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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Getting The Compensation Conversation Right

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Chris Moody, president and COO of Gnip, is back with a guest post in his Moody on Management series. Following are Chris’ thoughts on negotiating compensation with a prospective employee. Enjoy and comment freely!

In my last post, I provided a few tips for job candidates when interviewing at a startup.  This week I wanted to cover a simple process for hiring managers to follow when communicating with candidates about salary requirements.

There is the old saying that people spend more time planning their vacation than they spend planning their retirement.  I’ve found the same concept sometimes applies to job candidates when thinking about their compensation requirements.  As the hiring manager, you need to ensure that a candidate has fully considered their compensation needs before you make an offer.  Over the years, I’ve refined a simple and effective approach to facilitating this discussion.  I’ve used this technique countless times with great results.  The process starts with an email to the candidate:

“Dear Candidate,

From a skills and values standpoint, it seems like we are both excited about the possibility of you joining our company.  If you agree, the next step in the process from my perspective is to determine if we are aligned from a compensation standpoint.  As such, it would be helpful to get the following information from you:

- Current compensation.  Please breakout your base salary from any variable compensation if applicable.

- Your view of your current compensation as it relates to your next opportunity.  It is particularly helpful if you provide this feedback by selecting from either

a) I believe I’m fairly compensated and would anticipate making the same salary at my next opportunity

b) I’d be willing to take less for the right opportunity

c) I feel I’m currently under valued and looking for an increase of $x in order to be excited about my next opportunity.

If it works for you, I’d prefer to have this communication via email.  Over time I’ve found that putting this stuff in writing helps people think about it more before responding.

Love,

Chris”

Of course there are no right or wrong answers.  The goal here is simply to get a clear understanding of how the candidate is thinking about their future compensation by using their current compensation as a frame of reference.   Best case, the candidate’s expectations align with yours and the offer moves forward with a high probability of success.  Worst case your expectations don’t align but you now have a thoughtful starting point for negotiations if you still want to move forward with an offer.

A couple of additional points:

1) Even if the candidate has expressed salary requirements during the screening process or during your discussions, I strongly recommend you have this written conversation as the final step before you make an offer.  For example, perhaps your conversations along the way changed their perspective on salary requirements for the position.

2) The key to this approach is to do this communication in writing.  I know it can seem silly or impersonal, but it makes a huge difference in terms of requiring people to give thoughtful answers instead of answering on the spot.

Before using this approach I had more than a few occasions where candidates indicated verbally that they wanted $x, we offered $x, and then they responded with “I was thinking about it more and I really need $y to feel good about joining”.  Once you hit this situation, it puts both parties in an awkward position and it can be hard to recover.  You can avoid this potential pitfall with one simple email.

Oh, by the way, Gnip is hiring!

Guidelines For Interviewing At A Startup

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My long time friend Chris Moody, president and COO of Gnip, has offered to write some guest posts on management – we’ll call the series Moody on Management. In addition to being an outstanding early stage / high growth executive, Chris has made a study of management in startups and is extremely thoughtful about what does and doesn’t work.

His first post is aimed at anyone looking to get a job in a startup and talks about how to be effective at interviewing for a job. Feel free to weigh in if you have other “Stop, Don’t, Nevers” or “Pleases”

I love interviewing people to work at Gnip.  Unless I’m having a really crappy day, I enter each interview full of hope and optimism.  I’ve done countless interviews in the last 20+ years and I can easily slip into autopilot mode if I’m not careful.  In order to avoid this trap, I mentally prepare by reminding myself “today could be the day I’ll meet the next great team member.” I’ve found this mental pep talk helps remind me that there is no better use of my time than investing in the interviewing process.  In other words, the next interview could be a company game changer and I need to be 100% engaged.

Most interviews don’t directly lead to someone joining our company.  Often the person doesn’t have the right skills or experience.  There are plenty of cases where it becomes clear to the candidate that we can’t provide them an opportunity that meets their interest/needs.  Both of these outcomes are normal and healthy.  Unfortunately, I often find another outcome can occur which is frustrating and deflating.  This situation occurs all too often when a person is so poor at interviewing that we’re unable to determine if there is a potential match.  I’ll invest up to an hour in an interview trying to peel back the layers.   However, I’m frequently unable to get to a substantive layer of discussion that will help both parties determine if there is a potential match.   I’ll leave these interviews thinking, “Maybe that person was great, I’ll never know”.   Over time, I’ve started to referring to these as the “who knows?” interviews.

The good news is that I think job candidates can follow some simple guidelines when interviewing at a startup that will help avoid the “who knows?”

Stop, Don’t, Never

  • Stop selling and start engaging.  In order for this to work, we both have to determine if there is a match.   The best way for us to determine the match is to have a thoughtful/engaging discussion.   If the interview process only involves me asking questions and you giving answers that you think will impress me, we’re going to waste a perfectly good hour.
  • Don’t talk in sound bites and buzz words.  You might think they make you sound smart, but they don’t because they lack substance.  We need to have a real discussion.   If you find yourself rehearsing answers before the interview even starts, we’re almost certainly going to have an unproductive meeting.  Speak from your heart and your experience not from a script.
  • Don’t agree with everything I say. I’m wrong… A LOT.  I once went on an all beer and water diet for a week.   Challenge me.   Startups thrive when each person hired is smarter than the person hiring them.  If you agree with everything I say in the interview, I’m left wondering how are you going to contribute when we are working together trying to solve tough problems.
  • Avoid talking about past individual results.  I know this sounds unconventional, but as the interviewer is often very hard to contextualize how these results might translate to our business.  I’m much more interested in discovering what you learned in your last job that we might leverage at our company.  For example, telling me you increased sales by 300% isn’t that helpful.  Telling me how you learned to handle customer objections around price could prove to be very useful.

Please

  • Be honest
  • Ask lots of questions about stuff that matters to you.  Reviewing a company’s web site before the interview will give you some reasonable background. But, I can assure you that no company web site answers all the questions about a business.    It is often the case that an interviewer can learn more about the way someone thinks from the questions they ask than from the answers they give.
  • Ask tough questions.  You are considering investing a huge portion of your waking hours at our company.   Think about the risks and the downsides of the company or the role and freely express any concerns.
  • Figure out if our company is a good culture and values fit for you by asking tough situational questions based upon your past experiences.  Questions like “Can you give me an example of how the company handled a situation where a customer had a bad experience with the product?” can be very revealing about how the company acts/thinks.

Ask CEOs of successful startups about their biggest challenge and they’ll often cite the inability to hire great people.  My theory is there are plenty of great people, but many are just terrible at interviewing.  Hopefully these few tips help lead to more great matches down the road.  By the way, Gnip is hiring!

The Magic Moment When You Shift To Executing As Fast As You Can

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There is this magical moment that happens when a startup finally puts the key components together to build a successful business.  After months or years of iterating and pivoting, they finally have the right product for the right market at the right price.  At this point, the company has to shift gears and change their mindset a little.  They need to stop looking for gold and start mining as fast as possible.  My friend Chris Moody, President/COO at Gnip, refers to this as the execution phase of a business and there is no better example of execution in our current portfolio than the team at Gnip.

After 2.5 years of product development and varying business approaches, Gnip found their magic moment about a year and half ago.  Since that time they have been heads down executing and the results have been incredible.

Today Gnip announced an exclusive partnership with Tumblr.  This monumental partnership will give Gnip’s customers full coverage of an amazing source of social data that has never been available.  With 50 million new posts per day and 15 billion page views per month, Tumblr offers a huge new data stream for companies to analyze and use to drive business decisions.  The fact that businesses will be able to receive this data via the same reliable and scalable Gnip infrastructure that currently delivers Twitter and other important data sources is a major win for the ever growing social data economy.

The Tumblr partnership is the kind of announcement that companies plan their entire year around.  However, in Gnip’s case, it is just the latest activity in an impressive series of events that shows the Gnip team knows how to get shit done.  It is only April and Gnip has already done the following in 2012:

  • In January, Gnip announced an exclusive partnership with Automattic to provide firehose streams of WordPress.com and WordPress.org data to the enterprise.  This partnership increased the amount of real-time blog data available for business analysis by 70% overnight.
  • In February, Gnip announced a premium partnership with Disqus.  Disqus is the largest third party commenting system in the world (I use it on my blog) and the data offers tons of valuable insights to drive lots of cool business use cases.   The Gnip/Disqus partnership makes this comment data available in full firehose coverage form to businesses for the first time ever.
  • Also in February, Gnip released the first ever commercial Twitter historical product.   Gnip’s 30-day replay product allows their customers to go back and replay Twitter history.  As the old saying goes, hindsight is 20/20, and Gnip’s replay product allows companies to replay the entire Twitter stream for a full 30 days to look for things they might have missed.  This product was a monumental engineering feat and a huge portion of Gnip’s customers have already taken advantage of this product in just the first two months after its release.
  • In March, Gnip announced Big Boulder, the first ever conference dedicated to social data.  Take a look at the list of speakers – it will blow your mind.
  • Just last week Gnip announced that they added the largest microblogging service in China to their Enterprise Data Collector offering.  Sina Weibo has over 300 million members;  brands across the world are very interested in the conversations happening on this enormous platform.  Gnip continues to push to increase the number of international data sources in their offerings and Sina Weibo represents a huge addition to their portfolio.

Okay, so the Gnip team is getting stuff done, but at what price?  They must be cracking the whip pretty hard and creating a real sweat shop, right?  Wrong.  In spite of growing their number of employees by 300% in 2011, Gnip was just named The Best Place To Work in Boulder.  Not the best startup, the best company.  And, the best news of all?  They are hiring!

Gnip Partners With Twitter and U.S. Library of Congress

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I recently wrote about how well things are going at Gnip. Here we are just a few weeks later and my friends at Gnip continue to generate goodness in several different directions.

Today Gnip announced it has partnered with Twitter and the U.S. Library of Congress to manage the receipt of all historical data from Twitter and facilitate its delivery to the Library of Congress. This news builds off a release from the Library of Congress back in April where LoC announced that they will digitally archive every public tweet from Twitter’s inception and will continue to archive new tweets going forward. LoC has hinted that the archive will have an “emphasis on scholarly and research” endeavors.

Delivering a bunch of 140 character tweets might not seem like a big deal, but when you consider that Twitter is currently pumping out data at a rate of 35Mbps (and growing) with a max recorded rate of roughly 6000 tweets per second, the challenges of managing this transfer become substantial. Gnip is currently delivering over a half billion social activities per day to almost all the top social media monitoring firms. Since Gnip was Twitter’s first authorized data reseller it isn’t too surprising that they partnered with Twitter and the Library of Congress for this important endeavor. The best part of this deal is that some of the key technical bits that were required to make this project a reality will almost certainly end up in Gnip’s future business offerings so the commercial Twitter ecosphere will likely benefit from this effort at some point too.

Just yesterday, Gnip announced that Chris Moody joined the company as President & COO. I’ve been good friends with Chris for the last several years and am super excited to be working closely with him. I anticipate that Chris and Jud Valeski, Gnip’s CEO, will make a powerful duo.

On Monday, the company announced a much anticipated product improvement that allows existing customers to open multiple connections to Premium Twitter Feeds on their Gnip data collectors. The best part is that customers won’t be charged the standard Twitter licensing fee for the same tweet delivered across multiple connections. Instead, Gnip offers a small flat fee per month for each additional connection. This is a big win for ops managers who have multiple environments to manage for their various release cycles and for large enterprises with systems distributed across data centers all over the world.

For those keeping track, that’s three big announcement in three days. Chris also pointed out on Gnip’s blog yesterday that several other key individuals have joined the company in the last week including Bill Adkins, Seth McGuire, Charles Ince, and Brad Bokal.

Guys – keep on Doing More Faster!

Gnip Is On Fire

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One of my favorite times for me in the life of a company is when it finds its sweet spot and really turns on the juice. Over the past year, we’ve had a number of our Boulder-based investments find this magic moment, including Trada and SendGrid. The most recent Boulder-based company to really hit its stride is Gnip.

Gnip is around three years old and is a testament to our belief at Foundry Group that it often takes several years for a brand new company to really find its mojo. While Gnip is building a business based on the idea that led to its creation, like most firms breaking new ground it has had its share of bumps along the way.

The first version of the product was based on an architectural approach that didn’t aptly satisfy all players in the ecosystem and wasn’t flexible enough. This led to a reset of the business, including a layoff of almost half the team (who were quickly absorbed into a number of other local Boulder companies, including several that we funded) and a different approach to the product. This approach worked much better, but by this point one of the co-founders was frustrated with the customer dynamics (all business facing) and decided to leave to start a new consumer-facing business (he left on good terms, we are still good friends, and he’s much happier today).

At this point, the other co-founder, Jud Valeski, stepped up to be the CEO. Jud is an extremely experienced CTO / technical product manager and developer, but had never been a CEO. The investors in Gnip committed to supporting Jud in any way he needed and he’s done a spectacular job of building the product, growing the team, negotiating several significant deals including the first Twitter data resyndication deal, and unleashing a very compelling set of products on the world. His one-year CEO anniversary is approaching, and things are going great.

The last three months have been pleasantly insane. Gnip has been adding customers at rate that any investor would be proud of, is executing flawlessly on the product and operations side as it scales up, and is posting month over month growth numbers that put it in the “they are killing it” category. Oh, and they are hiring as fast as they can find great people; across the spectrum (business, sales, & engineering).

I’m super proud of Jud and the team he’s built at Gnip. I expect we’ll look back on 2011 as the year that Gnip went from a highly product development focused company to a company that was firing on all cylinders. And Boulder will have another substantial software / Internet company in the mix.

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