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The VC market has lost its mind.
Funding rounds are huge. Unicorns are many. There’s a lot of money, and a lot of people willing to spend it.
It feels like we’re living through a singular moment. But is that true? There’ve been tech booms before — is this one really any different?
Here to talk about it is Bill Beer, a veteran of Silicon Valley and an insider to its funding sprees going back to the early 2000s. As a partner at Daversa Partners, Bill has spent the past two decades working with newly-minted superstars & top VCs to build out their executive ranks.
Bill & Louis talk about today’s funding boom and what’s driving it (hint: FOMO), as well as the ins & outs of executive recruiting and how to find a firm that matches your needs.
“We got our start when the market tanked. We were hustling when everyone else was licking their wounds. And I think that push in 2003, 2004 & 2005 set us up really well…And when 2008 came and this market emerged, we were the emerging company.”
🎙 Highlights include:
- What makes today’s funding boom different from others in Silicon Valley?
- Are we in the middle of a tech bubble and is that a bad thing?
- What should startups be looking for in an executive recruiting partner?
- How do you know whether it’s time to take your executive search function in-house?
This Week’s Guest
Partner @ Daversa Partners
Bill Beer is a partner at Daversa and leads the company’s San Francisco office. Since joining the company in 2003, he has helped build executive teams for leading companies including Google, PayPal, Postmates, Sonder, Twitter, Credit Karma, NextDoor, Reddit, AirBnB, Pinterest & Square.
The Startup Stack’s Host
CEO, Co-Founder of Rocketplace
Rocketplace is a curated marketplace of high quality professional service providers. A 3x founder, investor, and board member, Louis began his tech career as a partner at Andreessen Horowitz. When he’s not working or podcasting, Louis enjoys cooking for his family. His pizza, he’d like you to know, is incredible.
Full Episode Transcript
Bill Beer: [00:00:00] So a recruiter asks a job candidate. Why did you leave your last job? And the applicant replies, it was something my boss said. [Music starts] And the recruiter asked, what did he say? And the candidate says you’re fired!
Louis Beryl: [00:00:15] [Laughing] Yeah. I was like, get a new job. That’s what he said. I hate when that happens.
If you’re paying even a little bit of attention to the world of venture capital right now, you’ll know things are wild. I’m talking about sky high valuations, record sized fundraising rounds back to back to back fund raises. I mean, how many unicorns can one market bear? This moment feels different. Unprecedented. But is it? Here to talk me through it is Bill Beer, a long time veteran of the tech world and an old friend. As a partner at the executive recruiting from Daversa Partners, Bill’s spent the last two decades helping to build out executive teams for some of techs most talked about up-and-comers. Spoiler alert, most of them, aren’t really up and comers anymore. Bill gives me the inside scoop on what’s new, what’s not, and what’s next. So enough of me, let’s get to the interview. [Music ends]
Bill Beer: [00:01:12] I have another joke, which is not even a joke. It’s so real. Um, and this is even about recruiting, but it’s just the joke of this, of the industry that we’re in right now. Dapper Labs.
Louis Beryl: [00:01:22] Hmmm. I know those guys. CryptoKitties.
Bill Beer: [00:01:25] Raised money three weeks ago at a two and a half billion dollar valuation news broke on Friday that they raised money again at a seven and a half billion dollar valuation. Two weeks later!
Louis Beryl: [00:01:36] Oh no mine Lord. Oh my Lord.
Bill Beer: [00:01:37] It’s the world we’re living in.
Louis Beryl: [00:01:39] Yeah, I know. I know. It’s it’s like, uh, you know, every Monday morning when I wake up, ah, Clubhouse has done a new, a new fundraising round.
Bill Beer: [00:01:47] Exactly right. Exactly right.
Louis Beryl: [00:01:50] I know the world we’re living in, it’s amazing these days and you’re at the center of it. Right. And so, um, you and I met, uh, almost 10 years ago when I was at Andreessen Horowitz, we’ve known each other a long time. Um, you do a lot of executive recruiting and you’ve been in this industry actually approaching 30 years. You’ve been with the versa nearly 20. Okay. You joined when it was just 10 people.
Um, now Daversa Partners has offices all over the globe, you know, seven global offices, 160, um, folks at the firm. Tell me about those early days when, you know, when you were, you know, what inspired you to, to join Daversa at the beginning? And what were some of the challenges you faced as a firm then?
Bill Beer: [00:02:35] Well, I, I joined Daversa in the fall of 2003 and that was still very much in the thick of the post kind of bubble burst. Oh, one meltdown where, um, I mean, there wasn’t a lot of fun to be had. Uh, and we were just starting to re-emerge from kind of the malaise and re-emerge, but certainly not enjoy like the, the benefits of the growing market. So it was a tough time. And I had been with my old firm for 10 years and left in 2001 partly because so much of the industry just went into hiding. At that point, right? It was a really rough time. And certainly not to be in the, in the hiring business. Right. It was, there was not any work to be had. So I had left my old firm.
I would had been consulting with a fairly big name executive search firm at the time called Christian & Timbers. Uh, I was just trying to figure out what I wanted to do and was in this kind of in-between time personally, as well for a bunch of reasons. But Christian & Timbers offered me a job and it was definitely a good firm. They had been one of the big firms in that, you know, early internet boom. They were kind of in the thick of it and they offered me a job and I was about to take the job. And one of the other guys there who I’d become friendly with pulled me aside, he was like, before you say yes to this job, you should come call this guy Paul Daversa. I met him. I, I made a huge mistake and I turned down an offer to join him. But having gotten to know you, I think you’d be much happier there. And I had been working recruiting for startups in, I moved to the Bay from New York in 1997, had been working with all of the, kind of in the thick of the high growth boom then, um, which has certainly made the current market kind of funny too.
Um, with certain parallels and certain things that are very different. Um, but my friend said you should go call this guy, Paul. He does a lot more work with stuff that’s in your, up your alley. Like he’s in with some of the VCs and the startups. So I cold called Paul and I had this offer in hand and I’m like, Hey, you don’t know me, but this guy, Jamie Sanger, who actually turns out is one of my current partners today.
Louis Beryl: [00:04:38] Oh man!
Bill Beer: [00:04:38] Jamie said, I should call you. I’m about to take this other job, but maybe you and I should meet. And I went and had like two days of interviews, got an offer, immediately knew it was the right thing for me, for those reasons that Jamie had pointed out. And then funny enough, four months later, Jamie joined and we’ve been together here for 17 years. But if he hadn’t done that, I never would have ended up at Daversa. So it is a, I’m constantly fascinated by the randomness of how those kinds of events happen in life, partially because it’s my job. Right. And you see the, especially when somebody has like one of the huge wins or just how people get jobs it’s so often the, the randomness of which path or email you answer or call you take or friend you have or whatever it is. But my, I lived that very much myself.
Louis Beryl: [00:05:22] Tell me about those early days. Yeah. What, what were, you know, what were you good at? You were at, you were, um, transitioning from contingent recruiting to exec recruiting and, and, you know, maybe, maybe before you, well, you know, while you’re telling us about those early days, also tell us a little bit more about, you know what Daversa does and what makes them special?
Bill Beer: [00:05:41] Why don’t I, I, I start with that. Um, so Daversa is an executive search firm focused on primarily disruptive venture backed companies. And we help build the executive teams for, for those companies that is not a. Totally accurate statement in that a lot of companies get funded in different ways these days, and there’s even your occasional bootstrap startup. And certainly the venture community has diversified, um, in terms of who’s making the bets. But if there is a company where tech is either the centerpiece of their business, or they are tech enabled disruptor, and that’s changed a lot, by the way, over the last 15 years is who our clients are.
But if you’re looking to build an executive team, whether it’s hire a CEO to run a young company, uh, or anybody who might report to a CEO, any of the functional leaders that make up an executive team, where are the one of the firms you would call, uh, and hire us to do what we call retained executive search, which means we kind of think of ourselves as a high-end consulting service, where we help you solve that one really important hiring challenge and oftentimes lead to many other hires for those same companies.
I came from the world of contingency recruiting, which often is a leveling thing, right? We focus on VP and above hires. Now I was kind of director and below for the first 10 years of my career. Also in tech and retained executive search is a very high touch. Invest a ton of time in these few processes and solve really big, important problems. Contingency searches is different where you cover a lot of ground. You only get paid if you complete the project. Whereas I essentially get paid upfront to do my work, or we get paid for our time versus contingency. You get paid for the outcome. And what that allows us is to dedicate time and resources to those really important senior executive hires, such that we’re not in contingency. You throw a lot against the wall because you don’t know where you’re going to get paid. Um, in retained, it’s the exact opposite, you know, where you’re getting paid. So you focus all of your energy on a smaller number of things. Yeah. So when I first got to Daversa that the market was coming out of, it’s kind of a doldrums and still in 2003, we’re still in the doldrums.
Right? We haven’t, I would say that there were you know, by 2005, 2006 we started to really feel like things were coming back around. And interestingly enough, the bull run that we’re on as a firm is sort of aligned with where the, the tech industry isn’t. It was kind of fall of 2008 was really the, the breakout, oddly enough, in the middle of the last global macro economic crisis of its kind or financial crisis. Um, and that’s when we really broke out now. What’s great about that timeline. If you think about it 2003 Daversa didn’t, we had known, we weren’t even called Daversa then. We had a terrible, we were called Resource Systems Group. I mean, just the sh**tiest, the sh**tiest name.
Louis Beryl: [00:08:34] Who would hire them?.
Bill Beer: [00:08:34] Our website looked like it was built in 1978. Not even, not even 2003.
Louis Beryl: [00:08:40] Oh my God. I would never hire this firm. It sounds terrible.
Bill Beer: [00:08:44] It’s amazing. Yes, it was terrible. Um, but we were scrappy. We were hungry and what we were doing, and this is just the benefit of the when and the how is, we were, Daversa got it stride after the bubble burst. So Daversa my old firm, which I’d been at for 10 years and it was a great firm and had built a really good firm, actually founded in spun out hotjobs.com. These were good entrepreneurs and the, in the world of recruiting and search. But when a lot of people got really beat up in 2001, so by 2003, a lot of those people were still licking their wounds. Daversa didn’t really have any brand at all in 2000. They had nothing to lose in 2001. So it was like, Oh boy, we might’ve like made our big bet to start a firm when the world wasn’t ready for it.
But we were hustling when everyone else was kind of. Licking their wounds. And I think that push 2004, 2005 to try to build a really substantial company and our effort, our aggressiveness getting on planes, meeting everybody, going down, Sand Hill Road up and down, up and down, up and down meeting everybody. We could set ourselves up really well so that when the market picked up in 2005, 2006 our brand was starting to get established. And when, when 2008 came we were, you know, you could still go higher Heidrick and Struggles, Spencer Stewart, you know, those firms. But when this market emerged, we were the emerging company.
And so that lucky timing of coming into our stride when, when the world picked up, um, in a different way. So we were poised for that at the time. So much executive recruiting is, you know, recruiting is the marketplace of sorts. Right? You got to get the. You know, the clients that are looking to hire the executives, but you also have to be building out that network.
Louis Beryl: [00:10:34] So, you know, tell me, tell me, how did you, how did you think through that? I mean, ultimately, what do you think, you know, makes a good executive recruiter.
Bill Beer: [00:10:43] Well, there’s, there’s no one simple answer for it. Cause there’s a lot of different styles of people I’ve seen be very good at this job, you know, in some ways it’s kind of classic sales traits, right? Even at the highest end of executive search, if you are a hustler and work ethic, And, um, by repeating the process, if you work on a few good searches, you get to meet a ton of great candidates. It’s a bit of a chicken or an egg theory. It helps to have a great client, which gives you access to great candidates. Even if you’re a firm with no brand name, if you are doing the, you know, the CRO search for Stripe right now, and you are an underdog company that knew nobody knew of you’re going to get audience with every good executive and industry by nature of that.
ROCKETPLACE AD [00:11:27]
Louis Beryl: [00:11:27] [Music start] [Sound of phone ringing] Hello? [Sounds of rocket ship]
Ben Hutchinson: [00:11:33] Louis?
Louis Beryl: [00:11:35] Hey, Ben. Sorry. It’s a little loud.
Ben Hutchinson: [00:11:44] Where are you at?
Louis Beryl: [00:11:45] I’m test driving rocket ships.
Ben Hutchinson: [00:11:47] You’re WHAT? [In an upset voice]
Louis Beryl: [00:11:49] Rocket ships for the Rocketplace ad? Excuse me — what does this button do? [Sounds of robot walking over] [Robot voice responding]. Oh don’t touch it. [Sound of hand being slapped]. Okay.
Ben Hutchinson: [00:12:02] Louis we talked about this.
Louis Beryl: [00:12:03] It’s branding Ben trust me. Hey, does the ship have windshield wipers? [Sounds of robot walking over] [Robot voice responding] [Sound of hand being slapped].
Ben Hutchinson: [00:12:11] I told you, I think we should just explain what Rocketplace. It is how we use intelligence software to pair businesses with world-class burns in everything from finance and accounting to marketing and branding, recruiting, software development, domain name, buying, product design, and more.
Louis Beryl: [00:12:27] I guess we did talk about that.
Ben Hutchinson: [00:12:28] Yeah!
Louis Beryl: [00:12:28] So no rocket ships then? [In a sad voice]
Ben Hutchinson: [00:12:31] Um no!
Louis Beryl: [00:12:32] You sure?
Ben Hutchinson: [00:12:35] Come home, bud.
Louis Beryl: [00:12:37] Okay. Excuse me. [Sound of seat belt unbuckling] Actually, I have to go. [Sounds of robot walking over] How do I leave? [Robot voice responding] Oh I can’t leave? [Robot voice “Shields on”] Wait why is the floor rumbling? [Sounds of rocket ship rumbling getting louder and taking off].
Ben Hutchinson: [00:12:56] Rocketplace. Find your firms. Grow your business.
Louis Beryl: [00:13:00] Ben? Ben? I don’t know if I’m going to make it to the office today.
And did you, did you have a couple, you know, you talked about this breakout of like 2005 to 2008. Were there a couple of key companies that you worked with that like, you know, it really helped move us forward?
Bill Beer: [00:13:22] It’s definitely starting in 2008. Yes. Um, and more so, because it’s so much part of the narrative that I talk about now of that era. Um, when I think about like the 2004, 2005, or 2006 timeline, it’s funny, it’s like, That that to me represents the heavy lifting to be in position to like, go get it in 2008. But for us, you know, for me, like one of my breakout clients, which if you put yourself back in Oh, eight timeline was Zynga and I got in with Zynga as they were about to go for it.
Right. And, and Mark Pincus was very good to me. Um, I had a friend who was a co-founder there, Andrew Trader, if we’ve ever known AT who’s just a great guy. And today continues to be a great partner to Daversa. Now at Bullpen Capital. But, um, Zynga was that breakout because up until then, you know, Our aspirations we were kept doing good work and you build your brand and you get a reputation. And I’d been doing a lot of work with Kleiner Perkins at the time. So while no one company stands out, Kleiner had kind of given me in that era, like was a breakout relationship. And of course, you know, top firm at that time, which gives you access to a lot of companies.
Um, but for me, it was Zynga. And at the same time that we were working with Zynga, there was kind of an era of companies Groupon, Zynga, Twitter, Guilt Group in New York, One Kings Lane. And like a lot of the companies that were making the market, some of which ended up as gigantic companies, some of which ended up having rocket ship growth, but then like, you know, the market is hard. It’s hard to sustain, but that era of companies is where we went from. Good scrappy firms starting to build a brand name to. Oh, look at these. We didn’t call them unicorns back then. But if we had a name for that group of breakout companies at the time we were one of the firms starting to get all of those looks.
Um, and of course, you know, my focus is heavily on the consumer side of the fence. Um, but you know, the same was happening in that kind of the B2B landscape. And we were starting to build those companies as well, even though I mentioned a lot of consumer brands there. So that’s what stands out to me. When I think about where we are today, it was that moment having hustled really like significantly to be in position to get that group of clients, which then just. You know, it, it just snowballed in a good way downhill and they accumulated and there were more of them and so on and so on.
Louis Beryl: [00:15:41] And, you know, as you think about yourself, you know, developing as a better consultant to startups and, you know, developing your craft, you know, Do you have some like painful mistakes you’ve made along the way and lessons you’ve learned?
Bill Beer: [00:15:56] Well, I think look, the first thing I would say when I think about our craft and I didn’t fully answer your question before about like what makes a great head hunter, um, we deal in a world that’s, that’s somewhat similar to venture, which is often why the venture capital firms are a great source of leads they introduced. Do they invest and then introduce us to the founder because the founder. Inevitably when you raised a new round off and that will lead to a lot of hiring. Yeah. So one of the things that’s critical for what we do, especially at the level where my clients are, tend to be the founder CEOs of, of startups. And I’ve met a thousand of them, hundreds, thousands. I mean, I’ve probably worked on almost a thousand executive searches in all my time at diversa and I’ve met so many more entrepreneurs since then.
So the first thing I would say is like how to partner with a founder. Is incredibly important. Now, one of the things that I think Daversa has done well is that we operate with the intensity and the urgency, um, that both pays respect to the, the founder, the stress of being a founder CEO, especially in that almost seems to have grown with the market.
Uh, over the last handful of years, the stakes just seem to be getting higher and the intensity, um, gets, gets deeper for these entrepreneurs, but they’re still young, many times very inexperienced. So I think the first thing that I think about in the evolution of myself, but also just watching this industry as being able to partner with that group of people to build trust, to become. Like a trusted advisor to have, um, you can’t just do this job well, if what you are is a sourcer and an introducer of candidates, you have to be an advisor on what it takes to make key executive hires, to build a team to think more broadly. And so learning to work. You know those cycles, which only can be gained over time. Right?
So this is one of those jobs, like many but repetition and, and, and getting more, you know, shots at it, teach you the things. Cause it’s all like, well, I’ve never seen this before. I’ve never seen this before. And I have a. Whole career. I’ve never seen that one before, but partnering with the entrepreneurs, I would say is the difference between being a good executive search provider and a great one. Um, and part of that comes from truly understanding the pressure, appreciating the lack of experience.
Many times I work with a founder they’ve never hired a senior executive from anywhere. And even if they have a good track record of doing it, I’ve done it a lot more times than they have. And, um, it was that. Appreciation understanding kind of fluency in entrepreneur that I think was probably the most, the steepest learning curve, either diverse as anybody we hired even eight years ago, seven years ago, our database is enormous. We know everybody, we have access to all the people that is not trivial, meaningful relationships. Are, are still much more significant than a database, but the people are out there. And if you’re working with a good company, you’re going to get access to those people, but it’s how do you affect the outcomes?
And then the second part is how do you like effect? We’re talking very senior executives here. There was a article, a little blurb from the information that I think came out yesterday about talent leaving Facebook and Google and going to. Younger companies, right? And this case was Instacart, DoorDash, a few others. But you know, we had recruited three or four of the people of this five or six they were talking about in the article. But when you’re recruiting senior execs from companies where, you know, one of the things we can talk about is things like the amount of money people are making out of Facebook or Google, or, you know, the, the wealth that gets created and what people are leaving behind. If they leave another good company.
It takes a lot of years of practice to be able to influence or partner in the decision-making that a very senior exec has. Um, if they’re faced with stay at, you know, big five company making $10 million a year or choose the job that could make you a hundred million dollars a year or a hundred million dollars or more. And the fact that those are the numbers is one of the craziest changes I’ve seen in this industry. You know, I feel like. A sports agent more than before.
Louis Beryl: [00:20:03] I want to come back to that. Yeah. Oh, you talk executives into leaving such lucrative positions, but maybe before that, you know, you were just talking about affecting the outcome of the search, you know, how it’s more than just making into sourcing and making introductions. And so maybe let’s take a moment for that young entrepreneur out there. Yep. What does a good hiring process look like of a senior executive from your experience?
Bill Beer: [00:20:29] It sounds obvious. But identifying the need is like creating the spec. So when we kick off a project, all of the work we do is inbound generated. So we don’t make sales calls. A venture firm or an entrepreneur or somebody will call us and say, “Hey, we need to hire somebody.” So inherently, that means they’ve identified that they have a need. We’re not, we’re not out scouring the market telling people, “Oh no, no, you have to change your org chart.”
You need to do this. They’re determining that there’s a need, but determining what that need is, is the first thing and getting alignment on who you need for this company in this job is the next. What are the core criteria that will make somebody great at this job? Focus in on what’s relevant to what you’re trying to solve for. So for a young company, seed or Series A, you’re trying to solve for the next 12 to 24 months.
And there is an urgency about the next 4, 8 or 10 quarters that will define the success or failure of a hire. If you are a public company, right…take some of the ones that have recently gone public. You might be thinking about 8 to 16 quarters, really thinking of a longer-term plan.
So where you are in your life cycle will determine what are you really trying to solve for here. Um, So really dealing with alignment on, what is the spec? What is the criteria? And do we all agree on this? Whoever the stakeholders are, right? And that’s probably the most important thing.
Executive search and executive hiring is not a democracy. But who are the vote getters? And what are the things that are important to that group and understanding how you can get everybody aligned. You can change your thinking. You can learn through an executive hiring process, but you have to have alignment. And then it’s about focus and execution.
If it’s not a CEO search, then the founder / CEO has to make sure…It’s a big time suck to do an executive search. You meet a lot of people…
And how long does a good executive search take?
A good executive search is about 90 to 100 days. Now that might sound long to some people and sometimes speed is celebrated, which can be… Speed is only great if you’ve got the right person, right?
A little time is okay. You want to meet a series of candidates. We want to learn about the market. You want to test. You know, there’s such a thing as the over-hire, meaning you’ve got to hire the amazing five-star candidate, but that’s only great if that five star candidate is excited about your stage and really focused on this and not gonna check out three months later.
So just because something looks great, you want to vet it, you want to do deep referencing. Back-channeling is kind of the dirty secret of Silicon Valley. Everybody provides references, but nothing gets done in this industry without confidentially and secretly calling people and asking about candidates. And that’s just how this goes.
But the proper level of diligence is usually not achieved in 30 days, even though that might be great from an efficiency standpoint, or because you’re almost always behind the eight ball when you started a project. Meaning, by the time a company recognizes the need to hire an executive from the outside, usually they’re too far behind. Your old friends at Andreessen did a great job of, in theory, trying to make sure you were always ahead of that.
And it it’s very hard in practice. But we’re always operating from behind and speed is tempting, but being thorough is what it’s really all about. And it’s hard to do a thorough search in 30 or 40 days.
Louis Beryl: [00:24:17] From the candidate’s perspective, that individual executive who is the one who’s going to get hired. What does it feel like for them? How many meetings with a company is best practice?
Bill Beer: [00:24:28] That can vary. There’s definitely a too much approach. Where you have everybody under the sun participating in an interview process is not healthy. It gets to be repetitive and you do want to map out.
So when we talk about what is a good search, you want to map out what a great process would look like. And I would say that…well, here are the things that we decide: What is really important to the candidates?
Let’s say, here are these six steps to get this job: meet the CEO, meet a few of the team members, meet a board member. Okay, we’re ready! We think this is our person. That’s great. But the key thing is to go to the candidate that you want to hire and say, have you learned everything you need to make a decision or is your due diligence complete? What else do you need to complete your process? So there’s sort of two phases when you’re doing it right.
Ideally an efficient process is anywhere between five and eight meetings, although in that five or eight participants in a process, you might have five meetings between CEO and candidate. Right? And there’s a lot to be said for that for a variety of different reasons that I could go into. But the number of participants is maybe somewhere in that five to eight range. Bt if the candidate comes back at the end of a process, look, I’m really excited, but here’s the things that I want to learn.
Well, you may introduce other team members. They want to dive deeper on product roadmap. They want to really get into some numbers with the CFO and that person’s team. They want to understand the cap table better. And maybe you bring in a board member and the CFO to tackle that conversation. And that’s the stuff that is highly curated based on different roles, different individuals.
Different asks and you’ll jump through different hoops depending upon whether somebody is a fine candidate that you’re excited to hire, or like a game-changer that you truly think could add zeros to the end. And if your return is good then…
yeah. You’ll jump through a lot of hoops for that candidate.
Yes, you will. And it’s very…especially in the competitive nature of the market we’re in, people will go through a lot of hoops. The other problem though that we’re seeing is the market right now, especially in the spring of 2021, is at a frenzy. Unlike any time I’ve seen. The only thing that mirrors it is 1999 / 2000. Just from the kind of pure frenzy and pace and wildness.
It’s a very different market, but there are traits that are similar. And what we have is that those companies are so desperate. They’re so aware of competition that they’re speeding up their processes, which isn’t super healthy, right?
Two interviews and offer! Even if the candidates not ready. And then throwing crazy numbers that people to try to offset.
And why do you think that’s going on right now? Why are things in such a frenzy?
Well, there’s I think of a handful of things. I mean, we certainly could look at, our valuation bubbly nature that we’re in. But there’s just a pace in this market of get-it-while-the-getting-is-good.
And we are certainly in that market right now where there’s a lot of capital available. A lot of companies are moving forward aggressively. There is a time to pounce that is very real. And so we went from last March or April, nobody knowing how to spend their money or what the future looked, like to everybody no in “let’s go all in right now mode.”
Which applies also to the funding markets, which are over funding these companies in many ways. But that’s competition. There’s a lot of really good companies. Everybody is aware of that. I don’t think anybody sits there and says, we’re the only good company out there, or this candidate is crazy if they don’t come to our company.
The general awareness of the competitive landscape is…I can’t complain about everybody being on board. Sometimes people look at it themselves in a vacuum as a founder or an investor in a certain company. And they’re like, “We’re are the best! Everybody should want to beg to work here.”
That is not real in this market. Everybody seems to be acutely aware of the competitive nature of the moment. Whether it’s startups, venture studios, going all the way to the bottom. Venture studios and incubators are fashionable. Again, tons of great seed and Series A companies are getting more funding than ever before. A great stack of mid-stage companies.
The late stage companies, the young public, the behemoths…I mean, we’ve got more 50 to 100 billion dollar companies than we’ve ever seen. We’re going to have 20 trillion dollar companies at some point, pick your poison. It’s everywhere. So everybody knows what the competition is. And then I do think there’s events… the SPACS are rushing people.
I’d say SPACs have sped up processes that people are trying to measure against, especially in our world of a lot of well-funded startups who are looking at their opportunities in the landscape. And so I think some of the events of the current market are speeding people up even further because, “Oh, we’re going to be a public company in four months and we better get our CFO in place because if we don’t that would really not go well.”
“If we try to be a public company without a public company CFO…” or, you know, fill in the blank.
And actually that’s a good question. Do you have certain areas — CFO as an example, or head of sales — that you and Daversa specialize in? Or are you guys just across the board?
So executive search is a highly specialized field. And many of our competitors are either boutique firms that specialize in an area or group of areas — product and engineering, finance, and ops, revenue, orientation. So we compete with a lot of companies who are very focused on their skill vertical. And then there are a lot of companies where everybody is organized by specialty — product, finance, revenue — whatever it might be.
We are not organized that way. So I focus on building executive teams for consumer brands. A lot of my clients I’ve done anywhere between five and 10 executive searches for over a bunch of years. Part of our value prop is if we do this well, we could have a long partnership together. And that’s something that we feel really strongly about.
I’d say more than half of my projects at any given time are follow-on searches from existing clients. That’s not unique to us, but we are one of the kind of old school firms in that way that we’ve resisted specialization in a narrow way. Although we do as many engineering searches as the engineering specialist firm, we do as many finance searches as the finance specialist firm too.
We just have more people who are good at each one of those functions is how I’d frame it.
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It does make me think though, of a different question, which might be: Okay if I’m going to build a relationship with a retained search firm because I’m going to build out my entire executive team. Shouldn’t I just bring this in house? Shouldn’t I have a recruiter on staff that I work with?
It’s a great question. So one, that is happening. But the two aren’t mutually exclusive of each other. A lot of venture firms brought in the executive talent function, but it wasn’t to do all the searches. It was to help shepherd a process that is more typical now where a company hits a certain escape velocity. For example, one of our team members just went over to one of our clients to be their first ever head of executive talent. This was at Plaid, great company. They’d just unwound an acquisition, an M&A opportunity they had.
And now they’re a standalone company. Just got big funding. Pretty late stage, multiple billions in valuation. And that’s the first time they’re considering that function. So first off, not too many small companies would consider this as a full-time role. The head of exec talent internally, that is. Most of our clients have a head of recruiting, right?
That tends to be for the bulk of employees you need to hire across the board. And executive search is still very specialized. So you hit a certain amount of scale, and you’re going to bring this in internally, but those are our clients too, right?
There will be certain roles… You know, I could think of many clients — Chime has been an awesome client of mine recently — and Chime has a great internal executive talent function, but they turned to Daversa when the urgency is so high, right? And we could spend more people hours on the search than any team could internally. The reach is different, where everybody we’re calling is truly gainfully employed. And it’s going to take a specialist in this craft to really pry that person, you know, the right candidate loose. Or the other scenario is:
Hey, we’ve got 30 needs at the director level and above, you know, we need Daversa’s help on two or three of them, right? That’s the most likely outcome. But that head of exec talent / executive search role internally is becoming a universally true thing, just like it did in venture, starting with,a handful of firms — Sequoia and Kleiner early on — and then it branched out.
And now everybody has that function. I would expect most companies at a certain size to have a true head of exec talent function internally. That will still not eliminate the need for search firms on really critical or hard to fill roles.
Let’s talk about that for a second. Because you mentioned before…these folks are enormous companies. They’re making so much money. It’s almost hard to believe. How do you ever recruit these folks out of these giant companies?
Bill Beer: [00:34:13] It’s part of the nuts and bolts of our industry. I mean, this is how we’ve, how it’s gone forever. You could trace this back, the seeds of entrepreneurial-ism to a group of successful companies, that beget entrepreneurs that found companies that beget other entrepreneurs.
I mean, that is the way it goes. I just think that’s the Darwinism of our industry is that people will continue to bet on whatever the next thing is and want to be a part of that. And I don’t know if that is exactly the same in other industries, right? Financial services for a long time was, you know, you could start a new company, hang, a new shingle, but the world was dominated by a series of large companies.
I think this industry is built on this premise of entrepreneurial-ism. And that will never change. Right? I don’t…I truly believe that will never change. So I think it’s part of the DNA of a lot of people in this industry. Not all! Many people love the fact that we have these great large companies that pay very well. That’s an amazing thing. That was investment banking when I was coming out of college in ’93. If you wanted to make your millions of dollars a year, you had industries where you would do that. And that’s now tech and I think that’s awesome. So there’s this entrepreneurial spirit is one.
The other part of it is that if you’ve been a part of Google, Facebook, Amazon, Microsoft, fill in the blank, right? Whatever it is. Or you were at a company like an Airbnb or a Coinbase. Coinbase minted a lot of new millionaires, right? And you can help build Coinbase over the next bunch of years.
But those people went to work with for Coinbase because they wanted to build something amazing and new. Not all those people want to work for Coinbase, the a 100 billion going to trillion dollar public company, right? Part of the thrill was the ride to get there. And it’s a different skillset to be great when a company hits 3,000, 5,000, 50,000 employees.
So a lot of the people that build these things up are actually meant to do another thing. They don’t want to be a part of a mammoth company. And the other part is that if you make X million dollars a year at one of these great companies, or you had a wealth creation event by picking a startup that had a great outcome, you can afford to take more risk.
And I think there’s more people who would rather try to go figure out. How to have a home run grand slam mammoth event, as opposed to the annuity of a very high paying big company job. Yeah. And that is peak in April 2021. We’re at peak FOMO. We are at peak…who was it? I was reading somebody’s tweets the other day that “10 billion is the new 1 billion, 100 billion is the new 10 billion” in terms of what outcomes people are striving for.
But the wealth creation that comes with that is a very different thing in this market. So I think when you’re founding a company today, the unicorn isn’t even a thing anymore. Like it’s like the name they’re like…
Louis Beryl: [00:37:06] They’re like seed rounds. Seed rounds. Seed unicorns, honestly.
You know, a thing I always like to ask is, what’s the new trend? And we’ve obviously been living through COVID for all this time, people are getting vaccinated, we’re pulling out of it. But it’s now April 2021. Is this peak FOMO? Is this the new trend versus where we were in 2020?
Bill Beer: [00:37:30] I certainly think there’s a big aspect of that. But if you think about it…the peak FOMO…the other way to frame that would be 10 billion is the new 1 billion, right?
And 100 billion is in play for a lot of people now. And so, yeah. FOMO gets created because of those realities, but the size and scale of the companies…there were some great articles that went around this weekend about Tiger Management and Cotu and what the hedge / hedge of venture funds are.
We have to come up with a name for the hedge funds that are doing this growth venture. Now. But like how that’s changing the size of the round, the valuations, the pace of it, like the game is changing and that’s look, there’s a whole economic argument. The inflation’s coming, the bond prices are up.
Like the low interest is gone. So does this change anything? Maybe.
But I think what’s here is this insatiable public appetite to be trading these tech stocks. Let me just go look at this NFT market as the next thing of like, who knows what’s going to happen, but I just think more and more people don’t want to miss out.
They are making bigger investments in seed rounds because they don’t want to miss out. The same applies to the executives. They don’t want to miss out, except you can join a company once it’s in that billion to ten — you don’t have to join when it’s a seed stage to win. You could wait until it becomes a very attractive later-stage private company.
And if you pick right. There is a massive opportunity there, but it’s FOMO. It’s the new economy that we’re living in. The number of great companies and still so many new categories. So I think there is a hunger for it, combined with the fact that… I mean, look, you’re seeing people leave Stripe right now.
Stripe is an example. It hasn’t even had their outcome yet. Of course, they’re secondary markets where you can liquidate. But you hit your five years at Stripe. They’re not even waiting for Stripe to become Facebook or, you know, whatever else Stripe might become. People are leaving before that event happens. And Stripe is a company with great retention.
You know, there’s a lot of revolving doors in Silicon Valley, even for some of our best companies. A lot of turnover is a natural part of this injury. Stripe didn’t have that, but even now people are leaving. Like “I got that. I got my equity. I got my money. Now I’m going to go do it again.” And they haven’t even finished the game yet! They haven’t finished being seen the outcome.
It’s just, it’s a fascinating time. The flip side of it also is so many people have made so much money that the urgency to make a decision is either you’re sitting on these great annual packages at the big companies, or you’ve just been a part of a fantastic exit.
Our clients all have urgency. Go, go, go. Now. Now. Now. We talked about the pace at which they’re moving. The candidates have the exact opposite urgency, and they’re trying to wait for the perfect chance to alleviate their FOMO because I’m picking the winner, but I don’t have to do it tomorrow.
I’m just going to wait until my 50 to 100 million dollar opportunity presents itself. So it’s a fascinating combination there too, of desire but no urgency for the executives because it seems like it’s never ending.
Louis Beryl: [00:40:45] Totally makes sense. You know, another big topic that always is coming up in recruiting is diversity.
As you think about building teams, you must deal with this all the time. Diversity and inclusion. And so how are you advising teams around building diverse teams, especially in this market where it’s so competitive?
Bill Beer: [00:41:03] Yes. So I’d say a couple of things. One, it’s a topic on almost every one of our searches right now, and we work with private companies.
So they’re bound a little differently by how a public company has governance on certain topics or private companies. I’ll be privy to some very frank conversations between myself and a CEO, a board of directors, whatever it might be, about diversity goals. We are doing a lot of executive searches where the candidate pool is a hundred percent diverse by requirement.
So that’s, you know, that is very new. I would say gender diversity has been the big topic for probably five years now. And now we have the URM BIPOC community becoming an even bigger priority. So this is a very real part… What we try to talk about is the following. There’s a couple of different scenarios.
They’ve tried to build their business in a certain way, which is very inclusive diversity as a core principle. And they’ve been committed to that. And it’s about continuing that commitment. But maybe their, their team is more gender diverse than it is color diverse. And they’re trying to really take that very seriously.
There’s a lot of other companies that pick their heads up in tech and realize that they’re incredibly one dimensional in terms of their employee base. And they’re like: Oh my, we have to fix this immediately. Right? And they’re genuine about it. And they didn’t intentionally end up single tracked of, you know, all white men.
Or I’ve had clients where it was all Asian men on the executive team. And they’re like, we can’t hire that person again. Right. And so there’s a different dynamic, but I mean, there’s a longer conversation. Is it bias? Is it just, you hire each individual person and you pick your head up and you’re like, “Oh, I see. Is that unconscious bias or is that just how this happened?”
But they want to fix that. There’s a whole other group of companies that are like, “Oh shit we have bad culture. We’re getting a bad rep. We desperately need to make a hire.” Just, you know, let’s get that one person in here. That’ll fix it for us! Which is crazy to think about that being the logic. But that is a reality.
So the challenge is this, let’s say you’re a startup company, right? And you’re committed to diversity, but you need to do make a certain hire. And you get only a couple of shots at building your company at each phase and doing it right. And the wrong hire can set you back tremendously. If you have this awesome white male executive that you can hire for a job where you are certain that’s the perfect candidate, but you also are really committed to diversity, but you’re a young company that’s very fragile.
Right. I see the deliberation of “well, shoot, what is right for us?” Like you want to build the company the right way, which is diverse over time. In all your different aspects as a diverse company. I think many do, and I truly believe this, that divesity makes for a healthier company and different viewpoints will create more balance.
But what if you’re in that moment where you think: we’ll, let’s just make this hire now. The white male and we’ll get that next one the next time. Cause we really want to do it. That’s a very real thing to consider because you do have this moment in time where if we don’t do this right, right now, we might not have a next time. But then you pick your head up and you realize “oh, we’ve had a whole bunch of we’ll get it next times.’
And we have no diversity on our team. It’s uh, you know, the public companies are, may have the ability to be much more patient and rigorous with this. And that is an advantage.
Louis Beryl: [00:44:25] Why? Why are they able to be more patient?
Bill Beer: [00:44:27] Because if it’s a certain size public company, it’s not that making that one hire is less critical, but their company is functioning without that hire.
You know, if you’ve done, if you’ve built your team correctly, you’ve got layers. You might have a lieutenant. That’s the interim in a capacity. Startups don’t have that. I mean, there’s a whole other dialogue about…
Louis Beryl: [00:44:45] So you’re kind of just saying there’s not enough depth on the team and public companies have…
Bill Beer: [00:44:50] Right! Startups don’t have a bench. There’s no concept of succession planning at a young company, which why we’re so busy. Right? You can’t afford to have your like three layers of what-ifs and “if we promote this person.” I mean, that’s the last thing that small companies get, right? Career development & succession planning, because you don’t have the head count and everybody’s like: focus on that next quarter.
You’re not developing skills. There’s an inflection point. When your company turns into a certain size company where you start thinking longer term, that’s why I go back to my point earlier. You hire for right now at the startups, but if you’re hiring for right now, then how do you factor diversity into that?
If right now is actually a real thing, it’s a very complex topic, but it is almost a hundred percent pervasive on every search we’re doing right now. Last question for you, if you
Louis Beryl: [00:45:39] You’ve been in the recruiting industry for coming up 30 years…
Bill Beer: [00:45:43] When you say that it makes me feel so old. God.
Louis Beryl: [00:45:48] But you’ve got tremendous perspective. You’ve learned a lot of lessons. If you could give yourself a piece of advice, if you could go back in time to maybe 2003, when you first joined…oh, I forget what it was called…
Bill Beer: [00:46:01] The Resource Systems Group.
Louis Beryl: [00:46:06] Exactly! If you could go back in time to when you joined the resource systems group, what would be the advice you gave to yoursefl?
Bill Beer: [00:46:13] Such a great question. I mean, one is: I would take equity in every company I’ve ever worked with. And then we wouldn’t be talking! And there are firms in our industry that have done that, but our model, we have a different approach. But of course now, you know, I have lot of moments of the FOMO of what could have, should have been.
But if I had a crystal ball, if I had known then that where this industry was going. You know, I think I would have been…There’s such a massive opportunity in the technology industry, whatever your role is, right? Engineer, marketer, head hunter, serving these companies.
We are still in the early innings of what this is what this is all about. Like tech is not an industry and every industry is tech now. And yeah, but I didn’t, I wouldn’t say I knew that in 2003 Andreessen hadn’t coined the “software’s eating the world” thing yet. If I had only known and I gave it my all… We’ve given it our all this whole time.
But if you had this visibility of being at the early days of what was happening and the approach you could have taken to building this. Because I feel like we’ve helped build it from a — certainly from a people standpoint — our fingerprints are so all over some of the most impactful companies this industry has had.
And I still feel like God, it could have been so much more. So you know, I’d say if you’re getting into this industry now, treat 2021 as if it’s 2003. Because you know, that is sort of what it is, right? And the opportunity in this industry, again — whether you’re in product and finance, if you’re an administrative assistant in this industry — it doesn’t matter.
Like you were in the early days of this continued industrial revolution that we’re a part of. And so find your spot in it and chase it incredibly hard if that’s what your motivation is, because the opportunity is just ridiculous. So…
Louis Beryl: [00:48:07] I think that’s awesome, Bill. You’re giving me FOMO right now!
Thank you for joining us today.. It was a really great having you on The Startup Stack. Thank you.
Bill Beer: [00:48:18] Thanks Louis. I loved it.
Louis Beryl: [00:48:20] For more on our conversation toda visitt www.rOcketplace.com/podcast. We upload a new episode every week. So if you haven’t yet, make sure to subscribe to The Startup Stack in Apple podcasts, Spotify, or wherever you listen.
Thanks again for joining us. See you next week.
Leah Jackson: [00:48:39] The Startup Stack is written and edited by Hannah Levy and produced by Leah Jackson.