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In a recent Outside Insights episode of Permanent Podcast, guest Anu Harihan, Managing Director and Partner at Y-Combinator, talked with Brent Beshore and David Cover about how best practices from Silicon Valley map onto Main Street. In her work with YC’s Continuity Fund with companies like Boom, Instacart, and Gusto, Anu has firsthand experience with what makes for a successful founder, what it takes to scale, and how to bring in outside talent – and while her work is with startups and growth stage companies, many lessons translate to the SMB sphere. 

For Anu, one key to hiring for growth and for a long-term mindset is figuring out whether someone is a manager or a builder. 

I haven't seen a stage of a company where you would say, "Let me just hire for a manager and not a builder." Having that builder mentality goes a long way, no matter how much you scale… If I had to err on the side of always hiring a builder who can also be a manager, I'd choose that path versus hiring a manager who cannot be a builder.

There are benefits in having leaders who can both corral and organize and build new things. And, there are real dangers if you become a roadblock to scaling as either a manager or a builder. But there’s an additional, specific threat to hiring a pure manager: They’re not going to be able to get back in the trenches if things go sideways. 

It's important to know how to manage and lead teams and put systems and processes in place so you're not always in the weeds. But companies always go through tough times, and if you have a builder on your team as a leader, they will not be afraid to go into the weeds. That usually raises the bar of the entire team…

Companies that relax and have too many managers of managers who are not in the weeds take too long to respond to critical issues, and that's usually when the company starts going a little sideways. Hire for the builder, but you also have to be careful that the builder is not the roadblock. You don't want a micromanager with 200-300 people reporting to them, and he or she has to approve everything. You don't want that. 

You need a builder who's also a great manager as a senior leader – who's willing to delegate, who's willing to put systems in place so that the velocity with which the organization is shipping is still fast. 

If you’re a small business owner, how do you identify and hire a builder to help grow your company? What questions and follow-ups can you ask to understand whether they’re ready to roll up their sleeves and do the work? And how do you align incentives to make a position attractive to the builder you want and need?

1. “Dig deep into their prior experience.” Keep asking, “What did you do?” to get past what the team did or what the company did to what their specific initiatives, contributions, and impact were. Try asking:

   • Who came up with the idea?

   • How big was the team when you started?

   • Over the X years that you built [the project, the department, the product, etc.], what was the exact impact of the initiative?

   • What did you do to drive impact?

   Tip: Look out for surface-level answers. If they don’t know the details, it might be because the team did most of the work. But if you keep asking “What?”, “Why?”, and “How?”, at some point their answers will plateau. You want to make sure they don’t plateau too quickly.

2. “If they’re really a builder, they’ll have already used your product or services… A willingness to go deep to understand the product and the service indicates that someone is a builder.” So bring someone on for a week and let them work with you as a contractor or a consultant. You can quickly get a read on:

   • How open are they?

   • How much do they engage with the team?

   • Are they waiting for someone to give instructions?

   • Are they learning on their own?

   • How do they ask questions?

   • How do they approach problems?

   Tip: Some people are great at interviewing. They can game the system. So give people homework – 70-80% of the people won't do the homework. That’s a sign.

3. “The test of a great builder is whether they want equity or cash. Builders want equity. They believe in what they're doing. They want to see the upside of what they're doing. They want to play a role.” Finding someone who wants a share of the work they believe in is a good indication that you’ve found a builder. It’s also an opportunity to create a compensation package that aligns incentives. Consider:

   • Part equity

   • Part upside

   • Compensation based on metrics/incentives/goals

   Tip: Make sure that any equity-based or equity-like compensation makes the link between the performance of the business and their personal finances clear.

Being a founder is like getting punched in the face every day. It’s a roller coaster. It’s a knife fight. Whatever the metaphor, it’s stressful. Anu’s advice is to acknowledge the stress – and not to go it alone.

It's very important to be human. It's okay to acknowledge that it's stressful. A team of coaches, including therapists, goes a long way. Having a peer group of other founders really helps. People underestimate it, but it's one of the biggest benefits of going through YC. Founders will tell you, "I never feel alone. I can talk to another founder and realize, geez, they're all going through the same issues."

And, don’t forget the builders – people who will get in the trenches with you, do the work, build the team, dive into operational and process improvements, and put systems in place – to grow your company with you. 

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