Building The Management Team In the Early Stages Presented at: “Soup to Nuts 2002 -- Advanced Survival Strategies -- Building and Managing a Tech Startup in Volatile Times” By the Software Development Forum, San Jose, CA, January 19, 2002 David R. Mather Managing Director, Technology & Venture Practice Christian & Timbers 2/25/2019

Building the Management Team in the Early Stages David R. Mather 13 years management & consulting experience (Ford Motor Company, Sara Lee Corporation, Warner Communications, Booz•Allen & Hamilton) 16 years executive search Christian & Timbers Established in 1980 Top 10 in U.S. Top 15 Globally Focus in CEO, Board director and senior level search Fastest growing search firm in the industry for the past 5 years 2/25/2019

Building the Management Team in the Early Stages Recruiting Strategy Timing Position Specifications The Recruiting Process The Selection Process Compensation Team Integration 2/25/2019

Building the Management Team in the Early Stages Recruiting Strategy People are the key element in building any company -- product or service Quality of management is a “Top Three” criteria for investors Recruiting strategy is a key element (often neglected) and an outgrowth of business strategy and organization strategy 2/25/2019

Building the Management Team in the Early Stages Business Strategy (the “What”)  Organization Strategy (the “How”) Recruiting Strategy (getting to the “Who”) 2/25/2019

Building the Management Team in the Early Stages Timing The timing of adding specific management positions varies widely -- there is no formula The timing is affected by the depth of experience of all members of the team Timing is affected by the success of the business Remember -- it takes time to recruit, so factor that into process Often better to think “start date”to “effectivity date” -- 90+ days later Usually better to be “early” than “late” 2/25/2019

Building the Management Team in the Early Stages Position Specifications Know what you’re looking for… and why Characteristics of the position • Expectations • Scale • Skills • Knowledge • Human Qualities Motivators Understand the value proposition -- internal/external factors Clarity is key 2/25/2019

Building the Management Team in the Early Stages The Recruiting Process Have a Process -- and a leader for the process Understand how best to find and approach prospective candidates • Direct Approach • Referrals • Advertising • Job Boards • Employment Fairs • Contingency Recruiting • Executive Search 2/25/2019

Building the Management Team in the Early Stages The Recruiting Process When thinking about “costs”, make sure you understand “opportunity cost” of time Encourage Diversity Utilize all resources -- investors, board members, customers... 2/25/2019

Building the Management Team in the Early Stages The Selection Process Designate a key contact for candidates Designate an interview team -- enough but not too many Structure the interviews -- evaluate, give information and sell, (the “onion” approach) Momentum is key Make crisp decisions Do references -- 360 degree view Close hard Remember -- despite what you hear, there still is a talent shortage 2/25/2019

Building the Management Team in the Early Stages The Selection Dilemma Experience vs. Human Qualities The Normal Technique HIRE FOR EXPERIENCE Later FIRE FOR HUMAN QUALITIES 2/25/2019

Building the Management Team in the Early Stages However, a caution… 2/25/2019

Building the Management Team in the Early Stages Compensation Cash compensation is important again Equity is more realistically viewed Overall “opportunity costs” are being weighed… job content and career progression A “pendulum swing” on risk… particularly for sales executives 2/25/2019

Building the Management Team in the Early Stages A Note on Compensation If you pay peanuts… you get monkeys! 2/25/2019

Building the Management Team in the Early Stages Team Integration Develop an “employee integration plan” -- different from an “orientation” Communicate expectations -- individual & team Evaluate and communicate often -- with clarity Recognize individuality within the team Find ways to integrate team outside of work… it helps! 2/25/2019