Wednesday, July 06, 2005

Looking for a job?

As a VC, I am frequently asked to meet with people looking for a job. The broad perspective enjoyed by many VC firms provides a birds-eye view into emerging markets, new companies, and areas of opportunity. It is a privilege and a pleasure to meet with smart people eager to identify the next great career opportunity.

This post is an effort to consolidate my advice into an actionable list of suggestions to help people who want to enter the start-up world.

First the good news; new companies are being created and funded at a rapid clip. New companies drive new innovation, and innovation (see my post on the MS CTO Summit) creates new jobs and opportunities.

In 2005 Q1, VCs funded 290 IT deals with $2.9 bn of investment. 52% of the $2.9bn went into A and B rounds, which implies that over $1.45bn of capital sits on the balance sheet of young IT companies looking to ramp headcount as they scale from product development into sales and marketing. In 2004, the VC industry invested $11.8bn into 1,303 IT companies.

The key take-away is that there is a large pool of new companies who will be adding headcount in the months ahead and are funded to grow.

With respect to a process for looking for the right next gig...I suggest the following steps:

Education

The web offers a variety of very useful tools and sites that help discover companies of interest. Before beginning a search process, I encourage job seekers to avail themselves to resources that can help map out areas of interest, representative companies, and funding events.

I recommend subscribing to VentureWire, VentureWire's events (see which companies are attending relevant conferences), reading The 451, AlwaysOn, VC blogs and tech news sites, and venture capital firms' portfolio listings.

Leverage

Start-up's cost of capital is high. Accordingly, BOD members and CEOs are focused on maximizing the return on every dollar invested. Given that HR costs represent over 70% of a start-up's burn rate, CEOs need to hire carefully and prudently in order to ensure that capital is invested wisely in reaching key company milestones. Therefore, I strongly encourage people to leverage their prior track record of expertise and achievement in looking for a start-up role. Specifically, start-ups can ill afford to experiment with an engineer interested in a move into marketing, or a consumer electronics product manager looking to move into the financial services vertical. When a req is open, the company needs to feel very confident that the prospective hire brings the skills and experience necessary to do the job. The cost of failure is too high.

If you are looking to move industries and/or career functions, I suggest the chances of securing a position are very low. Rather, try to leverage the expertise developed to date in a given market or function.

Access

Do not send email to jobs@company.com. This is a recipe for frustration. Given the high cost of a bad hire, start-ups like to hire known commodities. What if you don't know lots of start-up CEOs directly? Don't worry.

These relationships/touch points can be more than one degree of freedom away and still be very effective - referrals are the best source of qualified leads. Accordingly, once research uncovers a sector and set of companies of interest it helps to look carefully at the backgrounds of key management team and board of director members. Also see if the VC firms backing the company employ a full-time recruiter; VC HR resources are a wealth of information and access regarding opportunities across large numbers of young companies.

Remember, that personal references are vital and leveraging a network of relationships to secure access to the hiring manager is key to traction in a job process. If you use LinkedIn, you can search for a given target's name and see if your personal networks overlap. As an example, on LinkedIn I have 74 direct connections, 16,100 connections two degrees of freedom away, and 372,000 three degrees of freedom away. Amazing. Other useful networks to tap into include school alumni boards and company alumni groups.

Once the companies and a contact are identified, prepare diligently with respect to how you can help the company and play the game of numbers. To be successful, you will need a pool of targets to help yield one strong offer.

Process

Plan on a six month process. Split the process into manageable parts - 1) identify markets and companies of interest, 2) identify access points, and 3) leverage your background, preparation, and network to get an audience and opportunity to compete for a position.

In summary, start-ups continue to be created and funded at a very healthy rate. Life is too short to work in a job that you find unfulfilling, or for a company that is in decline. The start-up world will need to recruit hundreds of qualified senior managers to fill positions as young companies grow and scale. To be successful, however, I believe it will pay to focus on education and awareness of what is happening in the market, leverage prior track records of success and achievement, secure access to opportunity via trusted network connections, and prepare diligently for a lengthy process.

Good Luck.

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