How Crystal Knows Built an Alumni Referral Engine Where 30% of Hires Come from Former Employees (Interview with CEO Drew D'Agostino)

Introduction and Crystal Knows Overview

Drew D'Agostino

00:00I'm Drew. I'm from a company called crystalkn. So we've got like personality data platform. Been around for a little while. But for this talk, I

00:12it's kind of funny how the I guess when you do when you're in a startup slash like kind of bootstrap mindset growing over time, how like the oh, you realize, wow. I've just interacted with a lot of people at at my company. And I reached that point and this talk emerged out of an email that I wrote to a found another founder who was in this position where he's just felt like especially this was kind of

00:38like during the bull market when it just felt like every software engineer was asking for like a $250,000. He's like how am I supposed to do this? Like I don't have the money to to pay the people like I need to figure out how to get them in my company. So this this I wrote like a very long email that ultimately turned into like my own little personal note and there's a lot of ideas that emerged.

The Emotional Reality of Founder Recruiting

Drew D'Agostino

00:57So this is just like a talk with a lot of these ideas that I've refined and implemented over the last like five ish years and I can get something out of it. So first of all, there's like when you're running a company as a founder or as an executive, the thing they don't tell you about is just how emotional it is like he like he was just saying at the talk. So I want ask about like

Three Types of Hiring Heartbreaks

Drew D'Agostino

01:19there's three heartbreaks that I three types of heartbreaks I can think of. So who in the room has lost someone they really wanted to hire and then they chose a different job for another reason? Alright. It's a couple. And was that was it ever because of money? Like better offer? Yeah. It's always like alright. What about someone that unexpectedly quit and you didn't you didn't really didn't want them to? Anybody? Okay. And then and then someone

01:47and then someone you had to let go mostly because either you not necessarily strictly because of like performance reasons, but basically has anybody had to do layoffs before because they got over their skis? Okay. Got it. Alright. So people in the room have felt this pain. I should have asked this. How do I what's the the button? Got it. Oh, the the middle button.

02:14Green. I swear I'm a tech guy right?

02:19Alright first first of all, I have one of my employees in the room, did everyone sign the non solicit as well just in case? No? Nobody recruit Neil. He's making plenty of money. Okay. No, but this talk this talk is mostly for people who are trying to pay their pay their people well but have encountered that pain point. And and that pain point I kind of loosely describe as you are operating with far less resources than

02:46your better funded competitors. Therefore, you need to give people a reason to come to your company that is not all about the offer, not all about the financial package. So there's a couple of points in here that I'll of get into, but largely I kind of stick with this idea that I want employees to stick around my company, dub twice the amount of like the average startup tenure, which tends to be around like one point eight

03:08two years depending on how you measure it. That's my that's my goal, that's measure of success.

03:14So I'm gonna go into a couple of these parts, share some stories, share a couple of like the hard lessons and mistakes that I have learned over the last few years in hopes that maybe you can pull from that. And then a couple of the specific things that I go to in interviews and policies that I've implemented at Crystal, some of which are pretty new, some of which have been for a while, that are kind of

Why This Talk Exists: Competing with Less Money

Drew D'Agostino

03:36like I think working because we we we have a we have a pretty strong culture now and and I the way I've talked to people about why they work at my company, now we can pay people like more much more competitively than we were earlier on. So it's not as much of a struggle to like be able to get someone a compelling offer, but it's still working at a start up is or an early stage company

04:00of any kind is a higher risk, so you need to package, you need to put together something that's compelling to them. So I'm going go into a couple of these strategies.

04:07So 2023, we're not in 2021, so money is not flowing abundantly. We're not in zero interest rate environment where everybody every company can fund themselves. So startups all of a sudden became more risky again, kind of like they used to. They actually carry real career risk because everybody sees, oh yeah, x company did 20% layoffs and is your company going to do the same? So startups kind of carry, in my view, carry the risk they should

04:33because startups are inherently volatile. And that means that I think this problem is going to get more acute as top performers also experience risk aversion and they also are going to look at, alright, what are my options in these safer environments? So as a founder, there's no real alternative to having eight players because you're fighting against inertia. You're you're building something from nothing and it's very hard to do that, especially when you're trying to grow quicker

05:01than would be natural. So you just need those kind of top performers and now those top performers are experiencing the same types of economic stresses that a company is, so they're looking just as founders are looking for ways to be more secure with their future as are these people. So I think this is going to become a more acute problem. It's like how do I actually convince these people to join my company knowing that they might

05:24have to take a salary cut, knowing that they're probably definitely taking more risk with their career.

05:34And here's the unfortunate truth, something I learned as an introverted software engineer that did not like sales, did not like recruiting, did not like all those people oriented parts of my job. Whether you like it or not, you as a founder are the most effective recruiter for your company. We were just we were just talking the other day and this is kind of in business development, just reaching out to a prospect or a customer with knowing

05:55that you're the founder or the CEO or senior executive, like that carries weight that you can't get, you can't just, you can't say, I'll just pass that off. If you're not doing the recruiting and doing founder led recruiting, you're actually I think really hurting the company. So it's always really surprising when I get on the phone with some like, I do a lot of phone screenings just talk to people and have that first conversation. Some would

06:20say it might be a waste of time but I don't think it's a waste of time. They're always kinda shocked like wait the CEO you're talking to me? It's like yeah tell me tell me about this like jazz band you got on your resume. Yeah.

Founders Are the Most Effective Recruiters

Drew D'Agostino

06:34And in that process, I think one of the reasons that founders shy away from those parts of their job is because it is so emotional. And I wanna say like already asked a little bit, it seems like some of us have had like the ones that got away in the business sense. I'll share a couple of the like those for me that are like stick for me. So this particular one was a I was trying to

06:56hire very early on, this is 2015, I needed a new engineering leader and this guy I was I had like the hugest developer crush on him. He was like the he just had this amazing GitHub, he was right in he was right in Nashville where I live, we met like three times, we're like so on the vision, got really far in the process, he accepted my offer and then ultimately his old company, he sent this email

07:21and was like, hey, you know I was really not in their best spots with that, basically they offered me more money and now they've convinced me otherwise and now I can come back. That one hurt, that one really stung. Here was one where this was a product leader who yeah you can see basically my decision ultimately came from working at a company that was larger and much more well established which mitigates some of the risk for

07:44myself and my family during these uncertain times. I'm like, I wish I could say something enough but you're kind of right. Really wanted that, really wanted that one. You know we'll stay in touch blah blah. Haven't talked to him since of

08:01this was a more recent one. Was a job applicant that we got really far into the process and this is why I wanted to include this one because it's not like this doesn't happen to us now because this is just last month. And I think in evidence of the the economic climate, this was another case and I dug in a little bit more because I talked to him after, this is another risk aversion thing. You're a

08:23small company. I had this huge offer from this big company, salary was slightly higher, I'm going go with this. So I think this is going to come into play more and more, that whole risk aversion thing.

Stories of Candidates Who Got Away

Drew D'Agostino

08:37So every one of these though has a lesson like whether that's one that got away or someone unexpectedly quitting and I've experienced multiple of those heartbreaks for like eight years doing my current company but I've also gotten I think better at not just the front end of it, the recruiting part of it, but building real policies at our company that had that I now share in the interview process and actually really helps. And I think it's

09:05also helping retain it's really helping retain people for the long term. Now I'm not I'm not I'm not here to say like hey this is only thing I gotta write. Our company's still pretty small. So granted this is a lot of ideas that are stolen. One of the one of the ideas, actually a lot of these ideas I stole from this book. I'm not sure if any has anyone read this book before? It's really good. I'd

09:25recommend it. It's by Reid Hoffman and Ben Casnocha. I don't know how to say it. But he he outlines a whole philosophy of hiring

09:36Some of the ideas I've taken, some of them I haven't, but it's just a really really good read. So a lot of my ideas kinda stole from that. I also stole some ideas from my dad who's he's a carpenter and he always take him he's got this like really thick Long Island accent. So he's got these like, you know, one liners. One of the one liners, I used to work with him when I was a teenager

09:56and he has his guys. Like my dad's my dad's best friends, I never knew their last names. I just know Ray the plumber, Bob the electrician, you know, Dave the lumber guy, like that's that's who they are. And he always told me, you treat you guys good, they treat you good. So I was gonna make fun of my daddy. He's got his like army of guys who just like been working alongside him for that forever. So

10:20take a lot of inspiration from that. So I've got like five principles. Not sure if I'll get to all of them. I tend to like randomly go on a couple tangents. But the first principle is that I found that the people who, especially the ones who are kind of tossing around between a big offer at a big company that feels safer and your startup, they're actually attracted to the challenge. So I try to lead with that.

10:43And there's this really famous Ernest Shackleton quote about like he was going to Antarctica and put this ad out in the paper. I try to use that approach in my interview process in the very first time. So I say like these three things to make it really clear. Like, hey, I'm gonna kinda lead with lead with the hard and just see what happens. So first of all, I like well, speak in longer terms than they're probably

11:09ready for. I'll say like, hey, I just wanna be clear with you. I'm like recruiting you for the long term. I want I'm trying to build my team that I build many companies with together. I talked to Neil about this and that's part of like what the expectation is that I don't know how long crystalknows gonna last. We could succeed, be huge, we could fail. Doesn't matter. I'm recruiting you now because I want to work with

11:28you for a very long time. And that's like, if we share that, let's continue this conversation. If not, maybe it's not the right fit. And I want us both to sign up for a four year commitment to each other. Not legally binding, I mean we get a little bit into this, but setting the expectation that this is kind of the timeframe that mutually probably works best for us and then let's revisit. And then I really am

11:47upfront like hey this is actually probably gonna be harder and more ambiguous and you're gonna make less cash upfront than your other opportunities. And most of I think most of our especially our senior people, I've had this conversation with and it's made them more excited about joining the company because I think in their mind it clarifies why they're doing it too. And and it also it also helps filter through the actual other most important parts of

12:09the job. So that's in the interview. Now that four year thing, this is something I stole directly from the Alliance, that book, and I've implemented it at crystalkn, and I think it it it has it has helped people just think of a more structure about their tenure of employment. So it's still still like we haven't had many people go through this whole process, but it's been pretty cool to see just the effect that the policy itself

Principle 1: Lead with the Challenge and Set Long-Term Expectations

Drew D'Agostino

12:38has. So we very upfront that we want to do a four year kind of not a promise legally, but a four year commitment to each other. Like we're gonna end the company's gonna invest in your growth and you're gonna invest in the company's growth. This is a mutually beneficial thing. And if something is not working along those lines, we don't hold it back and then, you know, just send you a breakup text one day, like hey

13:01we need to talk. It's it's a it's a vocalizing of the issue and giving the other a chance to fix it whether it's from the employee to the company or the company to the employee. And then there's actual real teeth to it. So like at the the big thing is after four years, there's a one month sabbatical, a paid sabbatical with like $2,500 travel stipend. And that's not just a perk, it's also because we want to

13:24give you a reset and allow you to like, alright, let's think about the next stage. And at that point you have an official meeting where you can determine, okay, is it time to sign up for another tour of duty, maybe another tour of duty in a different role, or maybe it's time to move on and let's make that like a smooth transition that's transparent and helpful for each other rather than kind of secretly looking for a

13:44job and then putting your two weeks and then leaving. So the goal is to create like an open and mutual and a very open and structured timeline for things to move into the next phase, whatever that is.

14:00I stole that idea, the sabbatical idea from HubSpot.

Principle 2: Radical Transparency and Putting Your Worst Foot Forward

Drew D'Agostino

14:05Second one, radical transparency on the front end of recruiting. This is something I've only done recently because I didn't have the confidence to do it earlier on in my career. I call it putting my worst foot forward. Everyone always says put your best foot forward. Put my worst foot forward. Filtering out I found that filtering out the wrong people in the process is probably just as important or more important than identifying the right one. So I

14:28wanna like be very upfront. I do this with investors too. Like when I talk when I talk to them, I'll put these are the biggest risks things keeping me up at night. I'll let you know all the flaws upfront and then let's let's back into it. Then I'll you what the good parts are, but let's get that front. So when both parties are kind of going into that

14:47into the agreement with a very sober mind and clear eyes, I think it just immediately fill you can immediately filter out the conversations you shouldn't be having and then really affirm the ones you should because the right people, they'll they'll go right into that and say, okay, tell me more about the hard things you're working with and I wanna I wanna solve those problems. And depending on stage, it's just a little part of it because we're

15:11in this phase right now where we're actually shifting from trailblazers to bricklayers. This is kind of how I think about the two stages where you can filter out. Like if you're in a phase that's startup and you really need the trailblazers, you need to be able to understand that if you bring in bricklayers they're going be very frustrated. And bricklayers, kind of think about like we are building to scale, building for the long term. And likewise

15:31if you're in a bricklayer phase and you start hiring trailblazers, they're gonna blow the thing up and create chaos. So having those questions up front like if we're in a startup saying, hey we have like a lot to figure out. I might completely change the business model without really much planning in the next three months. Would that be okay with you? And some people are gonna be like, no, I'm gonna go work at Adobe.

Principle 3: Identify Non-Financial Motivators

Drew D'Agostino

15:53Alright. This one's pretty obvious. It's it's it makes sense, but I keep having to remind myself over and over that most people have a motive that's a lot stronger than money, but it's very different for each person. And if you can identify what that is, you can really structure either a package for them on the front end or just policies on the back end for the long term that that really help them get what they want

16:17that might not be financial. And these are just some of them. And each one each yeah. Like I said, each person has a different one. One of the specific ones that I've learned a lot about is I guess the first one up there, especially on the technical and engineering side, learned a lot about hiring, like, really great developers because I've made a lot of mistakes with it, is that the best developers are so attracted to just

16:42the idea of them pushing code and then seeing it impact customers quickly. That's like it's more valuable and money to most developers than or most of the best developers that I've talked to. And I didn't really understand that at the time because we kind of think of people in these buckets as like oh you're an engineering, you're not really thinking about customers or user experience, you're thinking about the code. But that's not the case at all.

17:05We think both ways. So that's just like one example of that.

17:11And oftentimes we use our product as a way to kind of detect this out, so people that care about people and our products are personality things. It kind of helps determine that.

Principle 4: Help Employees Increase Their Market Value

Drew D'Agostino

17:24Fourth principle, and how much time have I got Ben? Two, three minutes. Two, three minutes. Okay. Cool. People want their market value to increase and that's whether you I mean, just like any of us as individuals, but oftentimes I I feel like as a startup executive or a founder, you can look at someone as a dot instead of a line. It's like I hired this person for this reason and that's their job and I'm gonna pay

17:49I'm paying them to do that job. Meanwhile, they're viewing their life as a line. I'm I'm trying to increase and go up and increase my value and that's where you can get the situations where they feel stuck. So understanding ways to help your people increase their own value, think it's really good. These are a couple of companies that I think do it really well, particularly on like the branding side and the shared network effects, like g

18:09two and Catalyst. I asked them if these I know both of them. I asked them if I could use their pictures from the presentation. But their companies have very good employee branding and opportunities for their employees to to build their own personal brands, And I've seen that really become a great way for people to grow alongside their companies. That's one thing. Something we started to do was just start building those blocks, so give people resources to

Parting Ways Gracefully and the Alumni Network

Drew D'Agostino

18:36have on their own personal websites, their own social media, grow alongside the company. And then ultimately, what this translates into is well after the employment tenure is tapping into the alumni network. Because when people are proud of working at your company, even afterwards, you're building this compounding network of people that becomes a recruiting funnel. So part of that is when you part ways, not screwing up and burning bridges unnecessarily. So parting ways gracefully is an art

19:04that takes a long time to learn. Think about like writing a whole thing on that specifically because I I think we focus so much on the hiring and nobody talks about the firing process and that's where everything gets messed up like half the time. Couple of ways here, I know we're running low on time but to get that alumni network, we get one minute. Alright. Basically sum it up, when you you fire people put more just

19:27as much thought into it as when you hire them.

19:31Asymmetric trade offs.

The Alumni Flywheel: 30% of Hires from Referrals

Drew D'Agostino

19:34A couple of this actually I'll I'll finish off here. The I didn't our company is like eight years old now, so we've been able to have a couple of these situations where some of our top employees now about 30% of our employees came from an alumni referral, and we've actually had some boomerang employees come back too. And this is an example of like one of the situations where, you know, alumni basically goes, finds a great designer

19:57at his company, ends up selling it. Now we've got a great designer because he was looking for a place to put her. And we had one of our first employees come back recently, and he actually referred a couple other employees and basically creating that that alumni flywheel is like a great asset that I didn't understand until doing this for a while. So anyway, just a couple steps. Want to take a picture of it before the time's

20:17out? And thank you.