Building Teams That Scale: Hiring, engaging, and motivating a team that drives exponential growth

In this episode, Sumeru Operating Partner Ben Cox, hosts a conversation with two founder/CEOs that are helping companies build teams that scale while scaling their own teams: Nicole Alvino of Firstup, and Josh Millet of Criteria.

Nicole Alvino:

So important to not only create a human connection with work and ensure that somebody has a friend at work and ensure that they are really connected to the purpose, the strategic vision, and how their role can ladder up to that.

Josh Millet:

Probably the biggest inflection point, from my perspective in the labor market, maybe since like the industrial revolution, it’s hard to understate the sort of sea change that we’ve seen in the last couple of years.

Mark Healy:

Hello everyone. I’m Mark Healy, and welcome to some Mary’s Scaling X, the podcast that’s all about growth. Today, we’re handing the mic to Sumeru Managing Director Ben Cox for a conversation about talent. Ben will be talking to two founder CEOs, Nicole Alvino of Firstup and Criteria’s Josh Millett, about hiring and retaining top talent. You should know you’re in good hands. This is not Ben’s first time in the studio. In fact, he got a degree in radio broadcasting, and like a lot of radio broadcasting majors, he took the next logical career path–which was to get into tech investing. Here’s Ben:

Ben Cox:

Well, thank you, Mark, for the intro. It’s great to be back behind the microphone. I’ll just give you a little bit of a background on what I do. So, I work with our founders, people like Nicole and Josh, and I’ve personally had a chance to work extensively with their teams to help them scale.

After we invest, I will link arms with the team and help with pricing, product strategy, or churn reduction. Before I was in between radio broadcasting and working with people like Josh and Nicole, I spent a little time in enterprise software. I also worked at Bain & Company as a consultant and led sales teams even before that in the commercial lighting industry.

So, I’m going just to go ahead and transition now and say our topic today is something that every founder thinks about every day:

How to hire, retain, engage, and motivate a world-class team.

Josh and Nicole started companies to address these challenges. But before we get into that, I want to hear a little bit about each of their backstories. So, let’s start with you, Nicole. Where are you from, and how did you get started in technology?

Nicole Alvino:

Yeah, so I am from Southern California. I live in the Seattle area now. Firstup is the second company I founded and talk about interesting trajectories. I actually started my career at Enron doing structured finance, and my bosses went to jail. I learned what not to do as a leader. And I swore to myself that I would only start companies where I could control the culture and ethics and ensure that I would have an impact different than the impact of Enron.

Ben Cox:

That’s great. And Josh, I think I heard a little bit of a Canadian accent there. Where are you from? What’s your background?

Josh Millet:

Yeah, I grew up in Toronto, Canada, so I lived there until 18. Then, I came to school in the states. I had a little bit of a Circuitous route to enterprise software. I spent most of my twenties doing a Ph.D. in medieval French History, of all things. So, not as directly related to enterprise HR software as you might imagine. 

Ben Cox:

A bit like radio broadcasting, I suppose.

Josh Millet:

That’s right. And like Nicole, I’m also a second-time founder. I had a startup that we sold in three years. It was still very small. So this is kind of my second rodeo, I guess. That’s the general background.

Ben Cox: 

That’s awesome. Thanks, Josh. Nicole, I want to go back over to you. Can you tell us a little bit about why you decided to start Firstup?

Nicole Alvino: 

Yeah, so I think we looked back at the landscape of the workforce. And if you think about it 75% of the workforce is desk-less. So, not sitting in front of a desk in front of technology like we are. I think the store clerks, the truck drivers, and those people working on the line basically have been left out or have enterprise technology disconnected from their company, their culture, and the meaning.

Then, suppose you look at the 25% who are in front of a desk. In that case, we’re just inundated with information, applications, so many pings, and noise, which frankly hasn’t contributed to productivity or a sense of belonging. So we started Firstup to really reach 100% of the workforce and have a system of record for enterprises to reach everybody, deliver and engage with them, whether it is a cultural initiative. It has something to do with driving the top line or enabling all workers to feel connected and supported and mobilized to act.

Ben Cox: 

To bring a little color to that. What would be the experience of someone using Firstup who is an office worker? Would they use Firstup, or would they be receiving information from Firstup? Could you help us understand a little bit of what your solution does?

Nicole Alvino: 

Great question. So for the office worker, think about it as the end-user. So you would get an email. If you work at Ford or Boeing or Amazon or Hyatt or Hilton, anything you’re getting from the company is probably coming from Firstup. So whether you receive that in an email, in a mobile app, inside of SharePoint or teams, or even on a digital screen, all of that targeted, personalized communications are powered by the Firstup platform.

Ben Cox: 

And what about if I started out my career working on construction job sites, doing commercial lighting. If I was on a job site, inspecting some lighting, how would I interact with Firstup?

Nicole Alvino:

Yeah. So you’ve probably been given a mobile app that is targeted to you, has things that you are interested in. It could be about that particular job site. If you’re a people leader, it could be about effective tips to do effective management out on the job. You could also log in and check your pay stub or check your PTO balance. So especially for folks in the frontline, give them a mobile app that looks and feels like what we use in our personal lives as a way to reach and engage everybody.

Ben Cox:

That’s great. Thanks, Nicole. So Josh, could you share a little bit about what you started criteria to do? What were you trying to do?

Josh Millet:

Yeah, so criteria is all about helping, helping our customers make better talent decisions and primarily, that’s hiring decisions. So the origin story of criteria is, I was involved after the acquisition of my first startup, which was tiny at the time. It was only like five people. I went out to work for the Acquirer in Southern California, which is how I got to be out here. And, for some reason I can’t quite recall what it was, but they gave me a role in hiring, which at the time I was completely unqualified for. And so I sat through a lot of bad interviews there during my time there. And, one in particular, I remember when I looked up at the clock on the wall and it was like seven minutes into the hour, and there’s like this creeping realization that, oh my God, I have to be in here for 53 more minutes.

And, it was clear on both sides at that point that it wasn’t a fit. So that’s the kind of the problem that we set out to help solve was helping better match companies with candidates. So our platforms evolved. We started off as a pure assessment company, so helping companies use data-driven science-based techniques for making better selection decisions. And we’ve evolved into a little bit more of a broader platform adding video interviewing and building out interviewing tools and things like that. So it’s all about getting the companies to make better decisions, which has benefits of course for the companies and for the job seekers.

Ben Cox:

That’s great. So I wanna shift gears a little bit and talk a little bit about now that we have kind of the contact around where both of your companies are helping your customers, you know, hire and retain and engage their teams. Right now, we are in a period of tremendous uncertainty, high inflation, really labor markets, a lot of uncertainty globally, and a real shift in where people are working in many jobs, I’ll start with you, Nicole, but what are you hearing from your customers about what they’re doing to adapt?

Nicole Alvino:

Yeah, and I think so our customers are, you know, what, large global enterprise, we have 40 of the fortune 100. And I think the top thing is people just really need to be flexible. And for some companies, you know, a Dow who in order for people to get to certain levels of management, you would have to move to Midland Michigan. Now the talent opportunity has really opened up. So I think we’re just seeing an interesting shift, especially in some companies who were focused on a certain location for certain roles in realizing that the way of working has been completely changed forever. And so we do need to one just be open and flexible and to ensure that we’re empowering our people and enabling them to still be connected and be engaged in either a completely distributed environment or a hybrid one.

Ben Cox:

Yeah, for sure. How about you, Josh? What are you hearing from your customers about what they’re doing to adapt to this changing, you know, just completely, almost unfamiliar environment we’re in now?

Josh Millet:

Yeah, that’s right. I think it is totally unfamiliar. Probably the biggest inflection point, you know, from my perspective in the labor market, since maybe since like the industrial revolution, it’s hard to understate the sort of sea change that we’ve seen in the last couple years. For me, the thing that really sticks out, you know, there’s a lot that you read in the press about like the great resignation, and we think we’ve entered like a period of permanently elevated turnover. It’s not like an episode. We think it’s a new trend. And certainly like, it’s hard to disentangle, right? There’s kind of two things in the labor market right now. One is the post-pandemic work from home change. And the other is, it’s a really imbalanced labor market right now. That second one though, we think is temporary, right.

That will change. The first one I don’t think is going to, it’s gonna be a lot more enduring. And so if you think about it, what our customers are wrestling with is that, you know, across all industries, whereas turnover used to be something like 25% a year. So you’d lose a quarter of your staff each year. Obviously it depends a lot on the industry. You’re in, some are much higher, some are lower. And now it’s more like you’re losing 40% of your staff, like in 2021, 43% of Americans left their job, either voluntarily or involuntarily. And that’s, that’s crazy to think about an employer whose I guess bucket just got that much leakier, right. It’s a pretty huge challenge where if you think about, you know, a 200 person company, whereas you might have historically needed to hire 50 people just to keep your senses the same, your employee count the same. Now you gotta hire 80 people just to kind of break-even on headcounts. So it’s almost a sea change that is really pointing towards an environment where our customers are thinking for the first time about really even in the mid-market about having like an always-on talent acquisition function, which is a big change, I think.

Ben Cox:

When you have to hire potentially 70% more people than you used to, if you just take that increase, you know, amount of turnover and do the math on that, that means that you’ve gotta get much, you know, more efficient in your hiring process. What do you specifically recommend that our listeners, who are our founders like yourselves should be doing, or thinking about early on in the employee, you know, life cycle as they’re they’re acquiring talent.

Josh Millet:

Yeah. So it really does put a premium on velocity, especially as you mentioned in the tight labor market, you need to go from a lot of applicants or a big applicant pool to, to a much more targeted one really quickly. So, you’ve gotta think about velocity and confidence and how you kind of make that transition and how you focus on the right folks. And you’ve also gotta have tools given the imbalance in the labor market for uncovering talent in places you might not have looked before. So I think like coming into COVID pre-pandemic, there was pretty widespread recognition that things like resumes were kind of breaking down in certain ways and not yielding very good talent signals. I think that thought has increased. And there’s more recognition of the shortcomings there. They’re really not giving you that much useful information, in terms of predicting outcomes. So a lot of our customers, whether they’re using us or someone else are thinking about, okay, how do I use data? How do I use Evans based or science based techniques, to find talent? And once I’ve got my talent to move it through the pipeline as quickly as possible.

Ben Cox:

I mean, can you give me an example of that? Like, just to flesh that out, how that’s played out for a hire you’ve made?

Josh Millet:

For example, you know, if you think about what a resume offers you, right, it’s, it’s really giving you two things. It’s giving you a sense of the amount of experience someone has. And then maybe you can also get a sense of like educational pedigree in some way, right? Whether they have a four year degree, that kind of thing. So all the research shows that both of them, both those things are pretty weak talent signals, and they’re also really bad for people who are either early career or sort of mid-career. And someone wakes up, you know, maybe 10 years into their career and, and decides, hey, I don’t like what I’m doing. I want to change fields. We have a lot of those examples from our customers, but some of my favorites are actually from our own company.

So our Director of Engineering in North America for example, is a person who spent his first 10 years out of college in the banking sector, right. Was a branch manager of a retail bank. And then just decided one day, ‘Hey, I don’t want to do banking anymore.’ Right? And so he took some classes in software engineering, but when you’re in that situation, getting your first software engineering job is pretty tough. And so if it hadn’t been for the tools that we use, we never could have hired that person. So it’s an example of like getting I guess creative about the way you uncover talent by looking at these alternative sources of or alternative credentials. That you can get at through evidence based tools.

Ben Cox:

So that’s super helpful. Nicole, I wanna come over to you cuz your company plays much more after an employee has been hired compared to Criteria where it’s primarily pre-hire and it seems like if you think about the cost of all that turnover, some of it’s in the hiring process process, but some of it’s just in that process by which you get a new employee plugged in and engaged and ready to go and productive, really, what are you seeing your customers do there? And what should founders listening be thinking about in terms of how they can help their new employees get excited and productive as fast as possible?

Nicole Alvino:

I think it’s a great question and opportunity for companies of all sizes, right? That first 90 days of employment you’re probably never as excited or as happy. And so it’s so important to not only create a human connection with work, ensure that somebody has a friend at work and ensure that they really are connected to the purpose, the strategic vision and how their role can ladder up to that. So we obviously use our platform in order to deliver that with our customers. And what we’ve done internally, like to say we drink our own champagne. So like Josh, we use our own platform as well, specifically for onboarding and that purpose. And we’ve added a few things. So we do something called a sidekick. So anybody, every new hire gets a friend effectively that they connect with.

We’re a fully distributed company. So it’s not like people are coming to an office every day. And so just having that sidekick, someone that you can go to, to answer questions about the job, the culture, we’ve just found that that helps create that connection. We actually did go back to just very recently to kind of in person onboarding cohorts and training cohorts. Again, yes, we do live in a remote world, but there is nothing that can take the place of some of that in person interaction. And so even getting small groups of folks together we’ve found has been really helpful and to accelerate some of those bonds with their cohort, and then just ensuring that people have a place to contribute and ask questions and really do feel a part of the culture and the community from day one.

Ben Cox:

You know, one question that strikes me as we think about it is, you know, retaining employees. How do you think about competing with local employers? If you do have a fully remote and distributed company. We often hear people talking about, oh, you know, I’m here in LA in the case of Josh’s company of Criteria. But now we’re having to compete with all these Silicon Valley companies that are coming down, but I’m actually asking the opposite question, which is, as a fully distributed company, do you find that you are running into situations where people are almost boomeranging around and wanting to work locally?

Nicole Alvino:

I think so. At least for us. And then Josh can share, we have several offices around the globe where we do bring people in. I sort of said, you know, that the office is no longer a place where you go and put your headphones on and slack your neighbor. There are places to come in and collaborate, have trainings have offsite really use the time well that we actually need to spend together. So we do offer opportunities for people to come in. We have a location in San Francisco, Chicago, Belfast, and London. And so we do offer that. I personally haven’t seen anyone saying, you know, I’m gonna go work somewhere else because I really wanna go into an office five days a week. It’s more of where can I go, where I feel that sense of belonging and that I’m really included and part of the culture. And I think especially now that has to transcend physical space.

Ben Cox:

Josh, what do you think, what are you saying when you’re competing locally and, and, and more broadly?

Josh Millet:

I agree with a lot of what Nicole just said. I guess the answer is a little bit TBD, right? We’ll see. As things continue to normalize, how strong the pool of in-office work is for certain cultures, and maybe there’s a shift where people who really want that, you know, orient around it and around companies and cultures that offer it. But I mean, kind of similar to what it sounds like Nicole’s been through. Like, I feel like, and I made this remark, to the team, to my leadership team a few days ago, is that I don’t feel like we ever made a decision to be, you know, remote-first remote-friendly. I feel like I was pulled in that direction by my employee base and by the talent market that’s out there, like you just can’t hire in the industry, for example, today you can’t hire engineers and tell them where to go.

<laugh>

They’re gonna tell you where they want to work from. So for me, you know, it’s pretty incredible the impact of once you take geography out of it and say, okay, you know, we’re gonna be more or less within certain limitations, location agnostic. Like we’ve tried to actually hire in our time zone sometimes, or you know, because we have people in Australia as well, and that already creates a sort of a time challenge there. And so it’s not completely without, it’s not completely borderless and you know, we’re aware of different time zones and how that can impact people’s work-life balance. But, I mean, I think that’s one of the main reasons that turnover is gonna remain high is that it’s so relatively frictionless now for people to leave a company and join another one.

And so the challenge for employers is to create a oftentimes virtual culture that’s really appealing, so people won’t wanna leave it. And you know, we just brought people together for the first time, really at scale a couple weeks ago and it was so rejuvenating and energizing. But it didn’t make us think like, okay, we should reconsider having people, you know, in remote settings. I think it is really important to bring people together, but for me, like you know, the cows outta the barn and, and people wanna be remote and that’s like the new reality that we have to adapt to.

Ben Cox:

How’s that changed your hiring practices?

Josh Millet:

Well, it gives you a lot broader campus, right? I mean, we can now find people within reason in the whole United States, for example, for us sometimes even broader than that when we’re hiring in APAC. So it’s given us a much bigger talent pool to play in. So for me that’s a positive, obviously the other side that you lose people, that you might not otherwise have lost, is a negative, but it really does sort of place greater strategic value on your hiring and retention strategy, I think. And obviously, you know, Nicole’s, software’s all about the engagement side post-hire. I think both pieces are incredibly important, right? Because you want the right people in the virtual building to begin with. So it’s just made your talent strategy much more of an imperative. I think.

Ben Cox:

Nicole, how about you? How has the distributed nature of your workforce – how has that changed your hiring as it’s become even more remote or has it?

Nicole Alvino:

We were distributed even before COVID, so it’s something that, I mean, it did start with engineers, so it was, we just couldn’t only compete in the Bay Area and we saw there’s exceptional talent all over and we didn’t want to, you know, we wanted to open ourselves to that talent pool. You know, find people who needed to be in other places for personal reasons. So I think if, if anything, I love that Josh said it just made the talent recruitment and then the ongoing engagement, even more of an imperative.

So yes, we now are open to anyone working for us, which is incredible and those people can also go work for anybody else. So it’s just made us really focus on what it is to work at the first step, how we’re different, what we offer that other companies don’t. And we found that selling our mission and our purpose has been really helpful to get top talent from all over the world.

Ben Cox:

All right. So we have a game that we’re gonna play now, it’s a new game for the Scaling X Podcast, but I kind of stole it from Tyler Cowan who I like listening to. And the name of this game is underrated. And what I’m going to do is I’m going to name a trend in sort of people management, workforce management. And, and then I’ll go to each of you for a rapid-fire, one or two sentences underrated or overrated, and why. All right, are you ready?

Okay, buckle up. Here we go. So we’ll start with four day work weeks, Nicole.

Nicole Alvino:

Overrated.

Ben Cox:

Why?

Nicole Alvino:

That doesn’t solve, putting more boundaries on how we work does not help the work life balance in my opinion.

Ben Cox:

Excellent. Josh underrated, overrated four day work weeks.

Josh Millet:

I really want to straddle the fence, sit here because you know, some of the research on four-day work weeks is really encouraging. And there’s like a bill in California now which I don’t know how far it’ll get. I would say undecided because I agree with Nicole that the focus should be on work life balance. The question is, is this the right vehicle to get you there? Or is it just squashing five days of work into four, which probably won’t help.

Ben Cox:

Awesome. All right. Next one. Unlimited vacation days, Josh, you go first underrated, overrated.

Josh Millet:

I would say overrated. We used to have unlimited PTO and we put it to a vote in the company and they voted it down and now we have finite PTO and it works a lot better because people actually take it.

Ben Cox:

Awesome. Nicole, unlimited PTO.

Nicole Alvino:

I would say underrated if done the right way. So we also have unlimited PTO and in order to incent people to actually take it, we have something called a fruity drink bonus. So if you take five consecutive days, we give you a lump sum of money to potentially buy fruity drinks. And then another sum for the second week. So we’ve tried to incent real vacation with another piece that can be fun and has been helpful in recruiting talent.

Ben Cox:

All right. I like a little bit of controversy here. Maybe it matters whether you.

Josh Millet:

I just wrote down fruity drink bonus. So I’m gonna steal that.

Nicole Alvino:

You can steal it.

Ben Cox:

There’s one. We take away from the podcast that that might be it right there. Okay. Regional pay scales, like regional within a country, let’s say, underrated or overrated paying people different amounts based on where they live. Let’s say in the United States, Nicole, you go first.

Nicole Alvino:

Overrated. I think in this market, we don’t have the luxury of slicing and dicing for key talent.

Ben Cox:

Josh.

Josh Millet:

I would agree overrated, especially when you’re talking about in-country. I think it’s just tough in practice.

Ben Cox:

Next one is, designated company wide meeting for wide meeting free days like Wednesday. We don’t have any internal meetings. Josh underrated, overrated.

Josh Millet:

Well, it’s funny that you ask, I would say overrated, we have gone halfway there and had Wednesday morning meeting free across a big swath as the company. But I don’t think again, I know that the intention is good work-life balance and productivity. I just know, don’t know if that’s the way to get there. So I would probably say overrated on that.

Ben Cox:

All right, Nicole.

Nicole Alvino:

Yes, I’ll do overrated. Look when you’re, when you’re supporting the global enterprise and customers rely on your platform every single day for mission critical work, you’ve gotta have people who are available. What we’ve done. We have something called distance days that we started in the pandemic and have extended. So it’s one day a month. That is just what it is. First step distancing. If you wanna take the day off and go for a hike and use it as a vacation day that’s great. If you want to do focused work, that’s great. If you have a really big customer pitch or call that, that’s great as well. So we’ve found that that has given a well being break and helped to deliver what a meeting free day would, would intend to do. But because we have not been so rigid about it, I think its people have really learned to embrace it and really can appreciate it.

Ben Cox:

Great. Okay. Maybe a little less serious, but the next one Josh, you get, which is underrated or overrated standing desks.

Josh Millet:

I would say, underrated, I feel like we have about 20 to 25%. That’s totally swag number, but our workforce has gotten them and they seem to appreciate them. I haven’t taken that leap yet, but I hear good things.

Ben Cox:

How about you, Nicole?

Nicole Alvino:

Yeah, underrated. I’m a proud owner of a desk that I could make a standing desk or a sitting desk. If we think about our evolution and how much of our time as humans, we spent standing up on two, two legs and not sitting down. It’s a lot more time. So especially, I know our sellers who are pitching when they’ve got big pitches, they’re, they’re definitely standing up, even if it’s in their home office.

Ben Cox:

In full disclosure, I am standing at my standing desk right now. So I would agree with both of you. All right, last one. Nicole, you’re gonna get this one, which is company holiday parties, especially in the winter underrated or overrated.

Nicole Alvino:

I almost had to think what, what is that? I don’t even know if that is anymore. I think that, again, an opportunity to get a group of people together, you cannot undervalue or underestimate the opportunity to do that. I think especially in a completely distributed environment, the idea of bringing 100% of your workforce to one place for a holiday party is a lot harder. Having said that, even this year, we tried to do regional holiday parties and then offered a completely zoom based one. So we could meet people where they are. And again, it’s really focused on what can we do to make people feel included in, in the culture and really part of the team.

Ben Cox:

All right. Josh holiday parties.

Josh Millet:

I would say in general underrated, I agree with Nicole, any excuse to bring people together, unless it turns into a super spreader event, in which case I would reserve the right to change my answer to overrated.

Ben Cox:

But great. Just a little input as people are maybe even starting the planning now. Okay. Last question. I’m gonna admit, this is a little bit self-serving for us at Sumeru, but the last question I’m gonna give you is this, what are three pieces of advice you would give to a founder like yourself when they’re looking for their next partner to a capital partner to help fund the next, the next phase of growth in the business? Josh, I’ll start with you.

Josh Millet:

Well, this one isn’t particularly deep, but I would definitely say, like focus on the right partner, for the stage of the business you’re at, not like the valuation or the other deal terms, that I think is the most important thing. I also think it’s really important to be really intentional about when you raise money, like at what stage and raising it for the right reasons, like the timing being right, and the capital being helpful to growth and the partnership that you want being the right one, rather than just doing it, because it seems glamorous or whatever.

Ben Cox:

Great Nicole, what would be the, yeah, my three pieces.

Nicole Alvino:

Yeah. My three play-related one, I would say find a partner who really understands the culture of your company and won’t just bring in a standard playbook. You know, we practice what we preach and believe that companies are people and need to be motivated to move where you need them to go. So I think that’s when the second piece focuses more on where you want to go, not the current valuation doesn’t think of it as a funding per se funding to take off many off the table, but how do we get to that next phase? And then related the third piece is who’s really gonna roll up their sleeves and help you do that. Which is a function of understanding one and two. Do they, are they aligned with your culture? Do you have the same vision for growth and then someone who can help you execute?

Ben Cox:

Thank you. I think that’s great advice from both of you. Well, thank you. Thank you, Nicole, from Firstup and Josh from Criteria for taking the time to share your thoughts and insight on this incredibly important topic of how we build great teams and help them figure out how to do great things. So thank you again for your time today. It’s really been a joy speaking to both of you.

Nicole Alvino:

Thanks for having us. Thank you.

Josh Millet:

Thank you.