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COOLIRIS TEACHING NOTE

The Cooliris case follows the struggle of a new venture trying to recruit a highly qualified team. The case is designed so students are brought to the edge of a crisis regarding what to do about a broken recruiting process. This teaching note discusses how Cooliris resolved the crisis and suggests one way to teach the case. In general, the case is designed so that students spend class discussing how to resolve the crisis by answering two key questions proposed by the protagonist at the end of the case (1. Who is an A+ player? and 2. How do you attract A+ players?). The case and this teaching note are designed to lead the discussion to illustrate the following two learning objectives. The first objective is to demonstrate that all new ventures, even well-endowed new ventures, face challenges building a strong team unless they have the proper recruiting process. In the case, Cooliris has several problems with their recruiting process. First, like many new ventures, Cooliris has struggled to agree on a definition of what makes an A+ candidate. As a result, their recruiting targets are somewhat inconsistent. Second, Cooliris views the recruiting process as a selection, or buying process, rather than a selling process. As a result, candidates are not adequately engaged by the company to join the company. Third, Cooliris has overlooked the fact that recruiting talent is much like a sales funnel. As a result, the team is wasting immense energy on a shotgun approach to recruiting. Cooliris ultimately succeeds by properly defining their ideal candidates, reframing the hiring process as a sales activity, and focusing the recruiting funnel on their top candidates. The second objective is to illustrate that many problems in entrepreneurial settings are highly ambiguous and difficult to solve. When problems are ambiguous, there may be a temptation either to avoid them or to propose a barrage of solutions. The case illustrates that often the best way to solve such ambiguous problems is to use a framework to guide the discussion. Although the framework may not be perfect, imposing some order on a nebulous problem significantly enriches the ability to discover a solution.

This teaching note was prepared by Nathan Furr while a Ph.D. student at Stanford Universitys School of Engineering, with assistance from Josh Schwarzapel, Soujanya Bhumkar, and Professor Thomas Byers, as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Some facts have been disguised.

Copyright 2010 by Stanford University. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any meanselectronic, mechanical, photocopying, recording, or otherwisewithout the permission of The Stanford Technology Ventures Program.

Revised January 2010

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For this particular case, the Cooliris team stated that they solved the problem by mapping the process from beginning to end. Furthermore, the team stated that if they had been more haphazard, and failed to apply the process mapping framework described below, they would have missed the real solution. This case acts as an excellent teaching point of this particular framework but more importantly serves to illustrate how entrepreneurs can solve ambiguous problems: by using a framework and imposing order. The rest of this teaching note discusses a tactical plan for teaching the case. Case Discussion Introduction

1. Consider setting the stage for the discussion by telling the class that they are the Cooliris team holding a meeting to figure out what to do.

2. The purpose of the meeting is to address the problems Cooliris has had in recruiting a technical team. To do this, use the two big questions the protagonist feels must be answered:

a. WHO is an A+ player b. HOW do you attract A+ players

First Question: Who Is an A+ Player?

1. Students often overlook the nuance in the definition of an A+ player. In this module, explore what makes a candidate an A+ player. There are three key points to communicate:

a. An A+ player who cannot work as part of a team is not an A+ player. i. Furthermore, some of the attributes that entrepreneurs desire in a

candidate may have potential downsides in a team setting. Therefore, understanding what the company is really searching for is important.

b. The attributes desired in candidates may change. i. As entrepreneurs go through the hiring process, they often discover the

qualities they really want in candidates as opposed to those they defined at the beginning of the process.

c. Balance the team. i. Dont hire individuals with exactly the same characteristics and expertise.

For example, when hiring a technical team, entrepreneurs should hire both specialists and generalists, not just one or the other.

2. To help students understand the nuance of selecting candidate attributes, use the following attribute selection activity.

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a. Attribute Selection Activity i. Divide the class into teams to decide which qualities make an A+ player

for the Cooliris team. ii. Pass out the list of 20+ attributes (see appendix A). Have each team

choose eight qualities and split them into two groups: must-haves and nice-to-haves.

iii. Have student groups present the qualities they chose and defend their choice.

1. Use questions to probe why groups selected certain qualities and not others.

iv. Share the Cooliris list and discuss why the Cooliris team may have selected these qualities and not others (see Appendix B).

3. Follow-up the activity with a brief discussion of: a. The potential upsides and downsides of selected attributes. b. The pitfalls of hiring A+ players who cannot work as a team. c. The potential of change in the desired list of attributes as the team goes through

the hiring process. d. The need to balance the team.

Second Question: How Do You Attract A+ Players? 1. The purpose of this module is to help students understand how to develop a successful

recruiting process. a. The key tactical points to communicate are:

i. Hiring for entrepreneurial firms is a selling, not a buying, process. ii. The recruiting process resembles a sales funnel: understand the recruiting

funnel and focus efforts on getting dream players rather than boiling the ocean to get good players.

iii. Tailor the message to the audience. iv. Communicate openly. v. Never stop recruiting.

b. The key higher-level objective to communicate is: i. When tackling ambiguous or challenging problems, using a framework

can significantly improve the ability to analyze and solve that problem. By going through the work of mapping out the Cooliris recruiting process, students will get experience imposing order on ambiguity and thereby coming up with a more complete solution.

2. Consider beginning this discussion by simply asking students what Cooliris should do to fix their problem. Write these solutions down on the board (brainstorming style). Often in such discussions, students come up with part of the solution but not the entire solution. Once students have shared their solutions, the following process mapping activity will

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reveal how using a framework leads to a much more complete solution in an ambiguous setting.

3. To understand why Cooliris had trouble attracting a technical team, begin by analyzing the recruiting process described in the case from beginning to end, discussing what is wrong with each step.

a. Begin by creating a diagram on the board of the current Cooliris recruiting process (see figure 1)

i. Use student comments to fill in the numbers for the process ii. Optional activity: have students estimate the amount of time required for

each step and total time invested for a yield of zero candidates. This will help emphasize the scale of the investment

Figure 1

4. To solve the problem, the Cooliris team systematically re-examined their process. With the process mapped out, have students suggest ways to improve the process (or use the suggestions proposed in earlier discussion). Lead students through the discussion to the following major changes in the process made by the Cooliris team:

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a. Hard shift from buying mode to selling mode i. Previously the Cooliris team approached recruiting as a buying process,

first carefully evaluating candidates for technical capability while keeping the most exciting but sensitive parts of the company secret until the end of the recruiting cycle.

ii. The Cooliris team realized that for an entrepreneurial firm that is somewhat unproven, recruiting is a selling rather than a buying process. The Cooliris team made the following significant changes to the recruiting process

1. Brought potential recruits in through the main Kleiner Perkins office doors, showing them where famous venture capitalists sit, offering them some of the free food, and introducing them to people in order to impress upon them the feeling of being part of something bigger and exciting.

2. In the new process, the first interview focused primarily on selling rather than on screening the candidate for technical ability. The entire team met with the candidate to make them feel important. The opening presentation was changed to make the candidate feel like part of a big and successful team. To do this, the presentation featured the venture capitalists as part of the regular Cooliris team and then the candidates picture was added to the teams pictures during the presentation.

3. The first presentation took the risk of revealing Cooliriss somewhat sensitive vision and future products rather than focusing on the publically known past. (Cooliris was in stealth mode at the time.) This got the candidate truly excited about the big vision for Cooliris, which was much more compelling than the products of which they were already aware.

4. While the Cooliris team was selling the company they found they could actually easily evaluate candidates. The final round interview had some more technical evaluation components, but generally it became very clear early on whether a candidate was a good fit.

5. Although the process was focused on selling, the Cooliris team was careful not to oversell. Otherwise, both the candidate and the team might simply deceive one another about the fit for both parties. Additionally, in the final round interview, the CEO had a very open discussion with the candidate about the potential upside as well as expectations.

b. Optimized the flow of the recruiting process

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i. Previously the Cooliris team had focused on processing a large number of candidates who might fit the target attributes. This required an immense investment of time.

ii. After analyzing the process, the Cooliris team decided it would be better to invest a disproportionate amount of time recruiting one dream candidate than spreading their efforts thinly over a number of potentially good candidates. (See Figure 2 below.) To change the process, the Cooliris team:

1. Selected approximately 50 dream candidates for the position. To find these candidates the team used their social networks alongside more of the traditional methods they had used previously (LinkedIn, Google searches, etc.).

a. Interestingly, the team found that their social networks were not entirely adequate. The CEO and venture capitalists had social networks that connected with senior level people whereas the other three team members had social networks that connected to students. What was missing was a social network that reached mid-range technical candidates with a few years of experience.

2. Screened the 50 dream candidates with a phone call. Based on the feel of the individual and their interest on the phone call, the team invited 20 candidates for a first-round interview focused on getting them excited. Out of those interviews, 15 people were invited for a final round that was also a technical screen. In the end, the Cooliris team extended 5 offers of which 5 were accepted. The new recruiting process represented a dramatic improvement not only in terms of return on time invested but also in the quality of candidates that ultimately accepted the employment offer.

3. When it came time to make an offer, Cooliris focused on closing the deal by creating a sense of urgency from multiple sides (and not by giving exploding offers). Specifically, they created a sense of urgency by having a discussion about the very real need to act now given the current market opportunity and the special role the candidate would have in making that happen. As an example, when the candidate would ask about starting dates, the CEO would suggest, in all seriousness, how about right now? Although candidates would inevitably ask for a few days to think about it, this discussion reframed the closing period from weeks to days. Finally, when an offer was extended it came from the Kleiner Perkins offices (not the Cooliris offices) and was closed quickly.

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Figure 2:

c. In addition, the Cooliris team re-evaluated what appealed to their target audience. i. In the early recruiting period, the Cooliris team was convinced that they

understood what would appeal to the technical team. Given that their company had been recently funded by a famous venture capital firm, had great initial team members, and developed exciting technology, the Cooliris team felt they had the perfect appeal to attract technical talent. Only after the process failed did the team realize the nuance in what their candidates really wanted. By doing some research, the Cooliris team discovered what really motivated the technical talent they were looking for:

1. Although Cooliris saw it as a plus that they were located in the Kleiner Perkins incubator (which gave them close access to top venture capital talent and advice), technical candidates saw it as a sign that the company really wasnt very proven and therefore not very reliable. To make up for this weakness, the Cooliris team invested a significant amount of time to create a hard-coded demo

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of their next big product, which made the company seem more real and successful.

2. Through talking to candidates, Cooliris discovered that what really appealed to technical candidates was:

a. An interesting technical challenge b. Being made to feel that they were uniquely suited to have a

big impact c. Interesting technical people to work with d. A compelling product / monetization vision e. Financial compensation

3. To address what candidates really wanted, Cooliris tailored their message to each individual. Furthermore, they had Austin, their resident technical genius, spend much more time with candidates. Finally, they shared their monetization vision so candidates could see that Cooliris could be a large, long-term success.

ii. In addition, as the Cooliris team grew, they recognized that other types of candidates (such as sales candidates) would have different desires that would need to be addressed differently.

d. Lastly, the Cooliris team reframed the recruiting challenge. i. Cooliris came to recognize that recruiting was a full-time effort.

ii. Cooliris came to realize that they should never stop recruiting and maintained lists of interesting candidates who might be a good fit in the future, thereby saving time and effort in future recruiting efforts.

What Happened Josh and the Cooliris team successfully made radical changes to their recruiting process, which both increased the success rates of recruiting efforts and, more importantly, led to hiring more capable team members. As Cooliris soon found by experience, A+ players did indeed hire and incentivize other A+ players to join. Within six months of revising the process, the team had grown dramatically (to approximately 12 full time individuals and 36 interns) and was making significant strides forward in reaching the product vision.

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Appendix A: List of Potential Candidate Attributes

What Should You Look for in a Technical Candidate? Directions: Identify the eight most important eight that you would look for in hiring a core technical team member, and rank them in order from 1-8. Draw a line at the point where the must-haves end and the nice to haves begin, if there is such a place in your list. Be prepared to defend your list.

__ Honest

__ Youthful / Energetic

__ Articulate

__ Highly analytical

__ Communicative

__ Enjoyable to be around

__ Solid academic credentials from a top school

__ Big name company experience

__ Passion for the product vision

__ Hunger for success

__ Personable

__ Tendency toward entrepreneurship

__ Expertise in a technical domain the company is missing

__ Skill at managing people and process

__ High level of intelligence for and knowledge about the field

__ Humble

__ Outgoing

__ Bias toward implementation over strategy

__ Startup experience

__ Solid organizational skills

__ Experience in a team environment

__ Experience in a creative environment

__ Good short game on the golf course

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Appendix B: Cooliris List of Desired Attributes

1. Passion for the Product Vision

2. Hunger for Success

3. Tendency towards entrepreneurial leadership

4. Expertise/Experience in a technical domain that were lacking in

5. High level of intelligence for and knowledge about the field

6. Bias towards execution over vision/strategy

7. Communicative

8. Humble