How To Hire From Your Friends

by Eric Tobias - Partner

I spend a good amount of time speaking with people who are considering joining one of our companies. One of the things I always enjoy sharing is the power of the High Alpha network.

Each of our companies are amazing places to work and each holds their own in attracting the best talent. But when you also consider that each of those companies is part of a network, the opportunity for an individual becomes even more compelling. The network provides many benefits to the employee (professional development, bench-marking, etc) but the most compelling one may be the opportunity to de-risk the decision.

Early stage startups are risky. One way we help reduce that risk for candidates considering joining one of our companies is to leverage the entire network to our advantage should something not go as expected. For example, if the individual is hired by and working for company A but company A doesn’t end up being the right fit, we have company B and company C waiting in the wings. With nine portfolio companies (and growing) launched, the number of opportunities across the network are vast. I believe this is one of the most unique aspects of being apart of High Alpha and so I love to share this when speaking with a candidate.

But what happens when an employee at one of our Studio companies wants to leave to join another Studio company?

In short, it’s all about how it’s handled.

Great companies have great company culture, and I believe one of the characteristics of having a great culture is always putting employees first. Each of our companies work hard to attract and hire the best talent. And part of that processes is ensuring the fit is right for both the company and the candidate. Fortunately, we get this right our fair share of times. But when a situation arrises where the fit isn’t right, we default to asking a very simple question: “what is in the best interest of the employee?” And that’s often followed by “how can we leverage the power of our network to help?”

We strongly encourage our companies and the employees working inside those businesses to be transparent, especially when the fit isn’t working. It’s important employees feel the company is working to ensure they are best positioned for success. The employee owns a large chunk of this responsibility too, but great companies create an environment where the fit is mutually beneficial. And when it’s not, it’s best for all parties when employees can speak up with transparency without the fear of reprehension.

Sometimes, we see an interesting dynamic related to this. At times, employees working in one of our portfolio companies wish to pursue an opportunity at another High Alpha portfolio company. While this increases talent retention for High Alpha at a macro level, there is this awkwardness that is associated with such moves. It’s easy to mismanage this situation and we’ve noticed some interesting inner complexities within our network when it occurs.

When someone is leaving their job and moving to another company, I recommend for each of our leaders to really open up the lines of communication and chat about what’s happening. Most of the time, it’s a simple heads up about the situation. For example, if an employee working in Company A reaches out about an open position in Company B, has a successful interview process, and Company B determines it would like to hire this person, Company B has a responsibility to inform Company A about it. Now…it’s critical that both companies honor the confidentiality of the employee in question. I always advise Company B not to inform Company A about the name of the candidate. Company A will push and prod to know who is considering leaving. It’s the employee’s responsibility to inform Company A, on their terms. But Company B needs to pick-up the phone and be sure Company A hears from them in the process.

It’s an interesting dynamic we manage at High Alpha, but the same is true even if the companies are unrelated. Ben Horowitz of a16z wrote an excellent post about these situations. I personally have experienced this a few times as a member of the Indianapolis Tech community. My friend Scott Kraege runs a company here in Indianapolis called MOBI. A few years back, Scott called me to let me know they were going to be making an offer to a senior software engineer who worked for me at the time. I’ll never forget that call. It was a wonderful professional courtesy and it was the right thing to do in a city the size of Indianapolis.

At High Alpha, an inherent understanding amongst our portfolio companies allows for us to transfer talent and “hire from our friends” should someone be looking for a different fit. To date, it’s been a fairly rare component of how we manage our talent, but as our companies continue to grow, I believe we’ll see more and more of it. And I’m excited to watch us embrace it as a real competitive advantage for every company in our portfolio.

Hiring from your friends can be extremely tricky, and losing a critical member of the team always hurts. That said, it’s going to happen and the open borders of the High Alpha portfolio companies create a win-win for everyone — our companies, our current employees, and the employees we wish to attract in the future.