Zero to IPO

with George Northup

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Psych Profiles

Vetting business partners


Instructor
George Northup

CEO, Startup Whisperer, Lacrosse Coach

Lessons Learned

Use psychological profiles to take a look ‘under the hood’ at potential hires.

It is hard to predict the behavior of the investors, partners, and board members.

Interviews are not enough. Mitigate risk by checking references and vetting reputation.

Transcript

Lesson: Zero to IPO with George Northup

Step #6 Psych Profiles: Vetting business partners

It's hard to ultimately predict the behavior of the partners you choose from an investor board or a management standpoint, and when I was younger I used to think that I was so smart that I knew how to interview people and ask the right questions, and I would know based on that. Now over the years, I decided it's a flip of the coin. God knows if what you see is what you get. However, what I do feel is that you can mitigate risk by spending some time with the individuals, whether potential investors, board members, or fellow executives, and also by reputation, and also by back channel references. So I think you can mitigate risk.

Also for me, it would probably not be something that would work in a VC funding situation, but within my own management team, I use psychological profiling before we hire somebody. And these are very powerful tools where they let you get a very objective, scientific look under the hood, if you will, to just confirm what your perceptions are about people.

Typically, I used a firm called GRI, and also, full disclosure, I'm an advisor to the company. But this company has about 100 years of science behind it, and what it does is, in about one minute, someone can take an online questionnaire. All you do is really go through two different lists of words, and one checks the words that apply to you. It takes about two minutes and it immediately produces a profile and the profile centers at a very high level around the intensity of the person. Another category has to do with their affinity for either being data driven or people driven. Another one is having to do with their, let's call it their patience level. Are they very impatient, or very relaxed? And there's one other metric which I can't remember right now. Oh, it has to do with process. So are they very process and structure oriented or are they informal? This is at a high level. It gives you a very good view. There's a lot more to this and how it can be used.

What I was surprised at was that, there were times when I started to question my judgement on hiring people, and so this became a tool where I could more scientifically and objectively take a look and say was my perception right or wrong? There are a couple of key hires over the years where I used this and it saved me from an alternative decision that probably wouldn't have worked.

When I came to LiveCapital, we had a lot of people and a lot of money. One of the things that was interesting, one of the receptionists at the company, this is at the height of the dot com era, once a week would send an email out to the entire company saying, "Does anybody need supplies?" And so she would put the request out and then later that week we'd have boxes of pens, pads, pencils and hole punches and staplers arrive. And if you looked around the office, people had 10 staplers, 10 hole punchers, and things like that. It was really indicative of the excess of the times in general, not this company.

So maybe my first week there, and I was the CFO of this company originally, so I just told the receptionist, "Do not order supplies ever, and do not ask ever anyone again for this order." And so we never ordered supplies again for the company, and there was never a request for supplies again for the next four years for two reasons. One was that we probably had too much, and the second reason is that we didn't really need them. How many pads and pencils do you need?

Now the funny thing is that when I left the company in 2004 or 2005, I took a box of their pens which had the LiveCapital insignia on it, and I took it with me, and since that time period I've still been using pens from that box, and that supply is still lasting me.

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