In describing their biggest hiring frustrations, founder-CEOs often mention hiring someone out of a big company who was not able to adapt to the challenges of a new venture. One founder-CEO recently described one of his hiring mistakes – a VP-level hire who had worked at Oracle and IBM – as follows: “He didn’t know how to create something from nothing. It’s like if you already have a crank, he can crank, but he can’t actually build the crank.”
Last week, we held our annual IT webcast and annual Life Sciences webcast to unveil this year’s Compensation Reports. The webcasts included a panel discussion of compensation and hiring issues within start-ups. The longest panel segment focused on whether it is a good idea for a new venture to hire someone with big-company experience.
As highlighted by the founder-CEO above, a big challenge with hiring someone out of a big company is what one panelist called “the resource issue” – i.e., that the person is used to operating with a lot of resources. (As depicted in the picture below, “big company” Goliath was used to having a full complement of armor and weapons, while little David had only a slingshot and the ability to improvise.) One of the panel members said, “They have to realize that in a start-up, they are the resource. They have to make everything happen themselves.”
QUESTIONS, PART 1: In your experience, is it hard for people to transition from big companies to new ventures, or is this issue overblown? If it is hard, what are the biggest challenges, and what are the best ways to address those challenges?
However, the panel agreed that some big-company people can work well in new ventures. What indicates which big-company hires will work out? The following characteristics were proposed:
- Within the big company, the person has succeeded at a variety of very different jobs across many positions and units, which suggests an ability to adapt.
- The person has had some international assignments, which often demand more entrepreneurial skills than do domestic ones.
- The person has enough self-knowledge to know if she fits better in big companies or in new ventures, and what stage of a new venture’s life cycle would be the best fit. Relatedly, the person is aware that the situation is “radically different” in a new venture, regarding resources, financing, and the need to wear many hats.
- The person is comfortable with the fact that the probability of success is a lot lower in the new venture.
QUESTIONS, PART 2: Are there other indications that someone will be able to make the transition from a big company to a new venture? Also, are there functional backgrounds in big companies that are more likely (or, for other functions, less likely) to transfer smoothly to new ventures?