With Dan Hyde, CEO, Erevena
Setting the scene
Dan co-founded Erevena over 20 years ago, with an initial focus on hiring executives for B2B software companies. In that time he’s seen the market change and evolve, with the emergence of EMEA as a startup powerhouse, combined with new fast moving software categories. The war for talent is as strong as ever, with demand at an all time high for scaling and growing startups. In this interview, Dan unpicks how founders should think about who to hire, and in what order, and where things can go wrong.
Erevena have helped many of the most recognisable names in Europe Tech hire their leadership teams, and Dan’s learnings are invaluable. A must listen for all those who don’t want to make the mistakes of founders before them, and end up churning their most expensive and valuable people.
From philosophy graduate to working in B2B tech
I fell into that space straight out of university. I was a philosophy graduate, and typically philosophy graduates have no clear path to any kind of vocational career. I was lucky enough to join a headhunting firm that happened to be focusing on the technology space. Alongside the team I was working in, we were the youngest people in the office, we were given the internet to have a look at, which was fortuitous. This was when people like electricity companies were trying to use dial up over power lines- it was a super exciting time to be in tech!
I started to move towards B2B software. I think myself and a couple of people in the team thought that we could go our own way, and we’d learn from these great, really nice, experienced people that we’re working with. Myself, David Grundy, and Jon Irvine, who’s still my partner at Erevena today, decided to start a company. We had a slightly strange thesis at the time and the thesis was, we didn’t want to build a recruitment company because that would be a stupid thing to own as they don’t make money while you’re asleep. But, they weren’t worth as much money as all these exciting software companies we were trying to build. We actually had an idea that we would work with people that we knew and, initially, build their go-to-market teams on the B2B software side.
We were lucky enough that we were good at the recruitment side. When we started there was an incredibly nascent venture scene here. We worked with companies like Zendesk and Cramer Systems. In our spare time, we co-founded a couple of software companies. Alongside some other co-founders, we built a platform called Invenias to run a headhunting firm, which we raised venture capital for. We scaled that to around 2000 customers, and sold it to Bullhorn when it was owned by Insight Ventures in New York. That was a nearly 11 year overnight success story, and that taught us all that we should not try and build software companies as that was a discrete skill that we weren’t completely equipped for. But, it also taught us that we almost, by mistake, had built a search firm with a growing reputation in what was an evolving VC tech scene in Europe at that point, which was exciting! Now, 16 years later, we work with the majority of the well known VC funds, both in Europe and in the US. We have offices in San Francisco, New York, Stockholm, Copenhagen, Paris, and London. We still do a bunch of work in B2B tech, and we also work across the rest of that tech ecosystem e.g. FinTech, healthcare, education, marketplaces.
There is opportunity for our ecosystem to grow and mature further
In terms of the market, I would absolutely agree it is as hot as we have ever seen it! I used to see Europe as a sort of a discrete backwater, akin to New York, because they were both slightly inferior tech ecosystems to California. These days, we view it slightly differently. There are a bunch of global companies being built at extremely high velocity, a number of whom were founded in Europe. For example, if you look at a UiPath, Datadog, or Collibra, many of them were founded by their technical team in Europe and very quickly migrated to the east coast. Again, depending on their go-to-market strategy more often than not, they build out there where they perceive the talent pool is deeper, and that’s obviously been an incredibly successful strategy. But, there are talent pools in Europe that are equally well qualified to scale and build global software companies.
If you look at the different kinds of go-to-market models, like volume, SaaS or developer first, I don’t see the gigantic advantage of building out of New York or Boston from day one. I think there’s a lot of very capable execs in Europe that can help you do that. What’s interesting is that those execs do not have the network and relationships with a Tier One VC that you will see in the US. There are much, much closer connections between venture and large scale tech, than you see here. That is a way in which our ecosystem needs to mature further.
Finding the perfect GTM person fit as a founder
When we’re talking to a founder, or in fact a small scale business, we look at the functions in their business as a continuum. So, trying to draw a continuum from a developer to a customer success person, and in the middle of that you have: engineering leadership, product management, product marketing, performance marketing, sales enablement, and understanding where the strengths or weaknesses across that continuum is really helpful. If a company is relatively early stage, and relatively early in terms of finding product market fit for example, we think that magnifies the need for someone who is a thoughtful, and frankly smart sales leader; a good partner to the product organisation and a good partner for the marketing organisation. In truth, if you have an unbelievable product market fit, and all you need to do is put your foot on the accelerator and go from 100 to 500, you don’t need that product partnership because the product is baked. You might want their input once a quarter, but actually they can sell what’s on the truck and that’s totally fine.
One of the big challenges with early stage businesses is often they will look at a resume of someone that’s been through a scaling journey, but slightly oversimplify when they join that scaling journey, and they will underplay the situational kind of relevance to where they are. I was working with an entrepreneur and we were actually talking about why they didn’t feel that things would work out for them as a CEO, and they said that they tried to scale it before they nailed it. They’d hired a bunch of people, built the sales, infrastructure, and all those sorts of things, but they hadn’t quite worked out that recipe of ‘how do we scale the business?’ As we all know, it’s all in the numbers and it’s all in the unit economics. It’s all there in your cost of acquisition versus your lifetime value. If you are not in data, in top shape with your unit economics, you shouldn’t go hire 1000 salespeople and think that sales will work it out for you. A lot of it is about making sure that the person is situationally relevant for the moment in time that a particular company finds themselves in, and they are all, to some extent, unique. But, everyone’s running their own race, and it’s important that founders are thoughtful about that when they try to implement a playbook that they’ve seen elsewhere.
‘Supply has never been worse and demand has never been higher’
There’s a few issues in markets at the moment. First of all, because of valuations, if execs are doing well in a company, they have never been less likely to move, because ultimately their numbers if they believe their valuation metrics, most people doing well are sitting on a life enhancing amount of money to some extent- that’s in big and small companies alike. So, if you’re sitting there in Salesforce, you are earning more from it than you’ll ever have done before, it’s similar for Workday, ServiceNow, and others. It’s not as easy to just go take someone who’s done that journey in a bigger company, because they are earning more than they’ve ever earned. Obviously, in successful pre-IPO companies, everyone’s getting measured