Like many couples living and working from home together during the COVID-19 shelter in place order, Laurent Parmentier and I have noticed that work and home life have blended together more than ever before. I’ve taken advantage of having a “shelter-in-place buddy” in the VC world to ask him some burning questions about general market and talent-related trends, including tips on effective hiring, employee retention, and making hard decisions like letting team members go during this crisis.
To provide some context — we both work within the technology ecosystem. I’m a Client Partner at SPMB Executive Search, one of the largest retained executive search firms in North America focused on technology and innovation, and Laurent is a Managing Director and Head of Portfolio Operations at SignalFire, a Silicon Valley-based venture capital firm that uses actionable data to invest in seed and breakout stage startups.
Because of the nature of our jobs, we both have a unique, intimate perspective on how technology companies have been coping during this challenging time. In fact, in a recent article, I discussed some of the positive shifts I’m experiencing first-hand in the technology talent acquisition space.
Below, Laurent shares the business and talent-related insights he’s seeing across the venture landscape during this difficult period:
As background, tell us about SignalFire…
- SignalFire is a San Francisco-based venture firm. We’ve been investing since 2015 and have close to $1B under management across 5 different funds.
- We currently invest out of two funds: a $200M Seed fund in which we target early-stage companies, and a $300M “Breakout fund” that focuses on fast-growing companies that already have strong product-market fit.
- What differentiates SignalFire is that we look more like a technology startup than a traditional asset manager. We have an in-house team of engineers and data scientists that have built a data platform and proprietary systems that help us identify companies that we should consider for investment purposes. In addition, this platform provides talent and market insights to our portfolio companies allowing them to hire the right talent, identify potential customers, and gain competitive intelligence on their markets and competitors.
- Beyond our engineering chops, we also focus on driving operational excellence across all aspects of our firm.
And that’s where your role comes in, correct?
- Yes, that’s what I’m mostly focused on day-to-day. I lead portfolio operations, research and I also drive our investment process. In terms of portfolio operations, we treat our portfolio founders as if they were our own customers and I work closely with all our program leads to make sure that we remain our founders’ favorite venture investor. Given that we’re a relatively new firm and not as well known yet, the way we compete and the reason we win so many deals is through our founder references.
- With regard to our research efforts, we have amazing data on talent and early-stage companies. We use that data to inform our investment theses and to support our Limited Partners with market intel.
- Finally, I also work closely with our investment team to constantly refine our internal processes and ensure we effectively source and do our diligence on deals, ultimately leading to good investment decisions.
Based on your experience, what types of companies are seeing growth right now and which ones are experiencing pain?
- The first thing we did when the crisis began was to take a comprehensive look at our portfolio to assess how each company was likely to be impacted by the current environment. We were positively surprised by how many companies are experiencing tailwinds as much of consumer spend is shifting online.
- We have a lot of investments in areas like telemedicine, online education and at-home fitness that are doing extremely well right now. Other sectors that are experiencing strong tailwinds include gaming/media, grocery/restaurant delivery and remote work tools. We also think that a few existing trends around robotics/automation, cloud/SaaS, enterprise VR, esports, D2C, etc. will only accelerate. As such, some tech companies that are not seeing immediate growth may still benefit over the long term as the need for their product/services is only heightened.
- Obviously, not every tech company is doing well and some companies are really struggling. This is particularly true for companies in the travel space or those that provide an in-person service. Businesses that have a long, complex enterprise sales cycle have also had to significantly revise their growth projections.
With this current mix of some organizations growing and others slowing, how are you advising founders and executives? In particular, how have these companies changed their hiring strategies, especially for executives?
- It’s so hard to tell how long the current situation is going to last and when we’ll be able to go back to “business-as-usual”. As such, we’ve advised most of our companies to be conservative in their projections and to extend their cash runway. This often means slowing down hiring, and in some cases, reducing their workforce to focus on the core business.
- When companies need to reduce their cash burn, we generally advise them to cut deep and to cut only once when possible. It’s often better to try to cut entire products/programs/departments vs. “peanut butter spread” cuts across every department.
Does this mean that all of your companies have stopped hiring? If not, are there some commonalities in terms of the roles or companies that are still hiring?
- While hiring has definitely slowed down across the board, some of our companies are still hiring. For instance, some are seeing much lower customer acquisition costs and therefore very compelling unit economics. These companies are still very much in growth mode, and in some cases, have raised more money to take advantage of current market conditions.
- The best companies also tend to be well capitalized and have strong business models. For them, it’s a great time to acquire the most talented individuals from more vulnerable companies. We’re seeing consistent demand for core engineering roles and key executive hires. If your business is in this camp, it’s a fantastic time to recruit and hire executives.
In your view, how has this changed the hiring process and talent landscape?
- Everyone is having to adapt. For instance, I just hired someone onto my team last month whom I’ve never met in person. This is something we would have never considered doing until recently.
- Quite a few of our companies were already somewhat or fully remote before the crisis. For them, it’s almost business as usual. Moving forward, we expect to see many more companies with partially distributed teams. There are a lot of really smart people who live outside of Silicon Valley, New York or Los Angeles so there’s an opportunity to capitalize on that remote talent now more than ever.
With everyone working from home, are there any best practices you can share with us?
- We’ve talked with a lot of remote work experts and companies that have operated in a distributed way for a long time. Perhaps surprisingly, most of our companies are not experiencing a decrease in productivity. This is also the case for us at SignalFire. If anything, we’re even more productive than before as we all have more focus time, fewer distractions and no commute.
- The main challenge with remote work is keeping employees motivated, engaged and informed. This requires a couple of things. First, you have to spend much more time documenting values, processes and decisions as it’s far more difficult for people to learn by observing others, and it’s also more challenging to keep everyone in the information flow.
- Second, it’s important to create time for “coffee chats” as employees have fewer natural ways of interacting and building relationships with colleagues. We encourage employees to schedule time with peers or executives to catch up in informal ways (including Zoom lunches, happy hours, team events, etc.). When using Zoom, it’s helpful to turn on your video to encourage as much face-to-face interaction as possible. Everyone should try to get comfortable showing their messy homes, or having their dogs or kids in the background — we’re all human and in this together after all!
- Finally, we also need to recognize that these are very difficult times for most people and as managers we need to show extra compassion and try to make work fun whenever possible. Ask people to share funny anecdotes at the start of team meetings. Schedule time with your peers and direct reports to check in on how they’re doing. Recognize employees by thanking them for their contributions. These are best practices in normal times but they’re even more important in today’s WFH environment.
What sectors and stages of companies would you advise executive job seekers to focus on during this period?
- The current crisis is likely to permanently shift the balance of power between certain industries and companies. While everything appears to be all doom and gloom when you turn on the news, we know from experience that many of the world’s most successful businesses were founded in the midst of previous crises and recessions.
- I am very confident that this time will be no different, and in fact, there may even be more opportunities as the scale and pace of disruption in our way of life is truly unprecedented. We believe that SignalFire’s portfolio includes some excellent examples of companies that are shaping the future.
At SPMB, we’re currently helping some clients and their companies pivot to new business models. It’s more than helping operationally against the plans they had in place —it’s about creating new strategies for both the nearer and longer term. How much of SignalFire’s time is being spent helping companies vs. pursuing new investments, and how has that balance changed due to COVID?
- It’s a good question but unfortunately I’m going to give you a boring answer. The truth is we’re working harder than ever on both existing portfolio companies and new investments. A lot of our companies are experiencing significant disruption (both positive and negative) and therefore need our help and expertise.
- On the other hand, the world is changing faster than ever so we have to work very hard to try to understand how various industries are impacted, who are the winners and losers, and how we can position ourselves to make the best possible investments. It’s a fascinating time to be in venture and I feel very fortunate to be working closely with some incredible, innovative founders who are building products and services that make our lives better during these difficult times.
Anything else you would like to add for job seekers or technology executives at this time?
- It’s a unique time in the market in which companies hiring executives have access to an incredible talent pool. If you are hiring or looking to change jobs, contact Natalie Ryan at SPMB!
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