How do you make sure your team is marching in the same direction? It starts with frank and authentic conversations.
Circumstances change all the time. People change. Markets change. Opportunities show up at your front door.
How can you make sure you're open to new opportunities – while not changing direction constantly?
Nate Smith, founder and CEO of Lever, shares how authentic conversations are key to team alignment.
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💡 Key takeaways: https://bit.ly/37iB4ge
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✈️ This episode is brought to you by Upside Business Travel. Upside offers a free platform that allows you and your team to book, manage, and track business travel in one place.
Scott Case 0:00
Welcome to Founders Focus, a podcast made for founders by founders. I'm Scott Case, CEO and co-founder of Upside. And we created Founders Focus to share free resources and actionable advice. Together, we're building a community for business leaders, entrepreneurs and founders to come together to tackle today's challenges. This podcast is powered by the awesome team at Upside.
Scott Case 0:20
I'm super excited to be joined today by Nate Smith, who is the founder and CEO at Lever. And we're going to talk about a bunch of different things. But Lever has a long history of working with employers and prospecting candidates who are looking for jobs and all the hiring, and there's gotta be all kinds of interesting data. And we'll probably dive in a little bit around how to think about building a diverse team. And I don't doubt that Nate will have a point of view there.
Scott Case 0:47
But before we dive in, Nate, I'd love for you to introduce yourself and tell us how you ended up starting Lever and what were you doing right before and what made you make the leap?
Nate Smith 0:59
Sounds good. Thanks, Scott. So, I myself, I'm an engineer by background. Before Lever I worked at Google as a product manager, was there for about four years. And you know, when I got started there, I worked on AdWords reports within Google Analytics, then I was the pm for image search for a couple of years, and also worked on the Google search team on some early UI experiments. And honestly, working at Google was amazing, it was a great place to work.
Nate Smith 1:28
But I'd always wanted to start a startup, it was kind of always an ambition of mine. And working at Google in a lot of ways was a great opportunity to learn what best practices look like, what is a built out company and how does that work? And then, beyond that I was looking to come up with what could be a great opportunity to pursue. So, coming out of Google, I was pretty set on starting a company. So I quit my job, I'd saved up money for a number of years, and actually spent about a year figuring out what I want to do next. And when I thought about that, you know, a lot of people in Silicon Valley give you this advice, which is like, follow your passions or solve your own problem or something like that. I'm probably a little contrarian, because I tend to think that that advice can be actually pretty problematic for entrepreneurs.
Nate Smith 2:22
A lot of times you're passionate about something, but it's not a good market opportunity. Ultimately, if you start a company, and the timing isn't right, or the market isn't right, you are going to fail. You cannot control the market. That's why it's the market, it's bigger than you and you can't do anything about it. There will be opportunities where you can make a market where there was none before, those are amazing when you can find them, tend to be some of the biggest opportunities, but they're also super, super high risk. So there's kind of a trade off there.
Nate Smith 2:54
You can also go into an existing market category. And that's something that I was a little bit more aligned to, you know, something where I thought there were a lot of in particular enterprise software solutions out there that hadn't really been rethought in a long time. And I saw a lot of opportunity in finding a category where it was an existing category, something people needed, it was critical, yet the solutions were not what people needed anymore. And so that's what got me really excited. And to make a very long story short, I found recruiting and discovered that it was one of the biggest problems that a lot of companies were facing, small and large alike. And that got me really excited about the market. So I jumped into it.
Scott Case 3:45
I want to come back to something. You had a very disciplined approach, which, given your product background doesn't surprise me. But I also want to unpack something you did say which I agree with. And I think I'm often contrarian as well and would like to see if this resonates for you. I think people who solve their own problem are convinced that everybody perceives the problem the same way they do. So they don't do the work to actually go talk to a bunch of people about what perception of the problem they have. Whereas if you're not embedded in it, like a good product person, you sort of look at it objectively.
Scott Case 4:15
So I'm curious, you obviously probably recruited some people in your role, but it sounds to me like you needed to do a lot of that early discovery work. Can you just take us through that piece? Because I think that a lot of entrepreneurs think "I don't know anything about that market." And at the same time, it's like, actually, that could be your biggest advantage.
Nate Smith 4:33
Exactly. Yeah, I think it is good to be thoughtful around what's going to be your personal strategic advantage in starting a company. When you look at companies that are successful, it's almost always that a lot of things aligned. You have people who were smart and talented and great at what they do. They worked really hard. And the market opportunity was right place right time. So kind of all that has to align.
Nate Smith 5:01
And so you do want to go about that process in my opinion in kind of a directed way where you're thinking, I can solve certain problems really well in these certain ways based on my background, and, you know, if you're a maybe deep technologist, perhaps you can bring an innovative technical solution to the problem. If you're more coming from a product background, maybe you can do a really great job of designing a more holistic solution or something that's better fit to sort of the way of solving the problem or the why behind that problem. If you're someone who comes from maybe a business background, perhaps you bring a new insight into monetization. Like there's actually a lot of companies that got started because they had a unique monetization model to a problem that had existed for many, many years.
Nate Smith 5:51
So I think it is important to think a little bit about yourself when you're starting a company. You're a big part of the team, almost always. And as you recruit other people, you want to think about who you're bringing into the organization, what do they add to that effort to? So specifically, how I went about it definitely was a little bit more that, you know, product background, first starting with user research, starting with understanding the business motivation behind the problem. And what we discovered in our particular case, was pretty specific to I think the recruiting problem, which is that it is something that is extremely cross functional. There are lots and lots of different people involved in it, way more personas than your average kind of business problem. Because you've got recruitment, you've got the manager that they're hiring for, you have the entire interviewing team that's involved in assessment, you have the candidate, they're a big part of the puzzle, finance has to approve the plans for the future. And then usually, the entire executive team is screaming at the managers and the recruiters to go faster, because they're having a hard time finding the skills they need to bring in. So that's a really complex problem, which is, in my opinion, the most interesting, like, I really love complex problems, I love learning a lot about a lot of things, bringing it all together and synthesizing. And that was something that this I mean, this challenge had in spades. So the way we went about that was probably a little bit of a combination of like, true market research, and also user research, kind of on the market research side I never got an MBA, but I did take about like five courses in business school and that was that was enough to cover that and learned the basics. And I think that actually, sometimes MBAs get a bad rap in Silicon Valley, but I actually think there's a lot to be learned from the old school business case study. There's a lot of wisdom in that. And so when I looked at it, from the business standpoint, what I saw was, this is a market, which traditionally was thought of as kind of a cost center, you know, in other words, hey, we need to do this but the best thing we can do to solve this problem is do it for the least amount of cost possible and still get it done at a good enough quality. That was how people used to talk about recruitment 20 years ago.
Nate Smith 8:22
And when you talk about recruitment today, there's been a big change. And I believe that change came about, because there's actually been a shift in priorities for businesses. So when we look at globalization trends in the economy at large, when we look at how every single industry has been revolutionized by technology, and access to communication and the internet, the business dynamics have evolved, where now people think about their team, their people as a big part of what makes them a successful business. And therefore, recruitment has become more a more critical part of that value creation process for businesses. And now they think about recruitment as the way that you are able to be more productive in the future or grow more in the future and hit whatever are your business objectives. So we kind of found that out pretty organically. We talked to a lot of different folks. One thing led to another and said, like, Oh, that's interesting. Who else do you know and I talked to some managers, they introduced me to their recruiters. The recruiters introduced me to other recruiters. I happened to just have some contacts who were in the venture capital world so I asked them about their opinion. And you know, just kind of did this random walk through getting to know people. Then did a good amount of research into who were the current market leaders, read reports by the usual industry analysts and found out who were the folks that were currently the largest, asked the recruiters what do you think about those folks, and found out that they were pretty much universally in this case, not regarded well, which in my opinion, was a great opportunity. And then noticed that, in fact, in this market, there's recently been a lot of consolidation. So we started Lever in 2012. It was the same year that Twilio, which was the market leader at the time, was acquired by Oracle. And to us that was a signal that, first of all, there's big acquisitions about a $1.9 billion acquisition, that put a really nice comparable out there that we could leverage when talking to investors, it also was a really good signal that there would be an opportunity in the market down the road. Because we figured that after that, you know, Twilio was less likely to innovate. So you kind of bring together a lot of different things holistically to come up with an approach to the market. But for us, it was really tackling the problem from a lot of different angles, both thinking about the business, how to fund it and also thinking about the product, what kind of offering does the world need today and what are the user needs that are motivating that?
Scott Case 11:00
That's a great story. And just to your point about unpacking all of the personas and understanding the different players and the complexity there and where their heads are today with the solutions they have, we often forget, like most problems that we go to solve, they're being solved somehow. So making sure you understand those pieces.
Scott Case 11:20
And during that journey, that early journey, you've done something a little unusual if I can believe your LinkedIn correctly, which is you went from the CEO, and I think founder or co founder, then you then you sort of step back into CTO role for a number of years, and then you kind of more recently came back as the CEO. What was that decision process like? And it's at least unusual to me, maybe
Nate Smith 11:53
It's pretty unusual. I don't think a lot of people have done that particular path. Yeah, I mean, honestly, it's kind of one of those things where it's not something that was planned, it organically happened over time as circumstance needed. And I think, you know, a lot of startups probably more than people realize go through a lot of changes in the founding team, especially in the early years. Also as part of Lever, we went through Y Combinator in summer 2012. And a lot of companies in our batch and other batches went through their share of different changes in the founding teams and company alignments in those early years, especially. And, you know, it's maybe more common than it looks like from the outside, because a lot of times when people tell the story, it's so complicated that you'd rather simplify it a little bit, and you tend to leave out some of the detail.
Nate Smith 12:46
But, in our case, in particular, what happened was, I had a co-founder, Brian, who we worked with in the early days, and, he was a big part of the team, went through Y Combinator together. And the initial plan I had in mind was, I was a CEO initially, he's a really smart technical guy, thought he would be kind of the technical leader of the company. But long story short, after things evolved and we started learning about the market, found out that where I was looking to go in terms of like the business problems we were trying to solve and what types of products would be good for that and where Brian was really interested started to diverge. And most of the team was kind of more motivated around the more honestly very pragmatic direction of like, let's build software for companies looking to hire, Brian had a lot of other really cool ideas. And those were awesome. But honestly, they were, they were a different business. And so at some point, we realized, like, wow, we're kind of slowing down because we're not aligned enough and we're not like firing on all cylinders.
Nate Smith 13:53
And a lot of times the biggest threat to startup is time, right? So if you don't have strong alignment and a clear idea of where you're going and everyone's not clearly in line with marching to that same drum, you're gonna die as a startup. It's just that simple. So, at the end of the day, you have to make hard choices. And you have to say, Wow, like, what are we going to do here? And honestly, we had a pretty amazing group of individuals on the team who started in the early days. Sarah was one of them. She was another co-founder. She was our first designer, also worked at Google, in kind of the marketing realm, actually. And Sarah is incredibly smart, empathetic, amazing problem solver, and just ended up being really good at sales. never done it before, but she ended up being super good at it and started leading the sales team. We started hiring salespeople and she was leading it. And, I started filling in more on a lot of the engineering work. So a couple changes just happened. You know, Brian, we parted ways. And then I started taking over more engineering work, Sarah started doing a lot of business stuff. And then our third, our other co founder, Randall, he was like, you know, he was an engineer, he was like, you know, it seems like Nate's doing a lot of the engineering stuff, we need that to continue. There's a lot of hard technical problems we need solving, Sarah is doing a lot of business stuff. This is an enterprise software company, like a lot of the CEO job is leading the business side. And ultimately, like Randall actually just suggested it. He was like, hey, like, I don't know if like Nate should be CEO, maybe Sarah should that seems like a good idea. And this, by the way, happened, right as we were raising series A so like, we've basically gotten term sheets from multiple folks, we'd actually picked one, we went with matrix partners who led our series a round and dana stalger is on our board, he's been an amazing partner and board member through the whole company history. And, honestly, I was like, Well, okay, so we hadn't really close the round yet. We told them, we were going to go with them, but we didn't like make it official yet. So we were like, okay, we kind of have to tell Dana, like, this is a material change, who the CEO is, so I thought about it for a while, and, frankly, it was my decision at the time like I was the board at that exact moment. And so I wrestled with it a bit, because I mean, I genuinely did want to be CEO, it was a job I enjoyed, there was a lot of elements of it that I really enjoyed. But I mean, honestly, Randall is right.
Nate Smith 15:30
And, this is emblematic of one of our company values that kind of came out of this event, which is, we had this value, choose reality. And to a certain degree, it's just sort of a pragmatism, it's like this idea that, if you accept what's going to happen and just start working on it, you're going to move faster, you're going to be more successful. So stop trying to like, pretend like you're going to ship on time when you're not or, you know, don't try and do five things when you can really only do three, so it's about pragmatism, it's about, like, let's focus, let's move fast, let's like get stuff done confidently and hit our targets. But it's also about seeing the opportunity in things you didn't plan for. Because circumstances change all the time, people change, markets change, opportunities show up on your front door, and you don't want to change your direction and pivot constantly, that kills companies too. But there are these key moments and you have to keep your eyes and ears open for them where change is warranted, change is needed, and it's always been our company value, we're really into pragmatism that in moments like that you should embrace the reality of the situation and you'll be more successful if you're open to whatever is ultimately going to be the best opportunity.
Nate Smith 17:06
So that happened, we ultimately agreed Sarah was an amazing CEO for quite a number of years, grew the company a ton, hired amazing people and executives, and then a year ago, we were going into planning for, this is March of last year for context, planning for like, what the hell do we do in literally unprecedented times where we don't know what's going to happen in the talent acquisition market, lots of people had been doing hiring freezes, lots of people were not sure about their own company's future. So we didn't know what impact that would have on us. We figured ultimately, people wouldn't stop hiring, even when you do go through reduction in force or layoff. A lot of times, you actually do need to do additional backfills afterward. So in a lot of cases, what we found is that companies were still hiring, they never really did stop hiring. So ultimately, things worked out really well. And we grew a lot last year, and we're growing a ton now. But at the time, it was just uncertain, to be honest. And so when we looked in front of us, we said, well, heck, who knows what's going to come here? And you know, Sarah had been through a lot. And so we all kind of had a conversation about like, what's the right leadership look like going forward now? And so it's a really frank, open discussion among all of us. And, we made a decision as a board. So yeah, it's kind of a crazy journey. But something I've always loved, you know, getting involved on the business side. I've always loved getting involved on the technical side where I can add value. And I think, just being open to the fact that circumstances can change and it's good to think about who on the team is better fit to do what needs to be done. And try as much as possible not let ego get in the way.
Scott Case 20:06
I'm so glad I asked. Because I think a lot of, to your point about I think you said choose reality, I think a lot of founders get caught up in all kinds of things and not having those frank authentic discussions with each other about like, here's what's happening both one that was insightful and said, hey, you're kind of already doing this, why don't you just like, make it formal and stop dancing around it? And then you faced an existential point in time where it's like, Okay, we got to reassess now, and let's have a straight conversation about this, too. Again, a very direct and authentic conversation and, you know, good for you for being able to have that dynamic inside, because that gets built over time, it doesn't happen overnight.
Nate Smith 20:57
And honestly, dynamics like that aren't built with one person, it's a group thing. So I think, when you're bringing together a founding team, that's something to be thoughtful of is, is this group of people we're bringing together able to have those kind of frank conversations and are people able to put the needs of the group before their own? Because even if some of the leaders are willing to, that's not enough, you actually need everyone to act as a team in those kinds of situations and it needs to be, in my opinion, kind of a make it or break it thing is, are people willing to put the team first?
Nate Smith 21:38
And you should also think about that with your board. Like when you're going to raise money, who you have on your board, it's a tricky thing, because honestly, sometimes you have luxury of choice, and sometimes you don't. But at the same time, when you do, it's a really key determinant of how the company is going to operate in the future is, Who are those people and how are they going to make decisions? And, you know, talking to people who've been CEOs or leaders at companies that they've been on the board of in the past really critical. You really want to interview those folks and do references. Don't skip past that. It's really easy to rush the later stages of the fundraising process. But I'd really, I'd really encourage people to get to know their board members extremely well, before making a big decision like that.
Scott Case 22:29
I couldn't agree more. They're partners, and they're often gonna be there a lot longer even some of your founders sometimes.
Scott Case 22:39
Well, I have one last quick question for you. That is incredibly selfish.
Nate Smith 22:44
Go for it, Scott.
Scott Case 22:47
We're in the corporate travel space at Upside. And I'm curious as to how you personally and how your team is thinking about traveling. You talked about how you're in enterprise sales, some of those larger accounts probably benefit from face to face. But how are you thinking about the next six to 12 months as it relates to Lever's team out traveling for work?
Nate Smith 23:11
We're in the recruiting space, so of course, that's something we think about with our customers, but also with ourselves. And so we had to come up with our own strategy for how we are going to operate in this new world. A lot of our customers are thinking about hybrid models, having more distributed teams than they've ever had. And it's to say, when you ask about travel, the biggest thing that comes to mind is it's mostly like how do you make these hybrid teams work. So something that we've always done is we've always done since the very early days, when we were all in the same place, an annual company off site. It's a tradition we've continued, we even did it virtually last year. Gonna start doing it again in person next year, which is really exciting. But basically, just getting everyone together in one space is something I think is really important. A friend of mine is Joel spolsky. And he's founder of a number of amazing companies, one of them being Trello, one of them being Stack Overflow. And, he very much kind of said similar things. And this to some degree inspired us in this regard is with Stack Overflow in particular, they really embraced remote work and found that it made their company really effective, they found a really great opportunity to hire people that otherwise they probably wouldn't have been able to hire if they'd kept local to New York is where they started. And, those kind of annual company retreats became extremely important. So, if you kind of learn from those companies who've been doing this a little bit longer, a lot of them talk about the importance of getting people together for some sort of annual or otherwise event. So that's part of it. Another thing is if you're gonna if you're gonna embrace remote, it's at least our opinion that you can't have your entire executive team in one office and you're not really a remote company. So we've been expanding our team and we've recently hired outside of the Bay Area. And so we're thinking about how do we embrace, we have an office in Toronto, we have an office in San Francisco, we've got executives in multiple locations, we're gonna hire remote leaders as well. Having them travel to spend time with the team. So, today that's probably what's most top of mind is how do we kind of bring together a culture and a new way of operating. And I think that that's absolutely critical to building a really strong culture over time. People can work great effectively, just in a distributed way, but they do need that kind of in person time to build those bonds and those relationships that carry over into the times when you're working remotely as well.
Scott Case 25:51
That's awesome. Well, you'll have to keep us posted and if you need to travel solution, have we got one for you!
Nate Smith 25:57
Awesome. Thanks, Scott.
Scott Case 25:58
Thanks for tuning into this episode of Founders Focus. We love getting feedback. So if you've got a topic for us that you want us to discuss or you've got a founder you want to hear from, hit me up on LinkedIn at T Scott Case, or you can always grab one on one time with me at foundersfocus.com. Stay awesome.