Hiring people with potential is not the same as hiring great people

About four years into running Langoor I’ve had an epiphany.

Hiring people with potential is not the same as hiring great people.

There are squillions of articles on the Internet about the need for startups to hire the right people. However given the financial constraints of a startup, I always focused on hiring people with great potential. Until recently, I thought that meant the same as hiring great people.

A few months ago, my agency merged with another and as a part of that, three of the key partners of the other agency became the key management team and partners at Langoor.

Three months in, I feel it is one of the best things that could have happened in our business. And I say this for one simple reason – these three people are great people. They are not people with potential, not people I have to wait for to shine, not people who require grooming – they are people who I am learning new things from every day. Their experience, attitude, focus, love and alignment with my vision make them people I am really excited about working with every morning I wake up.

I have now realised that trying to build a company just with people with potential is not the best strategy. Finding the right people is. It also makes a huge difference to have people you can learn from around you, even as a Founder. My level of motivation, excitement and the subsequent energy investment is really high (four years in!).

This, of course, doesn’t mean that people with potential are not important. You need a pipeline of great people – full stop. But the difference it makes to have the right people, with the right experience, focus, love and vision is amazing. It can actually make what you are trying to achieve easier.

Edit: After I wrote this, I stumbled across another article that talks about hiring for the short term. In some ways this piece and that article are related so I thought I would share it here.

How startups and religions start and spread

I find religions fascinating. There is a small list of things on the planet that make a human being do amazing deeds of kindness or kill other human beings. Religion is certainly high up on that list.

I was in Macau recently, climbing the stairs up to the ruins of the Cathedral of St Paul’s facade when I became curious about its history.

St Paul's Ruins Facade, Macau Image

Reading through I discovered the way religion was introduced to Macau, and Asia more generally. It occurred to me that the birth and spread of different religions is not necessarily very different to that of startups.

If you think of it, individual religions were largely created as solutions to problems. These problems were generally different in nature at different points in time. Also these problems perhaps correlated to a different kind of need – of spirituality, morality and purpose. Relative to those startup needs may seem a little inconsequential and narrow-minded.

However, in effect religions have always been products that drive passion. They are generally well defined in relation to boundaries.

Something I think that startups can learn from is how religions focus on principles. In the process of discovery of a product or service, a startup may change direction and tactical details over time. However, as long as it sticks to the principles it started with it should see some success.

I also tried looking into the failure rate of religions. I did not discover as much on the Internet but what I did notice was the importance of the charismatic founders and preachers in the success of a religion. Stark and Bainbridge – two scholars, noted in a paper that founders of religions are like entrepreneurs. They take ideas from existing religions and then over time create their own, like developing new products based on what works and what doesn’t.

Of course all of this is at a very high level and it wouldn’t be hard to connect startups and religions to other subjects. But the relationship is still fascinating to me.

How can Sydney become a better place for startups and entrepreneurs?

I recently answered this question on Quora.

As someone who works with startups through my agency in Sydney, I find that Sydney is already not a bad place for start ups and entrepreneurs.

The key perception where the ‘not great’ piece comes in is the relatively poor valuation entrepreneurs based in Sydney or for that matter, in Australia, attract. Please note the word relative is important here.

Through work, I get to travel to different countries often and I have noticed that a large part of the problem is about the risk-taking capacity in the culture.

The Australian culture generally, compared to other cultures, is more risk averse. This is especially true for the corporate frameworks and ideas related to business. That is not necessarily a bad thing because arguably that kept the banking system strong through the Global Financial Crisis. However it does affect the view funds and investors take on startups when they are looking to invest. This problem requires a longer term solution and mind set. Of course, competition in the capital market also helps.

Size of the market is another issue for both valuation and the size of the startup scene. The size of the Australian market means that the size of the start up scene will relatively tend to stay small. But I generally find a lot of startups have a larger view and often consider different parts of the broader world as a potential addressable market. As a result you also see a lot of startups migrate to the US.

It will be interesting to see when startups also consistently migrate to Asia – but that’s for a different discussion. What can help is more Australian startups, operating out of Australia, look at Asia as a target market and create products and services for it.

I’m fairly excited about the potential of programs such as Incubate have to increase relevance of entrepreneurship at Universities. Of course the challenge is much larger as Universities will certainly need to play a bigger role to play including with culture and customer centric thinking.

Another challenge is that despite the recent upswing in accelerators and support groups in the scene, the more known startup scene is a little ‘clicky’. The networks that exist tend to know each other well in a relatively small group and it takes a while to break through it. I don’t think the intention is to be like this at all and from everything I’ve seen, this community wants to be welcoming and tries hard to be. But I find that a lot of people on the fringe find it intimidating to approach and find their own way to innovate independently.

I come across these people often and work with many of them. The real challenge is to understand how you can capture the stories of these startups as well and help them share their stories with the rest of the community.

Lastly for anyone to be involved with startups (including everyone reading this), it is critical to recognise that startups are different, not always sexy and span various industries beyond technology. Australia and Sydney contribute through some amazing IP based or even more conventional businesses that often get ignored by the startup scene here as one of them. Embracing them in all shapes and helping them is everyone’s responsibility.