Here’s an update on year-to-date results after 3 quarters of record growth (we know, yawn…). It’s an exciting time, to be sure. Our clients are growing like crazy, capital is flowing freely, disruption is everywhere and the energy around the Bay Area is frenetic and thrilling. Business is booming. Everyone knows how hot the market is, but we think Bill Gurley is right on the money, so to speak. We believe a note of caution is in order, and that this recent market correction and events around the globe are great opportunities to step back and be a little less go-go and a little more thoughtful.
Some musings and advice on/for the market and this environment:
- We’re deeply concerned about capital oversupply and the bad behavior it’s breeding once again. We’ve been waiting for someone with enough clout to step up and temper expectations and Bill Gurley was just the man to do it. Someone needed to stand up and point out the obvious, but in a way that was nonthreatening and not alarmist. If this concept catches on, and people show more restraint and discipline, the bull market we’re in for technology could last another decade. If not, we’ll be making a lot of sock puppet jokes and scratching our heads about our inability to learn from the past…
- Public co’s have more entrepreneurial talent than people think. Don’t turn your nose up at people from established players. There are hidden gems there. And they’re excited about startups. As they should be. Startups are fun, they’re lucrative (especially with private stock sales / secondary investors, etc.), and if they can execute, there’s nothing but daylight in front of many of them.
- If you’re a public company, you CAN recruit plenty of people despite all the startup fervor. VMWare, Citrix, Informatica, ServiceNow and some of our other public clients have plenty of cool, senior executive roles that can impact big markets quickly and they have huge footprints to leverage with less drama…A lot of great people want to do “smaller, faster” but not “startup.”
- A big financing does not a great company make, especially ones with lousy unit economics or no serious revenue. We can see a dozen stupidly valued startups hitting the wall in the next 18 months and embarrassing a lot of smart people. Don’t buy into the myth that a gaudy financing is cool and an attractant for talent. Be smart about how you raise money. While a $10B valuation sounds better than a $10M one, be careful not to put yourself into a situation where you’ve limited your options, specifically when it comes to liquidity and exit strategies (and execs are starting to shy away from companies with high valuations).
- At the same time, make sure you have enough cash if and when the next shoe drops. The companies killing it today were efficient with cash in 2008. Too many road-kill stories to count about super-hot startups that flamed out overnight because they weren’t disciplined. We see Fall of 2016 being pretty bumpy and anticipate higher interest rates and a big election as possible pin pricks for any bubble conditions.
- There are fresh-faced, hungry, talented people underneath the usual suspects in the candidate community and we are mining them more than ever these days. We’ve spent the last 5-7 years cultivating relationships with this group as they have been grinding it out during the downturn. They were not minting money in 2000, and “grew up” having to create real products and value. Don’t overlook them…they are the ones that have created this market! The no-entitlement, “grease monkey, doer” crowd who know that their moment is now. Love them.
- Move faster than ever to build, market, sell, scale and grab share, but don’t over-hire and don’t buy into the hype about over-paying for talent. Re-define what you think talent is for your specific situation. Don’t listen to talent pundits too much. Customize any search for your specific needs in the next 12-24 months and avoid looking for purple unicorns.
- Be decisive and execute a closing pattern swiftly when bringing on board the right key executives. Reference and aggressively pursue in concert with one another. The days of sequencing every step in a hyper competitive market are over. Multi-tasking is key.
- Downtown SF is all the rage, but be cautious there. Don’t sign ridiculous 10 year leases in downtown SF at $90/foot and try and compete with Google, Twitter, et al….If we had a nickel for every company that signed a bad real estate deal in the late 90s…Look at the underdeveloped parts of SF for value. The talent will be stickier and it’s just as easy to get there, in some cases easier. And beware of the anti-tech, anti-gentrification movement in SF. It’s not going away quietly.
- And last but not least…let’s root for our Giants!
- We have become the most transparent search firm on the planet. We have a killer collaboration tool that brings clients directly into the search to see 100% of the data that’s relevant to them, it’s mobile, it’s fast and it’s robust. Clients are loving it.
- Our consumer and sustainability practices are growing like crazy. Enterprise is out of control hot, as always, but the other practices are catching up quickly.
- We launched Mike Dempsey and Matt Moore as key new billers/project leaders this summer.
- We’re still hiring at a very strong clip and filling searches at a record pace, led by partners and project leads who average 10+ years in the search industry.
- Competitors are getting way over-committed and sloppy and we’d be loving it if we weren’t worried about the taint this will have on our industry. We think that’s bad karma AND bad business. Clients have long memories, and we were rewarded post 2000 and 2008 for not oversubscribing. In the past 3 months alone we’ve been asked to take over six failed searches from competitors. That’s not a good thing.
- Our Rocky Mountain Partner, Jon Landau’s practice is growing nicely. His experience ramping a company through IPO and hyper growth while running all talent for Rally Software gives him a unique insider’s view of company-building and clients are responding well. We’re working on Austin and Boston/NorthEast, actively, in parallel.
- We are focused on hiring more Partners for consumer/digital media and other interesting categories like digital health.
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