As we start to get our new company off the ground one of the key pieces of data that we are filling out is the hiring plan. Having been through the startup hiring cycle a few times before, I think we can avoid some of the pitfalls with some good decisioning. In the early days of the company doing things is everyone’s job. Leading is also everyone’s job. There is space for people who do without leading, but very little. In this phase is absolutely no time or space for leader, pontificators, pure strategists, etc. Everyone has to act and live like a owner/founder.

For those who may be wondering, startup hiring goes in phases:

1) Founders and founding employees: Emotionally invested and dedicated believers in the “vision” and are willing to do anything they need to do to get to the vision. I met some of my best friends from these phases at various companies in the most odd circumstances: Marketing guy sleeping on the floor of the data center because the website had to be released at 3am, graphic designer stuck under a heavy desk connecting Cat5 because he moved the furniture himself instead of waiting (or paying) for help.

These people are all classic doers and do not get political about things. Seeing through to the endgame is a good quality to have if you want to be in this category. Many of them avoid working in corporate all together.

2) Well-funded employees: These are the folks who show up after Series A, maybe after an heavy angel round if you are well connected. Usually a good set of startups on the resume, no real winners yet. Specialties abound here: specific channel marketing managers and the first dedicated PR headcount are common front-office roles in this phase. We start seeing some back-end management, the PMO may rear its head. The idea is that there is some money on the table now, and we need to get this train up to speed and put some rigor into the day-to-day. Most of these hires will fit in very well, having been immersed in the startup culture. Some will be corporate expatriates who may have some process affinities (Six Sig, Rapid Results), favorite partners (creative agencies, tech consulting) and expectations (read: skrilla).

3) Grey-hairs: So now that the board has some VCs on it, things are going to get interesting. The founders are going to start being a bit more tense before the meetings and one day they will come back with a really happy look and say something like, “I’ll get to focus on the true innovative vision!” or “I will offload some of the more management oriented duties and really get back into the guts of the company!”. This is the magical point, where money and “the vision” part ways. Sometimes it happens at 50 employees, sometimes at 100, but as soon as the professional money gets in the company account, you are on the suit invasion timeline.

The way to gauge whether the suit is going to work is whether they try to fit in. The ones that do are the ones that will fail. At a very casual, urban media startup, we had a great BD candidate come in and interview with casual clothes. He got hired and went back to his suits…and ties! Amazingly, because he didn’t try to fit in, he got his work done, when he met with the agents and music label execs, they didn’t try to shoot the shit with him, just listened to his pitch and made a decision. His deal throughput was great. At another company the founders hired a CFO from a major international bank. He came in and tried to dress down after getting the lay of the land. His entire dress down wardrobe was 4 Huxtable sweaters. That guy sucked and quit in 3 months.

What is very cool about the Mobile Money Ventures, is that we have all three categories in it from the start. Also, our angel round is Citigroup and SK Telecom. I hope we don’t ever have those sweaters.

UPDATE: I will be at Finovate tomorrow. This looks like a great event and I will post photos and comments.
Jim Bruene of Netbanker fame has organized a much needed event in Finovate 2007. Speed dating for venture capital ala the DEMO conference. I am sorting out my attendance, but I know some other folks from my team who will be there. There also seems to be a dearth of tickets (sold out!).

On October 2nd, 2007, twenty of the most innovative companies in the financial, banking and lending industries will gather in New York to offer a glimpse of the future of mobile, personal and online finance.

The presenters are:

• Andera
• Lending Club
• Billeo Inc
• Metavante
• CheckFree
• mFoundry
• ClairMail
• Mint
• Firethorn
• Monitise
• Digital Insight (an Intuit company)
• Mortgagebot
• Geezeo
• MShift
• Identity Theft 911
• Online Resources
• iPay Technologies
• Prosper Marketplace
• Jwaala
• Yodlee

This is the type of event that we need to see happen frequently in order to support innovation in the financial services space.

I got an email from a VC colleague regarding Charles River dipping their toe in the angel game. Interesting move to get themselves integrated earlier in the development cycle and expand their expertise through low risk investments (i.e. no pay out for any of these, but maybe they learn enough for a first round with a Google exiter). Right of first refusal is something we talk alot about here for our “strategic” partners but in reality the bank works with tech partners to learn more than produce. We usually end up building things internally after light joint ventures give us some exposure to an opportunity area.

A partnership or in the case of CRV a “loan” can give you access to the knowledge that enables you to jump on a fatty and hit it out of the park.

Innovation is a buzz word that has been gaining traction steadily on Corporate Earth for some time now. If you believe Google Trends the references in the news have increased by 50% or so in 3 years. The approaches to innovation are an interesting mashup of recent economic events and corporate hedge culture. When I was at a few startups the biggest thing we worried about was money. There are ideas ad nauseum, what we didn’t have was money. Just give us the cash man. Of course we did not know that we also lacked ability to run a business and grow it effectively, hence I work for a living still.

Of course VCs took a licking during the bubble and got some analytic religion as a result. The failures of that era gave us a clear distinction between quick ROI focused VCs and innovation focused VCs. Think the guys who backed text pager companies vs the ones who backed mobile phones as they began to emerge in the mainstream. The other product of the VC craze of the bubble was that corporates began to rely on this specialty area to develop innovative business that they could then grab and spin-in when appropriate. Well, that period ended with crash, and now the delta between good VCs and just money guys is becoming more and more apparent.

Two major trends emerged from this broken VC industry: First, the emergence of specialty consultant firms like Doblin, Ideo, Whatif?, as the discrete owners of innovation in business. Also, it forced corporations in non-R&D focused industries to look inwards to source ideas and innovations. Hence the transition from product development to innovation.
In the corporate innovation environment, there is no end to the business management expertise and in this new era of innovation as a necessary practice, CEOs are providing protected lab environments with dollars to boot. Venture funds (dollars and man hours) to develop and build out the next big thing are being analyzed with separate opportunity cost metrics.

This is a great, emergent business model, but it does have some distinct disadvantages to the real VC model. It will be quite interesting to see how the the VC vertical reacts to this emerging threats. If strategic theory holds, specialization should follow, which is what we are seeing from certain VCs who are ahead of the game.