/
RSS Feed
Show Notes
In this episode Startups For The Rest Of Us Rob interviews Maren Kate of Avra Talent about her entrepreneurial journey. She talks about her first company that raised 5.5 million in funding, hit $1mil in MRR, had over 400 employees, but ultimately failed. She talks about how she recovered both mentally and professionally, and gives her system of hiring/vetting people for your company.
Items mentioned in this episode:
Rob: Welcome to Startups for the Rest of Us, I’m your host, Rob Walling. In this week’s show, we look at someone who bootstrapped her company for two years before raising $5.5 million over the next couple years, growing to 400 employees, and then having the company implode before her eyes. Maren Kate is an entrepreneur who’s been starting companies since she was 19 years old and she started her company Zirtual in the 2010-2011 time frame. Zirtual is essentially virtual assistants on a monthly retainer, so you pay a monthly price for a set number of dedicated hours from a virtual assistant. The company became quite successful.
She got to about $1 million monthly run rate, so almost $12 million a year. In 2015, they were burning a couple hundred thousand dollars a month. At a certain point, they weren’t able to raise that next round of funding and finances were screwed up. You’ll hear us talk about it in this interview but it’s a fascinating and frankly it’s a devastating story to hear how Zirtual did implode and to hear Maren recount what that felt like, but she bounced back and we hear how she then went out to start her next company AVRA Talent just a year later.
We dig into Maren’s expertise and experience in hiring people. She’s had so much experience doing this. You can imagine having 400 employees, although you don’t hire everyone yourself, as a CEO, you certainly have a lot of influence on that process. Now, AVRA Talent is a recruiting agency in essence. They have a really refined system of how to do this and how to vet candidates. We dig into that towards the latter half of the interview. Without further ado, let’s dive into my conversation with Maren Kate.
Maren Kate, thanks so much for joining me on the show.
Maren Kate: Hi, thanks for having me.
Rob: Absolutely. You folks have heard in the intro about this amazing growth story of Zirtual, but I want to go back to when you decided to raise money, because you bootstrapped Zirtual for two years and then made the choice to raise money. A lot of listeners to this podcast, if I were to break it down, I’d say 90% want to bootstrap or self fund and there’s around 10% in this MicroConf, Startups For The Rest Of Us community that do raise funding and they don’t tend to want to go on the VC track, but they do raise $500,000, $250,000 from Angels or from TinySeed. It’s not binary in our space. The funding is good and not funding is bad or anything like that, but I’m curious how that decision came about for you and why you decided to go that route.
Maren Kate: Yeah, I wish I had a more thoughtful answer but the honest answer is I decided to go that route because we were in a place where we were growing, we were profitable but by a slim margin just because we were supporting our team, we had bootstrapped from day one, we didn’t take on any external funding. I didn’t self fund because I didn’t have any money, so every dollar in was all we had.
We were in Silicon Valley in San Francisco, me and my co-founders Collin and Eric. Especially at the time, I think it was and in 2012, it was just a really frothy time. Everyone that we knew raised money instead of asking what your business is. You tell them instead of saying, “What do you do you?” or “Blah, blah, blah,” they would say, “How much will you raise and from who?” It was the kind of ecosystem we were in.
We got really lucky. I got connected to someone through a client of Zirtual who really liked our culture and kind of the vision of the company, and pretty quickly offered to lead our series A. That happens once in a million. I didn’t realize that because it was my first time fundraising, so it was epic. That really made the rest of the deal really easy to close out because in fundraising, if you have a well known need, everybody else would just be like, “Awesome, sounds good.”
The reason we fundraised is because we could, it wasn’t super difficult. At the moment, it seemed like it would solve all our problems because going from kind of hand-to-mouth bootstrapping, all of a sudden we had $2 million in the bank.
Rob: And then you went on to raise a total of $5.5 million over a few years. Did you later regret that given that venture capital often makes us want to grow faster and makes us burn money, because it’s there and that’s what it’s used for. But given how things turned out, did you or do you have regrets? Did you think it was the right call?
Maren Kate: It’s hard. All of the mistakes that I’ve made have been incredible learning experiences. They’ve been incredibly hard learning experiences, but I wouldn’t trade the learning I have now for anything. That being said, if I could keep that learning and make better choices, obviously I would, but that’s not how the world works. I’d say if I was and I hopped on this, I talk to people that are starting similar businesses and they always want to know about raising money. What I’ve said is we were not a venture backable business. We got venture backing, which happens often, but we are a services business. We had no technology component. Even over the three-and-a-half years after raising money, we built very little technology.
We grew really fast because part of the raising money and we had a really awesome product and we had pretty good word of mouth and if we had not raised money, we would’ve had to really restrict that growth. In the short term, that would have been hard, but in the long term it would’ve made for a much more sustainable company.
Zirtual is still around, it’s run by startups.com. They kind of bought the assets and restarted it, it’s doing well and I think they have re-birthed it in the way that we originally did with, “Hey, we’re going to make this profitable. We’re going to make this focused on a service to the customer.” For that type of business, I think that is the right way to go.
If you’re building new technology, if you have to raise money because that’s the only way it’s going to get built, that makes total sense. But if you have a services business and people are paying you money for it, often you don’t need to raise money. It seems nice in the short term, but it has a lot of long term ramifications that people who are raising money for the first time often don’t realize.
Rob: You grew from essentially zero employees to 400 in the span of three or four years depending on how you count. What was that like being, because you’re pretty young at the time, were you like early to mid-20s?
Maren Kate: Yeah, I was super young and I was very green.
Rob: What was that like basically having a company with that many employees at that age?
Maren Kate: It felt exciting in vanity metric terms but it was exhausting, it was super overwhelming being the CEO of a fast growing company when you don’t have the experience. Also, I think just emotional maturity. I would say it was both really fun and gratifying and awesome experience in some ways and it was very overwhelming in other ways.
Rob: Yeah. Could you talk about, was there a time you can think of where you were overwhelmed as it was growing?
Maren Kate: It goes back to impostor syndrome, so we didn’t grow up in a family that had a lot of money, didn’t go to a fancy school, I wasn’t raised around businessmen where I learned all these things. When I came to San Francisco and especially as we raised money, and started growing, and started getting a lot of press, and kind of tech-darling status, I felt like a giant impostor. I say I have a blue collared chip on my shoulder that has lessened over the years, but at that time, when I was 25 was very intact. Instead of asking for help and being vulnerable and open and saying, “Hey, what’s going on here?” I felt like I had to figure everything out on my own.
I think that was because I felt like if I asked for help, people would be like, “Ha, we knew you didn’t know what you are doing,” like, “Get out of here, heck.” But that actually made for a very lonely experience, where as a 25 year old who didn’t have a lot of practical real world experience, I made a bunch of mistakes and so many of the mistakes, when I look back, were things that now more seasoned, it’s not reinventing the wheel, there are solutions for that. I think that’s kind of one of the biggest pain points, at least, that I experienced.
Rob: Yeah, I feel you. I resonate with that phrase, blue-collar chip on your shoulder, because I’m also—what’s funny is I grew up in the East Bay area, but I had nothing to do with the start up scene. My dad worked construction, my mom raised us with four kids and I like to say, solidly working class. I had no ins with people in Silicon Valley. When I started doing start ups, it really is a thing that that kind of weighs on you.
I’m curious, part of the story that’s come up, I have an assistant producer now and she did some research and read some articles and listened to interviews that you’ve done. It sounds like there was a turning point with Zirtual when you switched from contractors to employees and that things started turning there, can you talk us through that? Was that a decision you made? Did you have to make it and what were the ramifications of that?
Maren Kate: We thought we had to make it. This was during that time where a lot of the on demand gig work companies were starting to get fined or have lawsuits from the Department of Labor. We talked to some lawyers, and at this point we maybe 100 contractors and the fear was that someone was going to say, “Hey, you’re misclassifying your workers.” We didn’t think we were but there’s a 20-point test that you can do on the IRS website and it’s incredibly strict. We were like, “Maybe we should rethink the way we classify our workers and go from contractors to employees.”
Another driving thing behind this was we had amazing people on our team and they loved our mission, they loved the vision. They used to say they bleed Zirtual blue and they wanted to be part of the “team”. They wanted to have the option to get stock, they wanted to be employees, they wanted to have the option to get benefits. We made a call that was based a lot more on what we thought was the “right” thing to do. We did that without thoroughly thinking through the financial ramifications over the next few years.
We were using an outsourced CFO firm that one of our investors recommended to us, and I think that was one of the biggest mistakes we made at Zirtual. They were really, really bad, and again when you go to this impostor syndrome, I was working with a partner who was a CFO and had his MBA and yada-yada and I was an English literature drop out. He was like 27 at the time.
He would send over the P&L’s and I would go through them in my apartment and I’ll be like, “These don’t make sense. I’m no genius but…” and so again, same things like that. I would be like, “Well, he must know what he’s doing.” he has this firm, this fancy investor suggested him, but finally at some point, I went to our board, I was like, “These don’t make sense. These don’t add up.”
They looked at them and they were like, “Oh, yeah.” Literally, he’s doing math wrong. I’m like, “****. Well, what do I do?” They’re like, “Well, you should get rid of him.” Here’s another interim CMO firm. That was a huge mistake and I mean, at the end of the day, I’ll tell you one thing, it taught me a lot about finance. It also taught me just because I can balance my checkbook, I kind of thought, “Well, it’s cool. I’ll be able to keep all the numbers,” deal with them myself, and that is tragically untrue.
We wanted to do the right thing and make people employees and we didn’t really think through those repercussions. In retrospect, if I had to do it again, I would have changed our business model so we could keep people as contractors. It would have allowed us to actually pay them more as contractors and it would have made us be able to keep that kind of 50% margin we originally had.
Rob: Yeah, that’s really tough. I’ve been talking to startup founders for years as I was starting my own stuff and I always say, “If you’re going to start a tech company, you don’t have to learn to code, but learn just enough that you know when someone’s bullshitting you.” I feel the exact same way about finance. Finance is the same thing. I never took a finance class in college, but I’ve read enough books that I can hopefully spot something, just like you’re saying, you knew you had a Spidey sense that something was off. It’s like, “I got to trust that founder instinct on that.”
Maren Kate: Absolutely. I think in terms of those core competencies, I think the way our education system sets us up is woefully inadequate. Instead of taking calculus, you should be understanding how to manage a household budget, how to manage a business budget. I think the amazing part is now no matter what your income level is, if you can get online, you have access to all the knowledge in the world.
As founders or would be founders, it’s really important to educate ourselves on the building blocks of whatever business we’re in. If you’re going into the construction business, you should know the bolts, understand what’s going on there. If you’re going to be in tech, you should get a working understanding of exactly knowing someone’s bullshitting you. No matter what kind of business you’re in, you always need to keep an eye on that bottom line.
Rob: Unfortunately, we know how this story ends, ritualistically, you went under and you sold the assets to startups.com, but can you take me to that moment when you realize that you had run out of money and you needed to lay everyone off and shut the company down.
Maren Kate: Yeah, it was pretty horrible. We realized when we kicked out the one firm, finally brought in a director of finance internally, she was amazing. Within three weeks, she came back to me and she was like, “We’re running out of money.” I was like, “Oh no.” I went to my board, I went to all of our investors, told them and they were like, “Okay, well you guys need to raise the bridge,” I was like, alright.
Got that all set up, did the back of the napkin figuring out once we brought in the director of finance, she kind of was like, “Listen, 70% of the plans will never really make enough money to justify them,” but 30% of them will be calling Zirtual for business. They are the winners. We need to do a massive restructuring. We need to get rid of all the personal plans, we need to focus on business. We had everything built out.
We went to the board, we’re like, “Alright, we need $1.5 million to do this. Here’s the timeline.” Everybody said okay and then one of the VC’s, the same one that recommended the fantastic CFO firm, they said, “Actually, instead of giving you the $750,000 we said, we’re going to tranche it in three segments and we’re going to wait till everybody else’s money hits the bank before we put it in.” One thing about investors, and actually I’m realizing this as a lot of life that people tend to—they’re signaling, you are less likely to go in a restaurant if there’s no one there. If there’s a line, you’re more likely to stand in it.
Investors are very similar, if not even more, than the way we see that in the rest of the world. The moment someone kind of got cold feet, some other investors are like, “Well, we’re not going to put our money until this firm’s money is in first.” It was a catch 22 and I talked to one of our biggest shareholders, the person that was the representative on the board who had no business being there and later actually kind of came to me and apologized. He said, “Yeah, you know what, we have just enough in the bank to pay out this final payroll, pay off the taxes. I think you should just shut everything down.”
At this point, I was so kind of shell shocked and just absolutely emotionally, mentally, spiritually exhausted. I was like, “Okay, well, again, he knows more than me, so this is what we’ll do,” and trying to do right by the people by making sure that we didn’t keep open any longer because if we did, we might not be able to pay them everything. That’s when I know we spent four days trying to figure something out, nothing came through and that’s when I had to send the layoff email at 11:00 PM Sunday or 01:00 AM, I forgot when it was. I remember being in the office.
We look back and if I had it to do over, I would tell the guy who gave me that suggestion that that was the stupidest thing I’ve ever heard. I probably still would have to lay most people off, but I want to spend that week actually going around to a bunch of different firms saying, “Here’s our number. Here’s our business, let’s do a down round and we’re going to fix the company and focus on business.”
Rob: Wow, that sounds devastating. It sounds like one of the low points of your life perhaps.
Maren Kate: Yeah, absolutely.
Rob: That sounds incredible and you had to lay off, you mentioned it somewhere, that you had to lay off your mom and brother? Is that true?
Maren Kate: Yeah, they worked with me. Luckily, we are a close knit family and got through that but it was super bad..
Rob: There was obviously a lot of negativity coming at you after that. I’m sure from employees and I even think more direct articles on TechCrunch and other places that were talking about the big flame out. How did you handle that? Obviously, that sucks, and it’s people dragging you through the mud or whatever, but did you just black out, go offline for months, did you fight it? What was that like?
Maren Kate: No. I definitely went offline, because my whole thing was it doesn’t benefit me to hear a bunch of people tell me I’m ******, I already feel that so I’m covered there. I think honestly, probably, it was just like self preservation kicked in. I went offline for several months after we laid everybody off. Me, my co founders, and my brother wasn’t getting paid, and a few other awesome OGs in the company spent the next few months trying to make the transference to startups.com as simple as possible.
We kept working, cleaning things up and doing the best we could, and that was how I handled it. After the three months were up, I laid on the floor of my house at the time and just didn’t do much. After a few months of that, I didn’t have any money and I was like, “Crap, I really have to get back to work,” so I peeled myself up and got back on the saddle so to speak, but it was very devastating. It was absolutely hands down one of the low points of my life.
I think the reason was because I knew how many people it impacted and that’s what just crushed me, the investors, everybody else. We were such a tight knit group, and the people that were part of Zirtual were like an extension of our family, that was the hardest part.
Rob: I can only imagine. I’m speechless because like I’ve gone through hard things, but I’ve never had to do that. So many people will never have to in their entire entrepreneurial career. You go offline, how do you even recover from that? Mentally, it sounds like you were just, even before it was happening, there were just loads and loads of stress, because you’re growing this company, loads of stress as it’s kind of going down, and then this whole big thing happens, you go offline, but there has to be a healing process of taking a year off. In off, I mean I know you’re working and stuff, but what did you do to try to heal yourself to be able to get back on that horse and start what you’re working on now which is AVRA?
Maren Kate: I did kind of a deep dive. I started reading a lot which is kind of how I approach most things. I knew that this was either going to break me or I was going to figure out a way through it. I didn’t want it to break me. I think one of the things that actually kept me going was the sense of I have to make this right at some point in the future, in my life, and I still actually feel that very strongly.
There were definitely times where I would be in the shower and I was just like I can just slit my wrist and then not have to deal with this anymore, but that good old Presbyterian guilt I was like, “Yeah, but then that would really hurt my family, and my friends, and some employees, so that wouldn’t be fair to do it to them. Let’s try to get through this, let’s try to figure out a way to make this up to people at some point.” It sounds very morbid, but I actually think it was helpful. I always tell myself, I’ve never lived abroad and I was like, “Just figure out how to pay the bills, figure out how to maybe make this up to some people, and then you never lived abroad, so you’ve got it going,” at least try those three things.
Worst case scenario, if you can’t do either of those, then you can always kill yourself after you lived abroad. That actually got me through the first few months. After the really dark part passes, then you start to see through the mist. After the news cycle passed, after whatever else happened, I don’t know who the next target was in Silicon Valley, I was super lucky. I went through a really bad break up a few months later which was amazing especially since we live together. I was like, “Awesome,” that point was almost funny. I literally laughed. I said, “This could not be any…” I kind of took it as a sign. I was like, “Alright, I don’t have a house anymore.”
San Francisco has been really good to me in some ways and also been terrible. I was like, “Well, I want to live abroad,” and I got super lucky. I randomly got an offer from this company called Roam to head up their operations and they had co living locations all over the country. They’re like, “Part of this, Maren, is you’ll have to go and live with these different co living places and improve their operational efficiency,” I was like, “Literally, I’m on the next flight.”
I paired all my belongings down to suitcases, flip San Francisco off as I was flying out, and went and lived abroad for about a year which was wonderful. I also think just getting to see that the world is a lot bigger than the place you’re in was pretty ground breaking to me. I didn’t travel a lot as a kid outside of the states. To actually see how big the world is, and see how different people are, and to see what real struggle looks like, I was like, “Oh my gosh, you snooty bee, how dare you complain about this stuff. Don’t feel sorry for yourself, you’ve got nothing to complain about.”
I think that was one of the most transformational parts of my life. It was actually shaking myself out a bit by being able to see how big the world is, and how much opportunity, and then also how much suffering, and it really puts your own drama into a contrast.
Rob: It sounds like a really powerful way to reset. I think that travel can be such a therapeutic thing in that respect.
Maren Kate: Absolutely.
Rob: You took this time to recover, and then you got back on the horse, and you started AVRA Talent. Folks can check it out avratalent.com. Hire the best talent, regardless of geography. We connect employers with the top 5% of remote professionals tested and vetted for your specific needs. When I read that, I think of it as a contingency recruiting service. I’ve used those at previous places that I’ve worked. Can you talk to me about how you’re different?
Maren Kate: Yes. After I kind of did a post mortem on what happened at Zirtual, one of the biggest things that came back was that we had, and I had made some poor hiring choices along the way. When I think of hiring or recruiting, I actually think it has to do with anyone that is on the bus with you. That includes investors, that includes advisors, that includes employees. Just out of greenness, we had brought on some people that weren’t working great.
One of the biggest reasons I went back thinking that was, we didn’t want a thorough process. We were really good at recruiting our virtual assistants with this incredibly thorough process I think only half a percent got through and were hired, but when it came to our COO, or the outsourced CFO firm, or some people in our tech team, the process I ran was nonexistent. After Zirtual, I talked to some people, some founders while I was traveling abroad. I did a head of operations stint at Calm, the meditation app. I talked to the guys there. I was like, “Yeah, I just must be an idiot. I don’t know how to hire,” and they were like, “No, everybody actually has the same problem, we did a bunch of bad hires too.”
I was like, “I wonder if I could take the process, the structure that we did with recruiting our virtual assistants and apply that across different rules.” I started doing that as a consultant and then I decided to spin up an agency which is AVRA Talent. The way we differ I would say from the contingency recruiter is kind of 2-fold. We’re very focused on alignment, we only work with startups and companies whose culture and mission we can get behind. We charge a percentage of a placement fee, but we also charge an upfront $5000 retainer.
I started this from day one because one of the biggest problems I’ve realized in contingency recruiting is incentives are misaligned. Contingent recruiters incentive is to get you someone who’s the highest paid as fast as possible, because if they don’t get you that person before you hire them somewhere else, then they don’t make any money. That’s kind of one of the reasons that industry was so fractured and can have such a negative connotation, versus the way I talked to when I talk to founders.
I was like, “Listen, we’re going to do the work. We’re going to act kind of like your internal recruiting team. Each search we put several hundred human hours into. We’re going to put this retainer down. If we need to find you the person that you hire, then you’re going to pay us let’s say 15% of their base, and that $5000 will roll into that. If we don’t, if you bump into the next hire on the subway, that’s amazing. We want you to find the right person. It doesn’t matter how you come about them, but you’re still going to pay us for the time we spent,” and that model has worked really well for us.
We have four core values and alignment being the first one. In the last three years as AVRA has grown, we’ve actually gotten more and more focused on helping companies recruit fully remote talent. These are fully remote employees from engineering, to digital marketing, to operations, to product, to customer support. I think that is where we are the best in the world. That’s really where our focus is.
Rob: You’ve talked a lot about hiring and you obviously had to hire a lot of people. You mentioned somewhere that you kind of have this system and way of thinking about building a great company and it’s to bring on the best people, connect them to something bigger than themselves, empower them to do their thing, hire and fire according to company values. I wanted to get into that first piece which is bring on the best people. How do you do that? People listening to this podcast, there’s a lot of founders out there who maybe are hiring their first ever salesperson, their first customer support rep, or maybe they’re hiring their 10th or 20th employee, what’s that the CliffsNotes version of how do you bring on the best people.
Maren Kate: This is one of the reasons that I love remote recruiting so much, because if you’re trying to bring on the best person in say, San Francisco, you are competing with some of the well best funded, highest paying companies in the world, you’re kind of fighting a war. Versus if you are hiring in Boise, it’s a little bit easier, but there’s not as much talent that you’re looking for maybe with specific skills, and obviously technology companies and startups.
With remote recruiting, and this goes with anything, you can run this whether you’re hiring in an office in San Francisco or remote. At the end of the day, you just have to think of it the exact same way you think of a sales funnel. You need to get enough at the top of the funnel, and you need to filter them effectively through several steps to get down to the 5-7 candidates who really matter, who then you run through a more detailed process which would include test projects, references, cultural interviews, yada-yada. My favorite way of hiring is casting a really, really wide net and then setting up 5-7 steps in that funnel, so that the best people can shine through.
An example would be in my new startup that I’m spinning out, I’ve been recruiting for a founding product person, and a founding growth person. I would say at the top of the funnel, we’ve probably gotten 5-600 applicants on both sides. We’ve set different tests so to speak at different parts of the funnel and these cover the core values that we hold important. They cover the skills both soft and hard skills that are important for this role. As people go through different stages, and the funnel gets smaller and smaller, the best people start to really shine through.
Rob: Can you give an example of one or two of those stages? Is it like a 90-second video of yourself taking that exam or something?
Maren Kate: The way I like to think about it is just thinking what hiring normally is and then doing the exact opposite. Most companies approach hiring, they post a role and people submit their resume, and then it’s up to the hiring manager to go through all these resumes, and resumes are literally a terrible way of assessing fit. It goes back a stage. You want to figure out what is the role, what matters the most. You don’t say, “I want to hire a digital marketing manager,” you say, “This is the job or jobs I want this person to do. I want them to own our ad spend, I want them to be able to write great copy. I want them to be able to hire and manage designers, and I want them to be very analytical and be able to create reports.”
You can actually test that in different stages of the funnel. One example would be we have people submit resumes, but we don’t even look at them until maybe stage five. Instead, we would have three paragraph style questions that would be the first stage of the recruitment process. The very first one which we include in all hiring is, “What are you looking for in a role and what honestly draws you to this company and this role?” If people don’t fill that out in a meaningful way, in an honest way, we immediately disqualify them. Because if you want people that actually care about your product and your vision, then they should be able to articulate that.
We also ask them a few other questions and then we actually look at their writing and their communication which is incredibly important for most roles, especially ones that are remote. But going back to the digital marketing example, you want someone who can write well. It doesn’t matter if I look at their resume and they used to work for Apple, or Postmates, or one of these darlings, I’m not like, “Oh, they worked at Airbnb, they must be good,” that is not an indicator of success.
Instead, I actually look at the work they do. After that, we would yay or nay then someone on interview, or just glance and push through the top 20%, and then they would go on to another question, and we test the responsiveness as a really big one, and then we’ll get them into a phone screen where we’re talking about specific examples to understand, do they actually understand the role? How have they performed in their previous roles? A lot of those open ended like, “Tell me about a time,” questions. After that, there’s another longer test project.
We always suggest to clients to do this themselves. Setup a paid test project, something that you actually need done. Be sure to pay for a person’s time, that’s really important. Nothing is more powerful than seeing how people work with you and how they engage with you. If they do well through that, we usually do a second layer of interviews which have to do with your team, with who would be their supervisor. After that, we always highly recommend references. Checking references both given references and back channel references. That’s the one thing I tell founders. “If you do anything, just check references,” that’s the only take away.
Some of the worst hires I ever made, years later talking to people who maybe have worked with them, there’s always a pattern where it was like, maybe they’ve gotten lucky and gotten some good jobs that had high name worth at the company, and they had floated on other people’s success, or maybe didn’t have the skills but they were great talkers.
If I haven’t just spoken to a few references, and the way we do references as we think of are people you worked for, people you worked with, and people who worked for you, because somebody can trick one of those subsets. Maybe your boss thinks you’re great, but the people who work with you and work under you think you’re terrible, and vice versa. It’s really important to get all three of those categories. From there, we usually start to get our preview of a good holistic view of a candidate.
Rob: Very cool. That’s kind of a mini clinic in the hiring process. I really like that. I like most of the stuff you said there, but the write well piece is something that I really focus on. Even when hiring developers, that was the thing I was super picky about.
Maren Kate: And following instructions, that’s a huge one too. It’s amazing how few people follow instructions. Also just somebody who really vibes with your company and your culture. This is why I say when you’re writing your job description, let your company, let your culture, let your flavor of weird shine through. The right job description, it will scare most people off, but it will really attract the people that are like minds, and that’s what you want, versus a generic, bland job description.
Rob: Awesome. You’re talking about this topic in a couple months in MicroConf Minneapolis. If you’re listening to this and you’re not coming to MicroConf Growth yet, you should think about getting a ticket to hear a 40-minute talk for Maren on this topic. If folks want to keep up with you in the meantime over the next couple of months, you’re MarenKate on Twitter, and AVRA Talent everywhere, avratalent.com.
Maren Kate: Yeah, absolutely.
Rob: Sounds great. Thanks again Maren. Thanks so much for joining me on the show.
Maren Kate: Absolutely.
Rob: If after listening to that you have a question for me, or you have a question for Maren Kate, I could invite her back on the show if you wanted to learn more about how she hires, thinks about hiring, really anything from her experience, you can email questions at startupsfortherestofus.com. We also have a voicemail line 888-801-9690, subscribe to us by searching for Startups in any Podcatcher, and of course, we have a full transcript of each episode available within a few weeks of the episode going live. Thanks so much for listening again this week. It’s great to have you here, see you next time.
She got to about $1 million monthly run rate, so almost $12 million a year. In 2015, they were burning a couple hundred thousand dollars a month. At a certain point, they weren’t able to raise that next round of funding and finances were screwed up. You’ll hear us talk about it in this interview but it’s a fascinating and frankly it’s a devastating story to hear how Zirtual did implode and to hear Maren recount what that felt like, but she bounced back and we hear how she then went out to start her next company AVRA Talent just a year later.
We dig into Maren’s expertise and experience in hiring people. She’s had so much experience doing this. You can imagine having 400 employees, although you don’t hire everyone yourself, as a CEO, you certainly have a lot of influence on that process. Now, AVRA Talent is a recruiting agency in essence. They have a really refined system of how to do this and how to vet candidates. We dig into that towards the latter half of the interview. Without further ado, let’s dive into my conversation with Maren Kate.
Maren Kate, thanks so much for joining me on the show.
Maren Kate: Hi, thanks for having me.
Rob: Absolutely. You folks have heard in the intro about this amazing growth story of Zirtual, but I want to go back to when you decided to raise money, because you bootstrapped Zirtual for two years and then made the choice to raise money. A lot of listeners to this podcast, if I were to break it down, I’d say 90% want to bootstrap or self fund and there’s around 10% in this MicroConf, Startups For The Rest Of Us community that do raise funding and they don’t tend to want to go on the VC track, but they do raise $500,000, $250,000 from Angels or from TinySeed. It’s not binary in our space. The funding is good and not funding is bad or anything like that, but I’m curious how that decision came about for you and why you decided to go that route.
Maren Kate: Yeah, I wish I had a more thoughtful answer but the honest answer is I decided to go that route because we were in a place where we were growing, we were profitable but by a slim margin just because we were supporting our team, we had bootstrapped from day one, we didn’t take on any external funding. I didn’t self fund because I didn’t have any money, so every dollar in was all we had.
We were in Silicon Valley in San Francisco, me and my co-founders Collin and Eric. Especially at the time, I think it was and in 2012, it was just a really frothy time. Everyone that we knew raised money instead of asking what your business is. You tell them instead of saying, “What do you do you?” or “Blah, blah, blah,” they would say, “How much will you raise and from who?” It was the kind of ecosystem we were in.
We got really lucky. I got connected to someone through a client of Zirtual who really liked our culture and kind of the vision of the company, and pretty quickly offered to lead our series A. That happens once in a million. I didn’t realize that because it was my first time fundraising, so it was epic. That really made the rest of the deal really easy to close out because in fundraising, if you have a well known need, everybody else would just be like, “Awesome, sounds good.”
The reason we fundraised is because we could, it wasn’t super difficult. At the moment, it seemed like it would solve all our problems because going from kind of hand-to-mouth bootstrapping, all of a sudden we had $2 million in the bank.
Rob: And then you went on to raise a total of $5.5 million over a few years. Did you later regret that given that venture capital often makes us want to grow faster and makes us burn money, because it’s there and that’s what it’s used for. But given how things turned out, did you or do you have regrets? Did you think it was the right call?
Maren Kate: It’s hard. All of the mistakes that I’ve made have been incredible learning experiences. They’ve been incredibly hard learning experiences, but I wouldn’t trade the learning I have now for anything. That being said, if I could keep that learning and make better choices, obviously I would, but that’s not how the world works. I’d say if I was and I hopped on this, I talk to people that are starting similar businesses and they always want to know about raising money. What I’ve said is we were not a venture backable business. We got venture backing, which happens often, but we are a services business. We had no technology component. Even over the three-and-a-half years after raising money, we built very little technology.
We grew really fast because part of the raising money and we had a really awesome product and we had pretty good word of mouth and if we had not raised money, we would’ve had to really restrict that growth. In the short term, that would have been hard, but in the long term it would’ve made for a much more sustainable company.
Zirtual is still around, it’s run by startups.com. They kind of bought the assets and restarted it, it’s doing well and I think they have re-birthed it in the way that we originally did with, “Hey, we’re going to make this profitable. We’re going to make this focused on a service to the customer.” For that type of business, I think that is the right way to go.
If you’re building new technology, if you have to raise money because that’s the only way it’s going to get built, that makes total sense. But if you have a services business and people are paying you money for it, often you don’t need to raise money. It seems nice in the short term, but it has a lot of long term ramifications that people who are raising money for the first time often don’t realize.
Rob: You grew from essentially zero employees to 400 in the span of three or four years depending on how you count. What was that like being, because you’re pretty young at the time, were you like early to mid-20s?
Maren Kate: Yeah, I was super young and I was very green.
Rob: What was that like basically having a company with that many employees at that age?
Maren Kate: It felt exciting in vanity metric terms but it was exhausting, it was super overwhelming being the CEO of a fast growing company when you don’t have the experience. Also, I think just emotional maturity. I would say it was both really fun and gratifying and awesome experience in some ways and it was very overwhelming in other ways.
Rob: Yeah. Could you talk about, was there a time you can think of where you were overwhelmed as it was growing?
Maren Kate: It goes back to impostor syndrome, so we didn’t grow up in a family that had a lot of money, didn’t go to a fancy school, I wasn’t raised around businessmen where I learned all these things. When I came to San Francisco and especially as we raised money, and started growing, and started getting a lot of press, and kind of tech-darling status, I felt like a giant impostor. I say I have a blue collared chip on my shoulder that has lessened over the years, but at that time, when I was 25 was very intact. Instead of asking for help and being vulnerable and open and saying, “Hey, what’s going on here?” I felt like I had to figure everything out on my own.
I think that was because I felt like if I asked for help, people would be like, “Ha, we knew you didn’t know what you are doing,” like, “Get out of here, heck.” But that actually made for a very lonely experience, where as a 25 year old who didn’t have a lot of practical real world experience, I made a bunch of mistakes and so many of the mistakes, when I look back, were things that now more seasoned, it’s not reinventing the wheel, there are solutions for that. I think that’s kind of one of the biggest pain points, at least, that I experienced.
Rob: Yeah, I feel you. I resonate with that phrase, blue-collar chip on your shoulder, because I’m also—what’s funny is I grew up in the East Bay area, but I had nothing to do with the start up scene. My dad worked construction, my mom raised us with four kids and I like to say, solidly working class. I had no ins with people in Silicon Valley. When I started doing start ups, it really is a thing that that kind of weighs on you.
I’m curious, part of the story that’s come up, I have an assistant producer now and she did some research and read some articles and listened to interviews that you’ve done. It sounds like there was a turning point with Zirtual when you switched from contractors to employees and that things started turning there, can you talk us through that? Was that a decision you made? Did you have to make it and what were the ramifications of that?
Maren Kate: We thought we had to make it. This was during that time where a lot of the on demand gig work companies were starting to get fined or have lawsuits from the Department of Labor. We talked to some lawyers, and at this point we maybe 100 contractors and the fear was that someone was going to say, “Hey, you’re misclassifying your workers.” We didn’t think we were but there’s a 20-point test that you can do on the IRS website and it’s incredibly strict. We were like, “Maybe we should rethink the way we classify our workers and go from contractors to employees.”
Another driving thing behind this was we had amazing people on our team and they loved our mission, they loved the vision. They used to say they bleed Zirtual blue and they wanted to be part of the “team”. They wanted to have the option to get stock, they wanted to be employees, they wanted to have the option to get benefits. We made a call that was based a lot more on what we thought was the “right” thing to do. We did that without thoroughly thinking through the financial ramifications over the next few years.
We were using an outsourced CFO firm that one of our investors recommended to us, and I think that was one of the biggest mistakes we made at Zirtual. They were really, really bad, and again when you go to this impostor syndrome, I was working with a partner who was a CFO and had his MBA and yada-yada and I was an English literature drop out. He was like 27 at the time.
He would send over the P&L’s and I would go through them in my apartment and I’ll be like, “These don’t make sense. I’m no genius but…” and so again, same things like that. I would be like, “Well, he must know what he’s doing.” he has this firm, this fancy investor suggested him, but finally at some point, I went to our board, I was like, “These don’t make sense. These don’t add up.”
They looked at them and they were like, “Oh, yeah.” Literally, he’s doing math wrong. I’m like, “****. Well, what do I do?” They’re like, “Well, you should get rid of him.” Here’s another interim CMO firm. That was a huge mistake and I mean, at the end of the day, I’ll tell you one thing, it taught me a lot about finance. It also taught me just because I can balance my checkbook, I kind of thought, “Well, it’s cool. I’ll be able to keep all the numbers,” deal with them myself, and that is tragically untrue.
We wanted to do the right thing and make people employees and we didn’t really think through those repercussions. In retrospect, if I had to do it again, I would have changed our business model so we could keep people as contractors. It would have allowed us to actually pay them more as contractors and it would have made us be able to keep that kind of 50% margin we originally had.
Rob: Yeah, that’s really tough. I’ve been talking to startup founders for years as I was starting my own stuff and I always say, “If you’re going to start a tech company, you don’t have to learn to code, but learn just enough that you know when someone’s bullshitting you.” I feel the exact same way about finance. Finance is the same thing. I never took a finance class in college, but I’ve read enough books that I can hopefully spot something, just like you’re saying, you knew you had a Spidey sense that something was off. It’s like, “I got to trust that founder instinct on that.”
Maren Kate: Absolutely. I think in terms of those core competencies, I think the way our education system sets us up is woefully inadequate. Instead of taking calculus, you should be understanding how to manage a household budget, how to manage a business budget. I think the amazing part is now no matter what your income level is, if you can get online, you have access to all the knowledge in the world.
As founders or would be founders, it’s really important to educate ourselves on the building blocks of whatever business we’re in. If you’re going into the construction business, you should know the bolts, understand what’s going on there. If you’re going to be in tech, you should get a working understanding of exactly knowing someone’s bullshitting you. No matter what kind of business you’re in, you always need to keep an eye on that bottom line.
Rob: Unfortunately, we know how this story ends, ritualistically, you went under and you sold the assets to startups.com, but can you take me to that moment when you realize that you had run out of money and you needed to lay everyone off and shut the company down.
Maren Kate: Yeah, it was pretty horrible. We realized when we kicked out the one firm, finally brought in a director of finance internally, she was amazing. Within three weeks, she came back to me and she was like, “We’re running out of money.” I was like, “Oh no.” I went to my board, I went to all of our investors, told them and they were like, “Okay, well you guys need to raise the bridge,” I was like, alright.
Got that all set up, did the back of the napkin figuring out once we brought in the director of finance, she kind of was like, “Listen, 70% of the plans will never really make enough money to justify them,” but 30% of them will be calling Zirtual for business. They are the winners. We need to do a massive restructuring. We need to get rid of all the personal plans, we need to focus on business. We had everything built out.
We went to the board, we’re like, “Alright, we need $1.5 million to do this. Here’s the timeline.” Everybody said okay and then one of the VC’s, the same one that recommended the fantastic CFO firm, they said, “Actually, instead of giving you the $750,000 we said, we’re going to tranche it in three segments and we’re going to wait till everybody else’s money hits the bank before we put it in.” One thing about investors, and actually I’m realizing this as a lot of life that people tend to—they’re signaling, you are less likely to go in a restaurant if there’s no one there. If there’s a line, you’re more likely to stand in it.
Investors are very similar, if not even more, than the way we see that in the rest of the world. The moment someone kind of got cold feet, some other investors are like, “Well, we’re not going to put our money until this firm’s money is in first.” It was a catch 22 and I talked to one of our biggest shareholders, the person that was the representative on the board who had no business being there and later actually kind of came to me and apologized. He said, “Yeah, you know what, we have just enough in the bank to pay out this final payroll, pay off the taxes. I think you should just shut everything down.”
At this point, I was so kind of shell shocked and just absolutely emotionally, mentally, spiritually exhausted. I was like, “Okay, well, again, he knows more than me, so this is what we’ll do,” and trying to do right by the people by making sure that we didn’t keep open any longer because if we did, we might not be able to pay them everything. That’s when I know we spent four days trying to figure something out, nothing came through and that’s when I had to send the layoff email at 11:00 PM Sunday or 01:00 AM, I forgot when it was. I remember being in the office.
We look back and if I had it to do over, I would tell the guy who gave me that suggestion that that was the stupidest thing I’ve ever heard. I probably still would have to lay most people off, but I want to spend that week actually going around to a bunch of different firms saying, “Here’s our number. Here’s our business, let’s do a down round and we’re going to fix the company and focus on business.”
Rob: Wow, that sounds devastating. It sounds like one of the low points of your life perhaps.
Maren Kate: Yeah, absolutely.
Rob: That sounds incredible and you had to lay off, you mentioned it somewhere, that you had to lay off your mom and brother? Is that true?
Maren Kate: Yeah, they worked with me. Luckily, we are a close knit family and got through that but it was super bad..
Rob: There was obviously a lot of negativity coming at you after that. I’m sure from employees and I even think more direct articles on TechCrunch and other places that were talking about the big flame out. How did you handle that? Obviously, that sucks, and it’s people dragging you through the mud or whatever, but did you just black out, go offline for months, did you fight it? What was that like?
Maren Kate: No. I definitely went offline, because my whole thing was it doesn’t benefit me to hear a bunch of people tell me I’m ******, I already feel that so I’m covered there. I think honestly, probably, it was just like self preservation kicked in. I went offline for several months after we laid everybody off. Me, my co founders, and my brother wasn’t getting paid, and a few other awesome OGs in the company spent the next few months trying to make the transference to startups.com as simple as possible.
We kept working, cleaning things up and doing the best we could, and that was how I handled it. After the three months were up, I laid on the floor of my house at the time and just didn’t do much. After a few months of that, I didn’t have any money and I was like, “Crap, I really have to get back to work,” so I peeled myself up and got back on the saddle so to speak, but it was very devastating. It was absolutely hands down one of the low points of my life.
I think the reason was because I knew how many people it impacted and that’s what just crushed me, the investors, everybody else. We were such a tight knit group, and the people that were part of Zirtual were like an extension of our family, that was the hardest part.
Rob: I can only imagine. I’m speechless because like I’ve gone through hard things, but I’ve never had to do that. So many people will never have to in their entire entrepreneurial career. You go offline, how do you even recover from that? Mentally, it sounds like you were just, even before it was happening, there were just loads and loads of stress, because you’re growing this company, loads of stress as it’s kind of going down, and then this whole big thing happens, you go offline, but there has to be a healing process of taking a year off. In off, I mean I know you’re working and stuff, but what did you do to try to heal yourself to be able to get back on that horse and start what you’re working on now which is AVRA?
Maren Kate: I did kind of a deep dive. I started reading a lot which is kind of how I approach most things. I knew that this was either going to break me or I was going to figure out a way through it. I didn’t want it to break me. I think one of the things that actually kept me going was the sense of I have to make this right at some point in the future, in my life, and I still actually feel that very strongly.
There were definitely times where I would be in the shower and I was just like I can just slit my wrist and then not have to deal with this anymore, but that good old Presbyterian guilt I was like, “Yeah, but then that would really hurt my family, and my friends, and some employees, so that wouldn’t be fair to do it to them. Let’s try to get through this, let’s try to figure out a way to make this up to people at some point.” It sounds very morbid, but I actually think it was helpful. I always tell myself, I’ve never lived abroad and I was like, “Just figure out how to pay the bills, figure out how to maybe make this up to some people, and then you never lived abroad, so you’ve got it going,” at least try those three things.
Worst case scenario, if you can’t do either of those, then you can always kill yourself after you lived abroad. That actually got me through the first few months. After the really dark part passes, then you start to see through the mist. After the news cycle passed, after whatever else happened, I don’t know who the next target was in Silicon Valley, I was super lucky. I went through a really bad break up a few months later which was amazing especially since we live together. I was like, “Awesome,” that point was almost funny. I literally laughed. I said, “This could not be any…” I kind of took it as a sign. I was like, “Alright, I don’t have a house anymore.”
San Francisco has been really good to me in some ways and also been terrible. I was like, “Well, I want to live abroad,” and I got super lucky. I randomly got an offer from this company called Roam to head up their operations and they had co living locations all over the country. They’re like, “Part of this, Maren, is you’ll have to go and live with these different co living places and improve their operational efficiency,” I was like, “Literally, I’m on the next flight.”
I paired all my belongings down to suitcases, flip San Francisco off as I was flying out, and went and lived abroad for about a year which was wonderful. I also think just getting to see that the world is a lot bigger than the place you’re in was pretty ground breaking to me. I didn’t travel a lot as a kid outside of the states. To actually see how big the world is, and see how different people are, and to see what real struggle looks like, I was like, “Oh my gosh, you snooty bee, how dare you complain about this stuff. Don’t feel sorry for yourself, you’ve got nothing to complain about.”
I think that was one of the most transformational parts of my life. It was actually shaking myself out a bit by being able to see how big the world is, and how much opportunity, and then also how much suffering, and it really puts your own drama into a contrast.
Rob: It sounds like a really powerful way to reset. I think that travel can be such a therapeutic thing in that respect.
Maren Kate: Absolutely.
Rob: You took this time to recover, and then you got back on the horse, and you started AVRA Talent. Folks can check it out avratalent.com. Hire the best talent, regardless of geography. We connect employers with the top 5% of remote professionals tested and vetted for your specific needs. When I read that, I think of it as a contingency recruiting service. I’ve used those at previous places that I’ve worked. Can you talk to me about how you’re different?
Maren Kate: Yes. After I kind of did a post mortem on what happened at Zirtual, one of the biggest things that came back was that we had, and I had made some poor hiring choices along the way. When I think of hiring or recruiting, I actually think it has to do with anyone that is on the bus with you. That includes investors, that includes advisors, that includes employees. Just out of greenness, we had brought on some people that weren’t working great.
One of the biggest reasons I went back thinking that was, we didn’t want a thorough process. We were really good at recruiting our virtual assistants with this incredibly thorough process I think only half a percent got through and were hired, but when it came to our COO, or the outsourced CFO firm, or some people in our tech team, the process I ran was nonexistent. After Zirtual, I talked to some people, some founders while I was traveling abroad. I did a head of operations stint at Calm, the meditation app. I talked to the guys there. I was like, “Yeah, I just must be an idiot. I don’t know how to hire,” and they were like, “No, everybody actually has the same problem, we did a bunch of bad hires too.”
I was like, “I wonder if I could take the process, the structure that we did with recruiting our virtual assistants and apply that across different rules.” I started doing that as a consultant and then I decided to spin up an agency which is AVRA Talent. The way we differ I would say from the contingency recruiter is kind of 2-fold. We’re very focused on alignment, we only work with startups and companies whose culture and mission we can get behind. We charge a percentage of a placement fee, but we also charge an upfront $5000 retainer.
I started this from day one because one of the biggest problems I’ve realized in contingency recruiting is incentives are misaligned. Contingent recruiters incentive is to get you someone who’s the highest paid as fast as possible, because if they don’t get you that person before you hire them somewhere else, then they don’t make any money. That’s kind of one of the reasons that industry was so fractured and can have such a negative connotation, versus the way I talked to when I talk to founders.
I was like, “Listen, we’re going to do the work. We’re going to act kind of like your internal recruiting team. Each search we put several hundred human hours into. We’re going to put this retainer down. If we need to find you the person that you hire, then you’re going to pay us let’s say 15% of their base, and that $5000 will roll into that. If we don’t, if you bump into the next hire on the subway, that’s amazing. We want you to find the right person. It doesn’t matter how you come about them, but you’re still going to pay us for the time we spent,” and that model has worked really well for us.
We have four core values and alignment being the first one. In the last three years as AVRA has grown, we’ve actually gotten more and more focused on helping companies recruit fully remote talent. These are fully remote employees from engineering, to digital marketing, to operations, to product, to customer support. I think that is where we are the best in the world. That’s really where our focus is.
Rob: You’ve talked a lot about hiring and you obviously had to hire a lot of people. You mentioned somewhere that you kind of have this system and way of thinking about building a great company and it’s to bring on the best people, connect them to something bigger than themselves, empower them to do their thing, hire and fire according to company values. I wanted to get into that first piece which is bring on the best people. How do you do that? People listening to this podcast, there’s a lot of founders out there who maybe are hiring their first ever salesperson, their first customer support rep, or maybe they’re hiring their 10th or 20th employee, what’s that the CliffsNotes version of how do you bring on the best people.
Maren Kate: This is one of the reasons that I love remote recruiting so much, because if you’re trying to bring on the best person in say, San Francisco, you are competing with some of the well best funded, highest paying companies in the world, you’re kind of fighting a war. Versus if you are hiring in Boise, it’s a little bit easier, but there’s not as much talent that you’re looking for maybe with specific skills, and obviously technology companies and startups.
With remote recruiting, and this goes with anything, you can run this whether you’re hiring in an office in San Francisco or remote. At the end of the day, you just have to think of it the exact same way you think of a sales funnel. You need to get enough at the top of the funnel, and you need to filter them effectively through several steps to get down to the 5-7 candidates who really matter, who then you run through a more detailed process which would include test projects, references, cultural interviews, yada-yada. My favorite way of hiring is casting a really, really wide net and then setting up 5-7 steps in that funnel, so that the best people can shine through.
An example would be in my new startup that I’m spinning out, I’ve been recruiting for a founding product person, and a founding growth person. I would say at the top of the funnel, we’ve probably gotten 5-600 applicants on both sides. We’ve set different tests so to speak at different parts of the funnel and these cover the core values that we hold important. They cover the skills both soft and hard skills that are important for this role. As people go through different stages, and the funnel gets smaller and smaller, the best people start to really shine through.
Rob: Can you give an example of one or two of those stages? Is it like a 90-second video of yourself taking that exam or something?
Maren Kate: The way I like to think about it is just thinking what hiring normally is and then doing the exact opposite. Most companies approach hiring, they post a role and people submit their resume, and then it’s up to the hiring manager to go through all these resumes, and resumes are literally a terrible way of assessing fit. It goes back a stage. You want to figure out what is the role, what matters the most. You don’t say, “I want to hire a digital marketing manager,” you say, “This is the job or jobs I want this person to do. I want them to own our ad spend, I want them to be able to write great copy. I want them to be able to hire and manage designers, and I want them to be very analytical and be able to create reports.”
You can actually test that in different stages of the funnel. One example would be we have people submit resumes, but we don’t even look at them until maybe stage five. Instead, we would have three paragraph style questions that would be the first stage of the recruitment process. The very first one which we include in all hiring is, “What are you looking for in a role and what honestly draws you to this company and this role?” If people don’t fill that out in a meaningful way, in an honest way, we immediately disqualify them. Because if you want people that actually care about your product and your vision, then they should be able to articulate that.
We also ask them a few other questions and then we actually look at their writing and their communication which is incredibly important for most roles, especially ones that are remote. But going back to the digital marketing example, you want someone who can write well. It doesn’t matter if I look at their resume and they used to work for Apple, or Postmates, or one of these darlings, I’m not like, “Oh, they worked at Airbnb, they must be good,” that is not an indicator of success.
Instead, I actually look at the work they do. After that, we would yay or nay then someone on interview, or just glance and push through the top 20%, and then they would go on to another question, and we test the responsiveness as a really big one, and then we’ll get them into a phone screen where we’re talking about specific examples to understand, do they actually understand the role? How have they performed in their previous roles? A lot of those open ended like, “Tell me about a time,” questions. After that, there’s another longer test project.
We always suggest to clients to do this themselves. Setup a paid test project, something that you actually need done. Be sure to pay for a person’s time, that’s really important. Nothing is more powerful than seeing how people work with you and how they engage with you. If they do well through that, we usually do a second layer of interviews which have to do with your team, with who would be their supervisor. After that, we always highly recommend references. Checking references both given references and back channel references. That’s the one thing I tell founders. “If you do anything, just check references,” that’s the only take away.
Some of the worst hires I ever made, years later talking to people who maybe have worked with them, there’s always a pattern where it was like, maybe they’ve gotten lucky and gotten some good jobs that had high name worth at the company, and they had floated on other people’s success, or maybe didn’t have the skills but they were great talkers.
If I haven’t just spoken to a few references, and the way we do references as we think of are people you worked for, people you worked with, and people who worked for you, because somebody can trick one of those subsets. Maybe your boss thinks you’re great, but the people who work with you and work under you think you’re terrible, and vice versa. It’s really important to get all three of those categories. From there, we usually start to get our preview of a good holistic view of a candidate.
Rob: Very cool. That’s kind of a mini clinic in the hiring process. I really like that. I like most of the stuff you said there, but the write well piece is something that I really focus on. Even when hiring developers, that was the thing I was super picky about.
Maren Kate: And following instructions, that’s a huge one too. It’s amazing how few people follow instructions. Also just somebody who really vibes with your company and your culture. This is why I say when you’re writing your job description, let your company, let your culture, let your flavor of weird shine through. The right job description, it will scare most people off, but it will really attract the people that are like minds, and that’s what you want, versus a generic, bland job description.
Rob: Awesome. You’re talking about this topic in a couple months in MicroConf Minneapolis. If you’re listening to this and you’re not coming to MicroConf Growth yet, you should think about getting a ticket to hear a 40-minute talk for Maren on this topic. If folks want to keep up with you in the meantime over the next couple of months, you’re MarenKate on Twitter, and AVRA Talent everywhere, avratalent.com.
Maren Kate: Yeah, absolutely.
Rob: Sounds great. Thanks again Maren. Thanks so much for joining me on the show.
Maren Kate: Absolutely.
Rob: If after listening to that you have a question for me, or you have a question for Maren Kate, I could invite her back on the show if you wanted to learn more about how she hires, thinks about hiring, really anything from her experience, you can email questions at startupsfortherestofus.com. We also have a voicemail line 888-801-9690, subscribe to us by searching for Startups in any Podcatcher, and of course, we have a full transcript of each episode available within a few weeks of the episode going live. Thanks so much for listening again this week. It’s great to have you here, see you next time.
