00:00hello and welcome to the a 16c podcast i
00:04and I am here with Shannon Callahan and
00:06we are going to talk about human
00:09resources Shannon and working with
00:12startup companies what's the biggest
00:14mistake that you see companies make with
00:17respect to HR I would say the biggest
00:21mistake I am seen is that they're not
00:23bringing it on soon enough they a lot of
00:25our CEOs and founders feel that once
00:28they've hired the recruiter they've kind
00:31of covered themselves on the HR front
00:33that's interesting because recruiters
00:36are kind of the opposite of HR just
00:38agree yes yeah so you and I have talked
00:42about this in the past but recruiters
00:44from a personality standpoint to be a
00:46world-class recruiter you have to be
00:48kind of a world-class salesperson and
00:50generally world-class salespeople tend
00:53to have a fairly self centric view of
00:55the world like that's what makes them
00:56good and you know that kind of charisma
01:00and attitude and HR on the other hand is
01:03like the opposite it's when done well
01:06it's a kind of very low-profile kind of
01:10thankless job but but very important job
01:12and it's unusual that a recruiter would
01:17become like a great head of HR yes yes
01:19and I think that the other mistake that
01:22it's not a mistake but I think where
01:24they're going down the wrong path is
01:25there are tons and tons of recruiters
01:27that want to take on HR which means that
01:30they're either not hiring the best
01:32recruiter who wants to go out and hunt
01:34and make the kill to build an incredible
01:36technical team or they're putting the
01:39someone who has that skill set in charge
01:42of HR so both are disconnect right but
01:45recruiters are pretty good at telling
01:46CEOs on the fact that they should be
01:48head of HR yes yes yeah the great irony
01:52so when we talk about HR like what is HR
01:56so when I talk to our founders I always
01:59talk to them about you know the true the
02:02worth of HR is is that they are an
02:06extension of the founder in their vision
02:08in the way that they want to build the
02:11company in how they bring people on
02:13bored and how they actually build the
02:15company successfully they take what the
02:18CEO wants the company to be and partners
02:21with them to ensure that all of those
02:23things are happening that's like the
02:25importance of HR HR also is the person
02:28it's kind of the voice of the people to
02:30the CEO as the company grows a CEO can't
02:33stay connected with every person in an
02:35organization and so they're really they
02:38should be that you know a confidant to
02:40the CEO but also the person who can roll
02:43up themes and issues that need to be
02:45addressed in an organization right right
02:48and so the CEO is kind of in some ways
02:51in charge of the company culture and the
02:54company's management and so forth and
02:56the head of HR helps the CEO to succeed
03:01on that mission correct so you spoke
03:07earlier about people don't want to bring
03:09HR in early enough and you know lately
03:14we've seen some companies kind of get
03:17into a spot of trouble by not having HR
03:20early on so talk about how HR helps kind
03:25of protect the company from itself yes
03:28so I think the first the first thing to
03:31to address is what you were just saying
03:33a lot of CEOs don't want to bring HR on
03:35and that comes from a lot of folks bring
03:37or feel that once they bring HR in
03:39they're becoming a process kind of
03:42policed company that it's going to
03:44change the culture that this person is
03:46really there to make sure that everyone
03:49is doing what they're supposed to be
03:50doing so that one is false if you hire
03:53the right HR person as I said they're an
03:55extension of the CEO HR comes in to kind
04:00of you know I think you said this before
04:02in one of your blog posts kind of
04:04quality assurance against management so
04:07if you think about if a CEO is setting
04:09the tone on how communication is going
04:11to take place how people are going to be
04:13managed if their performance issue
04:15providing feedback kind of making sure
04:18that things are done in the right way
04:20that's what HR is there for and you know
04:23when you think about HR there is the
04:26word of compliance which as a company
04:28grows from you know in state of
04:30California once you hit 25 employees
04:32there's a lot of rules and regulations
04:33you need to follow so in a good HR
04:36person that comes on board is making
04:38sure that there are you know processes
04:40put in place there's there's ways in
04:42which to address issues within an
04:44organization from a legal standpoint to
04:47protect the company the employees and
04:51everyone who's interacting with the
04:54right and you know it's interesting when
04:57I started working in Silicon Valley we
05:01used to kind of have to dress
05:04differently for work than we were at
05:05home you know sometimes they'd make us
05:08put on suits and stuff but one of the
05:10benefits of that is everybody kind of
05:12understood that they were at work and I
05:14think you know one of the things that
05:16that we see is that sometimes as
05:18companies grow it's confusing you know
05:21it can be confusing like what behaviors
05:23at home are not OK at work and what are
05:26some of the things that you see and how
05:28can HR help with that so I think you
05:31know there's a couple of questions that
05:33come through a lot from our CEOs just
05:38one of them would be you know policy
05:40around dress code and how do you into
05:44your point people especially when you
05:46think about some of the you know
05:49technical companies that have a little
05:51bit of a hacker mentality like they're
05:53it's it's hip it's it's a really cool
05:56place to work how do we make sure that
05:58it's still a place to do business
06:00and so kind of setting the tone at the
06:02top as a company grows we've had some of
06:05our companies that have started you know
06:07inside a house how do you you know one
06:10of the issues that comes up there is you
06:13know I had a conversation with one of
06:14our CEOs who said what we really want to
06:15make sure that we're hiring females but
06:18we're finding that a lot of them don't
06:19want to come and work at the house and
06:21live at the house well it's you know
06:22congratulations you're growing you're
06:25becoming a big company or a bigger
06:26company and you have to you know if you
06:28want to attract the talent you have to
06:30start to evolve into a company that is
06:33comfortable for everyone that works
06:36and so that's kind of changing the tone
06:38at the top and and evolving the cool
06:41figuring out what was what was important
06:43when you were all working in a house and
06:44how do you maintain that once you move
06:46into office space right you know that's
06:48a that's a really interesting point that
06:51you bring up that often times if you
06:53have a super pronounced culture and you
06:54all live in a house together and kind of
06:57have a unique style that that can
07:00undermine your diversity efforts and can
07:03you can create an environment that
07:05doesn't feel inclusive to somebody who
07:08either don't live in the house and isn't
07:10part of that group so how does a kind of
07:13good head of HR help you evolve from a
07:16kind of kind of tightly cohesive but
07:21homogenous team into kind of broader
07:24more diverse team so I think it goes
07:26back to how you it still goes back to
07:29the type of talent you're attracting and
07:31kind of you know broadening what you're
07:33looking at when you bring people on
07:35board as well as your onboarding process
07:37so once again it's it's looking at
07:39everyone talks about culture and it's
07:42looking at what was so incredibly
07:45awesome about when we were all living in
07:47the same place and it's typically
07:49communication it's having meals together
07:51it's making sure that you know anything
07:53this the founders are thinking is being
07:55passed on to the person that's sitting
07:56you know on the couch next to them how
07:58do we how do we move that over and a
08:00great HR person will actually be able to
08:02dive in and figure out what are those
08:04four nuggets that are really critical to
08:06the culture and transfer that into an
08:11onboarding how do we onboard people how
08:13do we get everyone understanding the
08:14vision that is the founder have how do
08:17we make sure that everyone is connected
08:19and how do we do all of that while we
08:22transition into a bigger company no
08:25that's great and you know one of the
08:27things that I think nobody ever believes
08:31that their company is not inclusive like
08:33I've never spoken to a founder so no you
08:36know we're exclusive we don't let
08:38anybody and his woman like that never
08:40actually gets said and nobody ever
08:42thinks that but then when you talk to
08:45two women that you hear that all the
08:48time that oh that's not a good place to
08:49work for women and so forth
08:53you know it turns out to be the little
08:54things it turns out to be the weighty
08:56conversations flow it turns out to be
08:58the kinds of jokes that are made or the
09:01kind of chat rooms that are available
09:03inside the company so can you talk about
09:06you know some of those little things
09:08that might make somebody feel
09:09uncomfortable who wasn't kind of from
09:12the original core group yes so I think
09:15it's you know I don't even think that
09:17you I think it doesn't matter you know
09:21male/female I think it really one of the
09:24things and I think we went through this
09:25at Opsware and and loud cloud there was
09:28a very tight group of people that when
09:31you first start a company it's blood
09:32sweat and tears that go into that and
09:34you build this very solid solid bond and
09:38so I think it's it is there's everything
09:41that you touched on it's kind of knowing
09:44all the history of the company and
09:45referencing the history of the company
09:47constantly when you're making go forward
09:48decisions and not you know we see I work
09:51with our CEOs to think about let people
09:55bring new ideas to the table hear
09:57everyone's ideas make people feel
09:59included you know include new people as
10:03you go and do things on the weekends
10:05because you've been doing stuff together
10:0624 by 7 include more people into those
10:09functions as a CEO make yourself more
10:13available the people that you've been
10:15working with for the last two years feel
10:17very comfortable coming and speaking to
10:19you go out and hang out in the you know
10:22break room and talk to people it's it's
10:24being active in including people and yes
10:27like as you bring on different people
10:29from different backgrounds be conscious
10:31of what used to be okay to say might not
10:34be as okay to say now how about on
10:36things like you know everybody talks
10:38about oh you know the the key and
10:41Silicon Valley is having the best people
10:43and we're all about the best people and
10:45and everybody is going for the best
10:47people and thinks they have the best
10:49people and all these things but how does
10:52HR help a company really both kind of
10:57build a company of the best people
11:00possible and then know that they're
11:04not kidding themselves on it right so I
11:06think this this goes back to having the
11:09right process and I think that's one of
11:12the things many of our CEOs are like we
11:14don't want to put too much process in
11:16place but unless you define a process
11:19and understand what the best looks like
11:21it's very hard to continue to hire
11:23against that bar so really understanding
11:26and defining what different people's
11:29roles are in an interview process and
11:31making sure that you are diving into
11:33skillsets and cultural fit and all of
11:35those different things during the
11:37process and then holding people
11:40accountable to actually evaluate the
11:42people they've just spoken to so many
11:45times I talk to you know heads of
11:48recruiting or CEOs and they say we get
11:50together and we do thumbs-up thumbs-down
11:51we there everyone is should always have
11:54mixed opinions on everyone that they
11:55hire it's finding the best person and
11:57not everyone there's going to be
11:59give-and-take but you want to make sure
12:01that that bar is like very very high and
12:05when you step away from a solid process
12:07your bar starts to slip the second piece
12:10is measuring people's productivity and
12:13that starts with the second process that
12:15I feel is so crucial to companies and
12:18we're seeing more and more of our
12:19companies embrace this is having the
12:22onboarding plan designed and ready to
12:25implement before you even make the hire
12:27so it doesn't matter who you hire the
12:29onboarding plan is the still same
12:31onboarding plan and being able to set
12:34objectives on day one and measure
12:35someone against those very solid
12:37objectives in 30 days and 60 days and 90
12:41days and addressing a problem if they're
12:42not the best from and so it is it's it's
12:45the thing that everyone's always afraid
12:47of as HR comes in and puts process in
12:48place but a great HR professional will
12:51help define how someone is successful in
12:54an organization and help them get there
12:55and then measure people on it right and
12:58and you've talked about that a bunch
13:00that you know HR can help measure what's
13:04going on with employees and whether
13:06you're getting the right ones and what
13:07if they're getting productive and assume
13:09whether they're happy how does HR kind
13:12of partner with the CEO and the
13:13management team to get you really good
13:18I think well you have to each company I
13:20think is a little bit different you have
13:22to determine what what does a successful
13:25employee look like and how do we want to
13:27measure them you know what is the output
13:29that we you don't want to see from
13:31people are they a cultural fit are they
13:33working well with others you know
13:35there's some people that just aren't
13:36gonna work well with others so why you
13:38know you might not you it's not
13:40something that should be deciding if
13:41somebody is a great employee or not but
13:44I think it's it's really about sitting
13:45down as a management team and
13:47determining what does the perfect
13:50employee look like in this organization
13:52and then what do we put in place to
13:54measure that and those those can be you
13:58know it comes from setting clear
14:00objectives as an organization and then
14:02measuring people against those
14:03objectives that are set right that's
14:06really interesting and you know one of
14:07the things that I hear a lot from the
14:09from CEOs who don't want to hire HR is
14:12that kind of HR is synonymous with
14:17politics and rumors and gossip and all
14:20the things that you would hope HR would
14:24help you prevent and so they there are a
14:26lot of people have come from
14:27organizations where HR is sort of the
14:31problem with respect to that stuff as
14:34opposed to the solution and so how do
14:37you avoid that and why does that happen
14:39and how do you avoid it so I am you know
14:42first I will say I think that that is a
14:45reputation that HR professionals have
14:47brought on themselves in the past and it
14:49comes from knowledge is power and HR
14:52folks a lot of times use that knowledge
14:54to kind of manipulate an organization I
14:57think it's the same thing as hiring
14:59great engineers or product managers or
15:01designers it goes back to knowing what
15:04you're looking for and hiring against
15:06that and referencing people and really
15:07understanding what they bring to the
15:10table there are a lot of really crappy
15:12HR people in the valley and there's some
15:14great ones too and it's a matter of like
15:17finding the great ones that they want to
15:19partner to build something important
15:21they don't want to just you know police
15:24and organization and and use their
15:27knowledge to get things done and then in
15:29the organization right and how you know
15:31how do you go about figuring that out
15:34when you look at kind of a candidate for
15:37HR and you think about okay is this
15:39person really focused on improving the
15:44management quality of the company or you
15:47know becoming a world-class and having
15:50the best people who are have the best
15:52employee lifecycle first is okay I'm
15:55going to find out who likes who what the
15:59complaints are and then I'm going to use
16:01that to move myself up the organization
16:04how do you how do you kind of
16:05distinguish those two yeah so when you
16:07know I interview a lot of the HR folks
16:09that go into our portfolio companies and
16:11the thing that I really focus on is past
16:14experiences and what they've actually
16:16done in past experiences so there's a
16:19lot of HR professionals that have not
16:23necessarily growin a company they've
16:25been at a company once it's large and I
16:28think good HR people have have really
16:31good domain expertise in certain areas
16:33and they they they know how to get a job
16:37done and so I focus on HR professionals
16:40who have actually rolled their sleeves
16:41up and really done something in the past
16:43not just necessarily come from like a
16:45business partner standpoint I think you
16:47know business partners and large
16:49organizations tend to they don't fit
16:53well in in growing an organization from
16:55the ground up so I kind of look at the
16:57the background I also really dive into
17:00with references I think it's really a to
17:03me references are critical for an HR
17:05hire and understanding not just
17:07executives that they supported but
17:10talking to people in the organizations
17:12they supported to understand how they
17:14utilized their HR person so I think more
17:18importantly making it when you're hiring
17:20an HR person it's understanding what
17:22they're really good at understanding
17:23where they would need to hire to
17:25complement their skills and then doing
17:27the references not just with executives
17:29with but with people who use them to you
17:33know solve problems within an
17:34organization right great and there's a
17:37whole another kind of part of HR which
17:40kind of gets taken for granted but ends
17:43up being fairly important and it's
17:45the part employees care about a lot
17:46which are things like benefits payroll
17:49in a 401k health insurance vacation time
17:54all these kinds of issues and which go
17:58also hand-in-hand with compliance when
18:01you look at HR people and their skill
18:03sets and madan you know stock option
18:05plans and all these kinds of things what
18:09do you you know what do you look for
18:11from a knowledge set and a philosophy
18:14standpoint to see if somebody really
18:16understands how to do a great job on the
18:19thing that everybody cares about but
18:21nobody will ever say thank you for right
18:23and so ironically I think there's many
18:27many HR people in the valley don't have
18:29a lot of knowledge in that area and so I
18:32I do love diving into what people have
18:35done in those areas before and I do
18:37think it's it's okay an HR professional
18:41needs to understand and be able to
18:43articulate a total compensation package
18:45that is given to employees and
18:46understand the importance of it which it
18:48are all the other things that you just
18:50referenced that a lot of folks don't
18:52talk about but you know I think it's it
18:56they need to know how to leverage
18:57external sources if they don't have
18:59great knowledge in it but they also need
19:01to HR professionals need to have an
19:03overall network that they can go to to
19:05really stay on top of what's going on in
19:07the market what is competitive what's
19:10important to the employees what are the
19:12trade-offs what do we need to be
19:13implementing when and it's not something
19:16that can completely be out sourced and
19:18forgotten about and there are some you
19:21know HR professionals that just don't
19:22think about that side of the world and
19:25they need to write they do care
19:30vacation is very important yes yes the
19:32actual Human Resources care about it
19:34even if the human resource professional
19:37does not know that's really interesting
19:40so let's talk about kind of the you know
19:43the hardest you know some of the hardest
19:45parts of of a company which are you know
19:48firings layoffs and lawsuits from
19:53employees and and at least you know and
19:57they tend to go together and that
19:58if you if you do fire someone or if you
20:00do lay somebody off at least in in many
20:04states in particularly in California
20:06your likelihood of getting suit is
20:08actually pretty high and so how does
20:11kind of HR help both the CEO on the kind
20:15of psychological part of that as well as
20:19the legal part of you know what happens
20:22when you have to make reductions or make
20:26performance decisions yes I think
20:28they're you know two completely
20:30different situations and I would say it
20:35is for founder CEOs it's probably the
20:39first termination is one of the hardest
20:40things that they go through it's I would
20:43say it doesn't matter if it's a
20:45reduction in force or if they're having
20:46to terminate someone who's a performance
20:49issue or for other reasons it is you
20:52talk about you know the psyche it it it
20:54totally it's a hard thing to do they
20:57feel you know when you're building a
21:00company you feel like you're always
21:01hiring the best and you feel like once
21:02you start working with people that
21:04everyone's your friend and no one would
21:05ever do anything bad
21:06so it's really hard when they're making
21:09their first termination you know it's
21:12about I always remind our CEOs that it's
21:15about respecting an individual whether
21:17you're bringing them on board or if
21:18you're terminating them if it's you know
21:20performance based or if it's in a layoff
21:22it's all about respect because they are
21:25still an ambassador to your company when
21:27they leave so if it let's let's go with
21:29the first one if it's a
21:30performance-based termination you know
21:33the the first thing that an HR
21:36professional would help someone who's
21:37doing this is to understand what
21:39feedback has been given how was the
21:42feedback received how did you continue
21:44to address performance if you do that
21:46you get to a termination you know 90% of
21:48the time the employee is not surprised
21:50I always start a conversation with a CEO
21:53asking is the employee going to be
21:55surprised and when the answer is yes it
21:57means that there's been no feedback and
21:59this kind of goes back to culture you
22:01most people do want their culture to be
22:03you know ongoing feedback is provided to
22:07if you think about layoffs it's also
22:11very much about respecting the
22:13individuals and making sure that as
22:14people are leaving the company they are
22:17you know treated with the utmost respect
22:20I mean you've you referenced that you
22:21laid me off once but it had to do with
22:27you know understanding the contributions
22:30that people have brought to the table
22:32and making sure that they're valued on
22:35their way out but I think you know the
22:38second piece from a legal standpoint
22:41another thing CEOs hate to hear is
22:43getting an employee handbook in place
22:45that is like the number one thing that
22:46will protect every company from any type
22:49of termination and any type of lawsuit
22:51and it doesn't have to change your
22:54culture right yes so Shannon thank you
22:59so much for this excellent discussion
23:01you have been listening to the a 16 Z
23:05podcast I am Ben Horowitz thank you very
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