It is a story as old as time itself. An inventor comes up with a crazy idea that can change the world, they get ridiculed by their peers and traditional investors, yet through sheer perseverance and hard work, they turn their visions into reality and make the world a better place.

However, this does not answer the most fundamental question. If those, inventors were laughed at by their contemporary investors, how did they manage to get the resources they need to actually change the world? Here is the story of the adventurous group of people, who are always investing in a brave new world; Venture Capitalists.

The story actually begins thousands of years ago in the heart of the Arabian Desert. After the trade revolution that happened through the domestication of camels, finally allowing humanity to trade over vast distances and through harsh environments, a bigger financial problem appeared.

Due to the high risk of the venture of trading over long distances, poorer merchants found themselves in a perilous situation, where they can lose everything on any given trip. The toll of this risk was so huge, that poorer merchants would undergo a suicidal ritual called i’tifad in which they starve themselves to death if they happen to lose their goods!

However, it was out of this misery that one of the most brilliant financial models was born; Qirad, an ancient predecessor of what we now call Venture Capital. The idea was relatively simple! Rich merchants would provide the capital needed to buy the goods and fund the trip and young entrepreneurs, who lacked the resources, would embark on the adventure of actually going on the trading trip. If the venture was successful, then the investor gets his money back and 75% of the profit, and the entrepreneur gets 25% profit on the carried goods. If the venture fails, then the investor loses his money, and the entrepreneur would lose nothing but his time and effort.

This model was so powerful, that it kept reappearing in history under different names and across geography. For example, the same system, under the name of Mudarabah, would play a critical role in propelling Baghdad to its golden age in the Middle Ages. It would later reappear in Venice, under the name of Colleganza, catapulting Venice to become an economical powerhouse. Then again in the US during the 1950s, under the name of Venture Capital, and yet again propelling the US to being the richest nation in history! As Peter Thiel puts it in his book Zero to One:

“After all, less than 1% of new businesses started each year in the U.S. receive venture funding, and total VC investment accounts for less than 0.2% of GDP. But the results of those investments disproportionately propel the entire economy. Venture-backed companies create 11% of all private-sector jobs. They generate annual revenues equivalent to an astounding 21% of GDP” — Zero to One, Peter Thiel

Similar to their ancient counterparts, modern VCs are adventurers at heart and perform a very similar job. Let’s say you are a young entrepreneur with an idea that could transform the world we live in. To realize your vision, you need money, lots of it. However, since you are daring to do something new, there is an enormous risk associated with your venture. So, what can you do?

Your first thought might be to go to a bank and get a loan. But, if your idea is actually innovative, there is no way any bank is going to give you the money. They would just think it is “too crazy” as they always did and if they do give you the money, you will have to suffer from a huge interest rate.

Which leaves you with the second option. Simply, find someone as crazy as you are, who believes in your vision, and actually has the resources to provide capital for your adventure into the uncharted territory of innovation!

This is where venture capitalists shine. A VC is an investor that provides capital to a company in its early stages in exchange for shares, which makes them your partner in good and bad. That’s why they will always put your long-term interests before anything else since your success is their success! If you build the next Google, they win big! If you build an online pet store, well they will still be at your side as you both lose everything.

This has been the way, innovators throughout history used, to achieve their visions and create a better world for all of us. VCs might have had different names and backgrounds throughout history, but they always had one thing in common; taking bold risks into the future and supporting entrepreneurs who dare to dream big!

Luckily, there is now more money deployed in VC than ever before! In the next articles, we will dive deeper into how VCs work and how you can benefit from it 🚀

Cash is the oxygen of startups. Most startups fail because they simply run out of money. Yet when it comes to the biggest source of cash burn (labor costs) most founders use “voodoo techniques” and gut instinct to make their hiring decisions.

“According to studies we’ve done with our clients, the average hiring mistake costs 15x an employee’s base salary in hard costs and productivity loss. Think about it: a single hiring blunder on a $100,000 employee can cost a company $1.5 million or more” — Who by Geoff Smart and Randy Street

“Recruiting is a core competency for any company. It should never be outsourced” wrote Peter Thiel. It is simply a skill that you as a founder have to master. Luckily, two of the best in the industry; Geoff Smart and Randy Street, developed the A-Method and published it in their book Who, to help you consistently (systematically) hire only A-Players. Here is how you do it.

🏋️ Who is an A-Player?

First of all, you need to clearly define what do you mean when you say “A-Player”. A very concise definition is “Someone who has at least 90% chance of achieving outcomes that only the top 10% of possible candidates could achieve while fitting with the culture of the company”.

This clearly shows why the A-Player of one company in one role can be a B or C-Player in another and brings us to the first step in the A-Method; Developing a Scorecard.

A scorecard is a document that defines for a given role how an A-Player looks like by clearly stating the following

• Mission: Why does this role exist?

• Outcomes: Lists the achievements that have to be reached and not just actions to be done. This excites A-Players and intimidates B&C-Players.

• Competencies: Lists both the competencies needed to achieve the outcomes as well as competencies of the company to ensure cultural fit. For example, if the role needs negotiation skills, do you have a culture of aggressive negotiation or soft negotiation? This changes the profile of the ideal candidate.

🌊 Generating a Flow of A-Players

Now that we have defined how our ideal candidates look like, it is time to find them. According to interviews done by the authors of the book, 77% of the top managers interviewed mentioned referrals from their business and personal networks as one of the top talent sourcing methods they use.

But what can you do if you are just starting in your entrepreneurial journey or if you do not have a large network? Here is one of the most powerful tricks to exponentially grow your network of A-Players.

First, you have to understand that you should be constantly sourcing great talent whether you currently have open positions or not. As Steve Jobs famously put it in his guest lecture at MIT in 1992, it always took him around a year to win the best talent over to his companies. So, you never want to wait till you desperately need someone to start sourcing!

Second, you can start now by thinking hard about who do you know that can be classified as an A-Player? Think as broadly as you can; it can be an old classmate, someone you met at a student initiative back at university, or someone you casually met at a party and struck you as brilliant.

Once you have a list of 5–10 people you consider as brilliant, add a 30-minute weekly block in your calendar, where you call one of them for the next 5–10 weeks. You can keep the conversation casual, just tell them that you think they are great at what they are doing and since you are always on the lookout for great talent, you wanted to catch up with them, tell them about what you are doing and get to hear about their career interests and what they are passionate about.

Most people would be incredibly excited at the opportunity to express what they are passionate about and how they would like their career to be! Listen carefully and at the end of the conversation don’t forget to ask them, “Now that you know what I am doing. Who are the most talented people you know that you think would fit in my company?”

Talented people know each other and they would gladly recommend each other. Keep building your list and commit to having at least one call per week.

By the time you have a job opening, you should have had a large talent pool already. The question now is, how do you select the right candidate from all the applicants?

Equipped with your scorecard, you should now perform the following four interviews.

🖥️ The Screening Interview

This should take just about 30 minutes on the phone. Your goal here is to quickly filter out B&C-Players and choose who you want to be spending time with, during next interviews. You should be asking the next four questions:

• What are your career goals?

• What are you really good at professionally?

• What are you not really good at or not interested in doing professionally?

• Who were your last five bosses and how will they rate your performance on a scale from 1–10 when we talk to them?

You are looking for people who talk with passion about topics aligned with the role and not those who just echo everything on your website. You also want candidates who would rate their work consistently above 7.

Finally, if you notice the candidate is not answering truthfully when asked about their weaknesses, you can always tell them, “if you get further in the process I will need you to set up reference calls with former peers, so what do you think they will say about your weaknesses?”

By saying will instead of would, you show your intention to actually perform the reference calls, which will force the candidate to answer more truthfully.

🙋 The Who Interview

Your goal here is to get the person to tell you their story. First, you should help them divide their career into chapters. Each chapter can be a job or a group of jobs that took place in a 3–5 years timeframe.

Then you start walking with them through their career chronologically while trying to find repeated patterns in their path. For each chapter, you should be asking the following questions:

• What were you hired to do?

• What accomplishments are you most proud of?

• What were some low points during that job?

• Who were the people you worked with?

• Why did you leave that job?

Success leaves clues and this is the goal of this interview. You want to see if the candidate throughout their career were always pulled to better positions due to their performance or pushed out due to the lack thereof. Do they have a tendency of outperforming expectations? Are they a joy to work with or do they alway wreak havoc in their teams?

A-Players tend to talk about outcomes linked to expectations for the job. B&C-Players tend to talk about people and events they enjoyed. So always listen carefully to how they describe their previous experiences.

For a CEO level, this interview can take between 3–5 hours, for an entry-level around 90 minutes. The length of this interview forces you to be very picky in the screening interview and choose only those who you see big potential in.

🔎 The Focused Interview

Based on the competencies and outcomes of the scorecard, we create multiple focused interviews. So for example, you would create a focused interview on sales and innovation and another focused on building a team and listening to others.

This is to better assess the candidate's different skillsets and should be conducted by different interviewers.

🪞The Reference Interview

For higher managerial positions, it is recommended to conduct 7 reference interviews; 3 past bosses, 2 colleagues or customers, 2 subordinates. In each interview you should ask the following questions:

• In what context did you work with them?

• What were the biggest strengths?

• What were the biggest areas of improvement back then?

• How would you rate their performance from 1–10?

• The person mentioned they struggled with ** can you tell me more about it?- Example: “The person said that you might say that he was disorganized. Can you tell me more about that?” This will encourage former peers to open up and speak honestly since the comment is coming from the candidate themselves.

🥂 Seal The Deal

By now you have found the best candidate and you are in love. But how do you make sure that they end up choosing you? Talented people do not need to work for you and they have a lot of options.

Depending on your company’s size and the candidate’s situation there are different things you can offer them. However, there are five main things that talented people usually seek:

• Fit: Being passionate about your company’s mission. People love contributing to a bigger goal, if they are A-Players their time is their biggest asset. Make sure they find your work valuable.

• Family: The candidate’s family has to be convinced about the move to a different place. Try to win them over.

• Freedom: Candidates need their autonomy in the new role.

• Fortune: You should also highlight the financial upside for achieving targets.

• Fun: Describe the work environment and personal relationships candidates will make.

Congratulations 🎉 you are now equipped with a step-by-step method to ensure you hire the best rockstar team for your company!