160 by traditional style you mean that we 207 00:13:08.800 --> 00:13:12.320 talking about the manager of a large cap company who has the ability to 208 00:13:12.320 --> 00:13:15.730 delegate while it's in the starter. They must do everything 209 00:13:15.810 --> 00:13:19.650 themselves. Right. That's maybe what you mean by the question. And 210 00:13:19.650 --> 00:13:22.810 also the behavioral and what we call in 211 00:13:22.810 --> 00:13:26.370 Diagnostics feeling of power. Yeah. So 212 00:13:26.610 --> 00:13:30.370 you, you would like to perceive this the boss of the pack, 213 00:13:30.449 --> 00:13:33.970 so to say. Yeah. And this traditional 214 00:13:33.970 --> 00:13:37.650 multivita is definitely a red flag. We have to figure 215 00:13:37.650 --> 00:13:41.130 it out. But we need to do it in the interview phase and in the 216 00:13:41.130 --> 00:13:44.800 assessment and not upfront. If we read a cv. Yeah. 217 00:13:44.960 --> 00:13:48.600 Because we have a narrow niche to recruit in. Not everyone 218 00:13:48.600 --> 00:13:52.200 is motivated to join a startup. But if someone is 219 00:13:52.200 --> 00:13:55.800 motivated to join a startup coming from a mid cap or even large 220 00:13:55.800 --> 00:13:59.520 cap, from a business unit manager position for example, 221 00:13:59.999 --> 00:14:03.680 then we have to select is someone really 222 00:14:03.680 --> 00:14:07.400 willing to invest is someone really willing to invest 223 00:14:07.400 --> 00:14:11.160 in autonomy and is this person changing because a lack of, 224 00:14:11.160 --> 00:14:14.660 a lack of autonomy. And this is a motivator and the selection 225 00:14:14.660 --> 00:14:18.460 criteria at the same time. So we need to hire 226 00:14:18.460 --> 00:14:22.140 for expertise. So we cannot exclude bigger cases. 227 00:14:22.220 --> 00:14:25.820 Bigger, bigger, large gaps. But we also see 228 00:14:25.820 --> 00:14:29.660 is this person motivated enough for the startup environment. 229 00:14:31.180 --> 00:14:31.740 Mm. 230 00:14:35.420 --> 00:14:39.140 When I was thinking about the questions I thought about something like the 231 00:14:39.140 --> 00:14:42.860 emotional hangover. Founders often don't realize how 232 00:14:42.860 --> 00:14:46.640 much their emotional, emotional energy goes into managing 233 00:14:46.640 --> 00:14:49.880 a mis hire. What patterns do you see 234 00:14:50.360 --> 00:14:54.120 in founder burnout linked to leadership 235 00:14:54.120 --> 00:14:57.720 mismatch? Okay. I believe there are 236 00:14:57.720 --> 00:15:01.520 multiple reasons for founder burnout. So it's not 237 00:15:01.520 --> 00:15:05.240 a funny story. It's not. It's always multifactual. I think 238 00:15:05.240 --> 00:15:09.080 that's the English expression what we psychologists say so. However 239 00:15:09.320 --> 00:15:13.160 the intense engagement with a mishire is certainly 240 00:15:13.160 --> 00:15:16.920 energy consuming. Often VCs tell 241 00:15:16.920 --> 00:15:20.600 me that that a founder holds on to a non performing 242 00:15:20.600 --> 00:15:23.840 colleague. And this is the most common pattern I, I 243 00:15:23.840 --> 00:15:27.240 observe. It is better to hire slow, 244 00:15:27.240 --> 00:15:31.000 carefully and to fire fast. To be honest it's not, 245 00:15:31.160 --> 00:15:33.960 it's. That is the best way. And also 246 00:15:34.920 --> 00:15:38.480 the, the main problem is and that is 247 00:15:38.480 --> 00:15:42.240 also linked to the feeling we should not invest too 248 00:15:42.240 --> 00:15:45.800 much feeling in like this family and friends set 249 00:15:45.800 --> 00:15:49.560 up. It's a company and the VCs and the vessels are expecting 250 00:15:49.560 --> 00:15:53.360 something from the founders. Yeah. To be a manager and 251 00:15:53.760 --> 00:15:57.520 not to be the father of the family. We'll be back after short ad break. 252 00:15:57.760 --> 00:16:01.520 Stay tuned to learn about the first VP dilemma 253 00:16:01.600 --> 00:16:04.320 and resume versus readiness and much more. 254 00:16:09.600 --> 00:16:13.040 Hey guys, welcome back to our interview with Dominic 255 00:16:13.200 --> 00:16:16.880 Headhunter who had made more than 400 placements 256 00:16:17.040 --> 00:16:20.320 of executives and we talked about how to get 257 00:16:21.200 --> 00:16:25.040 external executives into startups and common mistakes. 258 00:16:26.720 --> 00:16:30.400 Let's call this the first repeat dilemma. Meeting the first 259 00:16:30.780 --> 00:16:34.540 vice president for startups hiring their like first 260 00:16:34.700 --> 00:16:38.380 ever external vice president of sales, marketing, 261 00:16:38.380 --> 00:16:41.700 operations or something. What's the single most 262 00:16:41.700 --> 00:16:45.340 overlooked mistake you see in the Briefing or screening 263 00:16:45.340 --> 00:16:49.020 phase. And it's a very good question. 264 00:16:50.620 --> 00:16:54.380 In the first phase in the breathing so to say there 265 00:16:54.620 --> 00:16:58.460 is a wish list of expertise criteria and also personality 266 00:16:58.460 --> 00:17:02.270 traits like soft skills and this is the. 267 00:17:02.270 --> 00:17:05.630 A volume style. Referring to the beginning of our talk. 268 00:17:05.790 --> 00:17:09.550 Yeah. So this is a wish list. The first step for me is then 269 00:17:09.550 --> 00:17:13.070 to challenge the startup's job profile and differ between 270 00:17:13.310 --> 00:17:16.910 what is the mandatory criteria and what is nice to have 271 00:17:17.790 --> 00:17:21.070 and what can be also then compensated by team members. 272 00:17:21.470 --> 00:17:24.710 So let's hire for potential and not too much for 273 00:17:24.710 --> 00:17:28.210 expertise in every field of the competence 274 00:17:28.210 --> 00:17:31.970 profile as it becomes quite expensive. So what can 275 00:17:31.970 --> 00:17:35.610 we. What is. What can be covered by personality and potential 276 00:17:35.610 --> 00:17:38.850 and what is really a must have criteria. So that is the first step. 277 00:17:39.090 --> 00:17:42.530 Yeah. And the. In the screening of 278 00:17:43.090 --> 00:17:46.290 like sales candidates. Let's take this 279 00:17:46.450 --> 00:17:50.050 example because it's the. The second role that I am recruiting, 280 00:17:50.130 --> 00:17:53.570 at least in startups it's always head of business development or 281 00:17:53.650 --> 00:17:57.240 cso. Yeah. The founders often 282 00:17:57.480 --> 00:18:00.880 overvalue the network aspect so 283 00:18:00.880 --> 00:18:04.040 candidates overestimate their network themselves. 284 00:18:04.600 --> 00:18:08.160 And in addition candidates are not able to 285 00:18:08.160 --> 00:18:11.560 reactivate the network for other products in most of the cases. 286 00:18:12.120 --> 00:18:15.720 So example is if I am hiring a headhunter for my team. 287 00:18:15.880 --> 00:18:19.640 Network is quite crucial, Joe. That is maybe what 288 00:18:19.640 --> 00:18:23.260 we rely on and I think 289 00:18:23.260 --> 00:18:26.860 it's also in technical companies the same story. But 290 00:18:26.860 --> 00:18:30.580 my belief is I went for one third 291 00:18:30.580 --> 00:18:34.220 rule, so to say one third of the customers remain with the 292 00:18:34.220 --> 00:18:38.020 old company, one third follow the consultant 293 00:18:38.660 --> 00:18:42.300 and one third turn away from both the company and the 294 00:18:42.300 --> 00:18:45.860 consultant. And that is a realistic estimation of network. 295 00:18:46.100 --> 00:18:49.910 So we should not focus too much on it, but more on 296 00:18:49.910 --> 00:18:53.510 potential and capabilities. And the second problem, 297 00:18:53.510 --> 00:18:57.270 especially with VPs or. Yeah, the first CSO 298 00:18:57.670 --> 00:19:01.230 is that we tend to favor candidates with a high level 299 00:19:01.230 --> 00:19:04.550 of, let's name it, extroversion and strong 300 00:19:04.550 --> 00:19:08.310 communication skills. During the interviews, we assume that this 301 00:19:08.310 --> 00:19:12.070 candidate will also succeed in acquiring new customers 302 00:19:12.070 --> 00:19:15.880 because of the way he or she communicates. However, this is 303 00:19:15.880 --> 00:19:19.520 a bias. We should not infer sales competence 304 00:19:19.520 --> 00:19:22.520 from an observed presence in the meeting. 305 00:19:23.240 --> 00:19:26.760 It requires much more. Such as resilience, such as influence. 306 00:19:27.240 --> 00:19:30.840 Yeah. Which must be evaluated separately in the process 307 00:19:30.919 --> 00:19:34.680 and later in the process. We cannot generalize from one trait 308 00:19:34.680 --> 00:19:38.080 to another. At the end of the day the person might just be 309 00:19:38.080 --> 00:19:41.730 extrovert but. And charismatic maybe, but not 310 00:19:41.730 --> 00:19:45.330 have the ability to deliver results. So these are the 311 00:19:45.330 --> 00:19:48.610 most common common observations I have. 312 00:19:49.810 --> 00:19:51.330 Mm, I see 313 00:19:53.650 --> 00:19:57.250 we've been talking about this. And your edge is empirical. 314 00:19:57.810 --> 00:20:01.250 You apply management diagnostics to assess 315 00:20:01.490 --> 00:20:05.050 behavior and fit can you walk us through a 316 00:20:05.050 --> 00:20:08.490 specific test or signal you use that startups 317 00:20:08.490 --> 00:20:10.390 wouldn't typically consider? 318 00:20:13.030 --> 00:20:16.470 Yeah, most VCs nowadays at least consider 319 00:20:16.550 --> 00:20:20.350 personality tests. But that is the problem. It's just a test like the 320 00:20:20.350 --> 00:20:23.910 inside personality test that ranks personalities 321 00:20:23.910 --> 00:20:27.510 in colors. Maybe you know that. Yeah 322 00:20:28.470 --> 00:20:32.070 and it's an interesting indication but it's not valid enough 323 00:20:32.150 --> 00:20:35.550 to predict behavior. And the tests are not 324 00:20:35.550 --> 00:20:39.270 aligned to the specific situations, culture and challenges of the 325 00:20:39.270 --> 00:20:43.090 vacancies. And the results are over all statements about personality. 326 00:20:43.090 --> 00:20:46.930 So this is a frame what you shouldn't do. So the first problem 327 00:20:46.930 --> 00:20:50.730 is that they are mostly descriptions of trades, self 328 00:20:50.730 --> 00:20:54.050 descriptions which doesn't need help us forward. 329 00:20:54.370 --> 00:20:58.130 The second problem is that yeah it's. It's 330 00:20:58.130 --> 00:21:01.650 not aligned to the context of the role these self descriptions. 331 00:21:02.130 --> 00:21:05.930 So if you looking for a good test, it's 332 00:21:05.930 --> 00:21:09.590 not a test, it's a whole assessment that you should 333 00:21:09.590 --> 00:21:13.270 have cognitive abilities, you should have personality traits and 334 00:21:13.270 --> 00:21:16.630 then test this in an in depth 335 00:21:16.630 --> 00:21:20.150 interview with an expert. So that would be the best 336 00:21:20.150 --> 00:21:23.630 setup for a startup. I talked about the best setup for 337 00:21:23.630 --> 00:21:27.270 startup here. I was wondering for our audience what's one 338 00:21:27.270 --> 00:21:30.710 interview question you've used to uncover 339 00:21:30.870 --> 00:21:34.630 leadership behavior, share it on LinkedIn and tag startup? 340 00:21:37.170 --> 00:21:40.610 Curious question what the data didn't say. 341 00:21:41.330 --> 00:21:45.090 Can you share a time when the CV and 342 00:21:45.090 --> 00:21:48.690 diagnostics aligned but still the hire 343 00:21:48.690 --> 00:21:52.210 didn't work out? What did you miss and what did you 344 00:21:52.210 --> 00:21:55.890 learn? I also had failures especially 345 00:21:55.890 --> 00:21:59.610 in the beginning of my career. Maybe 346 00:21:59.610 --> 00:22:03.330 I underestimated the stakeholders in my first year for for example or 347 00:22:03.330 --> 00:22:06.770 first years I just listened to the PE or the BC 348 00:22:06.770 --> 00:22:09.970 owner and his or her 349 00:22:09.970 --> 00:22:13.410 expectations from the future position holder in the 350 00:22:13.410 --> 00:22:17.010 portfolio company. But I did not interview the management team 351 00:22:17.330 --> 00:22:21.050 in order to get a holistic view of the situation, challenges 352 00:22:21.050 --> 00:22:24.850 and also of the DNA of the company. That is something 353 00:22:24.850 --> 00:22:28.490 I learned. So it is just one view. I need to really 354 00:22:28.490 --> 00:22:32.050 deep dive and understand what is the challenge, what is the situation 355 00:22:32.130 --> 00:22:35.800 and the DNA and in order to derive from that a 356 00:22:35.800 --> 00:22:39.360 competence profile and then do assessments and the whole 357 00:22:39.360 --> 00:22:42.240 executive search process. That was the main 358 00:22:42.800 --> 00:22:46.640 failure I made. I would say you 359 00:22:47.360 --> 00:22:51.200 talk about the executive search process founders 360 00:22:51.200 --> 00:22:54.240 do already have like guesstimate 361 00:22:55.120 --> 00:22:58.840 about what how long it takes to 362 00:22:58.840 --> 00:23:02.680 hire somebody like an employee, like a like 363 00:23:02.680 --> 00:23:05.980 a team lead. How long should founders actually 364 00:23:06.140 --> 00:23:09.860 estimate between the first email 365 00:23:09.860 --> 00:23:12.780 to you and the first working day of the new 366 00:23:13.100 --> 00:23:16.860 VP or executive? Very good question. Let's 367 00:23:17.660 --> 00:23:21.420 try to to find an appropriate answer. It is the first 368 00:23:21.580 --> 00:23:25.100 step is that is our executive search process 369 00:23:25.900 --> 00:23:29.260 which I won't deep dive here, but it's about 10 370 00:23:30.040 --> 00:23:33.840 weeks that we need to have someone signed a 371 00:23:33.840 --> 00:23:37.360 contract with the company. And then of course you have 372 00:23:37.360 --> 00:23:41.160 notice periods to be taken into account. So 373 00:23:41.240 --> 00:23:44.920 I would indicate on for notice period at least 374 00:23:45.160 --> 00:23:49.000 three months to be very conservative in the estimation. So if 375 00:23:49.000 --> 00:23:51.800 eight weeks plus three months, I would say 376 00:23:53.080 --> 00:23:56.760 10 weeks. 10. Eight to 10 weeks plus three months. Yeah. 377 00:23:57.920 --> 00:24:01.760 That's also something I would have in mind. If you say like 10 378 00:24:01.760 --> 00:24:05.400 weeks, there's always somebody traveling, somebody on vacation and make it 379 00:24:05.400 --> 00:24:09.000 three months at least. I do believe if you're talking 380 00:24:09.000 --> 00:24:12.640 like a Chief Technology Officer for example, right now with 381 00:24:12.640 --> 00:24:16.240 AI skills or somebody who will take over 382 00:24:16.800 --> 00:24:20.640 as a CEO, I would say you can more than double it. 383 00:24:20.880 --> 00:24:24.650 Sorry, sorry. The time you need if you're looking for 384 00:24:24.650 --> 00:24:28.490 vp something like three month guesstimate. But if 385 00:24:28.490 --> 00:24:31.290 you're looking for somebody like an external CTO 386 00:24:32.890 --> 00:24:36.090 with crucial for example AI skill. 387 00:24:36.170 --> 00:24:39.850 Exactly. Or even CEOs, how long 388 00:24:40.010 --> 00:24:43.450 do you think you should take there? Maybe up to a year. 389 00:24:45.370 --> 00:24:49.210 I would say the process is quite 390 00:24:49.210 --> 00:24:52.660 the same with this, with this CEO or a CTO with a 391 00:24:52.660 --> 00:24:56.420 vp. It's just like the availability we are 392 00:24:56.420 --> 00:25:00.060 relying on. The availability depends on the what, 393 00:25:00.060 --> 00:25:03.660 what, what month we are heading to like summer etc. 394 00:25:03.900 --> 00:25:07.460 But the, the notice period is the crucial point. 395 00:25:07.460 --> 00:25:11.260 And you know there are often like notice periods written down 396 00:25:11.260 --> 00:25:14.500 for one year. But it's not that the 397 00:25:14.500 --> 00:25:18.150 candidate will stick to that period written down agreement. 398 00:25:18.310 --> 00:25:22.070 You can also talk to your employer and say 399 00:25:22.070 --> 00:25:25.630 okay, I have a new opportunity. You will also save costs. 400 00:25:25.630 --> 00:25:29.150 Yeah, let's, let's find an agreement like I can get out 401 00:25:29.150 --> 00:25:32.909 here after six months. So we should manage to 402 00:25:32.909 --> 00:25:36.710 have someone. Yeah. In a shorter period, 403 00:25:36.710 --> 00:25:40.070 not one year. Because in one year a startup environment is, 404 00:25:40.310 --> 00:25:44.110 is based on dynamics and pace. You can wait one year for a 405 00:25:44.110 --> 00:25:47.790 CEO. Yeah. Yes, exactly. 406 00:25:47.790 --> 00:25:48.830 That's always an issue. 407 00:25:51.630 --> 00:25:54.190 You've done more than 400 searches. 408 00:25:55.550 --> 00:25:58.030 I'm sure you recognize some patterns. 409 00:26:00.350 --> 00:26:03.870 For hundreds of VC and PE backed firms. 410 00:26:04.350 --> 00:26:08.110 What personality patterns or behaviors have you consistently 411 00:26:08.110 --> 00:26:11.230 seen in the top performing startup leaders? 412 00:26:15.940 --> 00:26:19.660 The first is simple and related to what 413 00:26:19.660 --> 00:26:23.220 I just said. The pace and the dynamics of the VC and 414 00:26:23.220 --> 00:26:27.020 PE universe. It is the ability to take a very 415 00:26:27.020 --> 00:26:30.100 fast decision without having sufficient data. 416 00:26:30.980 --> 00:26:34.660 You can quickly adapt after having taken the wrong decision 417 00:26:34.820 --> 00:26:38.140 in this environment. But you cannot miss out chances and 418 00:26:38.140 --> 00:26:41.870 opportunities and slow down the scaling by overthinking. 419 00:26:42.270 --> 00:26:45.310 That is relevant for both mid caps and also 420 00:26:45.470 --> 00:26:49.310 startups. That is one personality pattern 421 00:26:50.350 --> 00:26:53.630 for very good performing leaders to take fast 422 00:26:53.630 --> 00:26:56.990 decisions. And yeah, 423 00:26:57.790 --> 00:27:01.550 the second I would say if I have to name it, is the ability 424 00:27:01.550 --> 00:27:05.170 not to be a team player at every single 425 00:27:05.320 --> 00:27:08.200 certain stages of scaling. 426 00:27:08.920 --> 00:27:12.440 What I mean is that often the founder is the protector 427 00:27:12.440 --> 00:27:16.040 of a harmonious environment in a startup 428 00:27:16.120 --> 00:27:19.640 when it scales up. So co founders have a common 429 00:27:19.640 --> 00:27:23.360 vision of course, and also perceive their startup as a family 430 00:27:23.360 --> 00:27:27.120 and friends setup. But the investors don't invest 431 00:27:27.120 --> 00:27:30.440 in family, they invest in business. And to see also 432 00:27:31.110 --> 00:27:34.070 it is not the CEO's job to provide a 433 00:27:34.390 --> 00:27:38.230 harmonious environment, but also to take sometimes 434 00:27:38.790 --> 00:27:41.830 unpopular decisions in order to save the company's health. 435 00:27:42.550 --> 00:27:46.310 So taking fast decision and unpopular decisions, 436 00:27:46.470 --> 00:27:50.310 I think I don't like that idea to be honest. But 437 00:27:50.310 --> 00:27:51.030 it's the truth. 438 00:27:54.470 --> 00:27:58.080 I'm talking now a little bit about future you. 439 00:27:58.560 --> 00:28:02.120 If your future self looked back at this 440 00:28:02.120 --> 00:28:05.760 conversation 10 years from now, what would they say 441 00:28:05.760 --> 00:28:09.480 about your mission to change how leadership hiring works 442 00:28:09.480 --> 00:28:12.920 in startups? I would say it is 443 00:28:12.920 --> 00:28:16.600 awareness. Awareness of the common mistakes in hiring 444 00:28:16.600 --> 00:28:20.320 executives and maybe a formula how it can work out. 445 00:28:20.400 --> 00:28:23.520 And yeah, in order to ensure performance of the company. 446 00:28:24.220 --> 00:28:28.020 I still believe in our duck region, innovation 447 00:28:28.020 --> 00:28:31.860 and discipline and that we have an 448 00:28:31.860 --> 00:28:35.700 impact on the world's economy. So that is real my focus. 449 00:28:35.700 --> 00:28:39.260 And if I have a footprint small or big in this 450 00:28:39.260 --> 00:28:41.100 direction, I would be more than happy. 451 00:28:43.020 --> 00:28:46.660 Dominik, thank you very much. It was a pleasure having you as 452 00:28:46.660 --> 00:28:49.500 guests here. Hope to have you back soon. Thank you. 453 00:28:55.220 --> 00:28:58.660 That's all folks. Find more news, streams, 454 00:28:58.820 --> 00:28:59.860 events and 455 00:28:59.940 --> 00:29:04.260 interviews@www.startuprad.IO. 456 00:29:04.660 --> 00:29:06.900 remember, sharing is caring.