A roadmap from a Silicon Valley recruiter on efficiently building Israeli (and other non-US birthed companies) to Scale Up in the US
These are notes from a presentation delivered in Tel Aviv @Vintage Investment Partners annual CEO summit
I’ve been helping Venture and PE-backed companies build their GTM teams to scale for over 20 years now, and have placed close to a thousand executives. Many of these companies were founded outside the US, in Europe, in Australia, India, and….in Israel. Many of these companies have gone on to have multi-billion dollar liquidity events, and a good 30% were founded outside the States.
One of my early assignments as a newly-minted valley recruiter was for Checkpoint Software. The projects for Checkpoint, while challenging, went well, and I continued to work with that valley based Israeli network. I soon gained a positive reputation for guiding these Israeli tech companies along their journey to expand into the US. Some of the now well-known success stories I helped along the way include Palo Alto Networks, Imperva, JFROG and many many others. I love this work, I like the intensity, the people and the pace. Personally I much prefer direct communication. I’m much more likely to help you succeed if you tell me the real deal in real-time. Israeli founder CEOs are direct and I appreciate that. In Silicon Valley we admire that drive and grit — it gives these leaders an edge, and I wouldn’t change a thing in that regard. In fact, I think its funny that Israeli’s are seen as “too” direct and aggressive when expanding into the US. Americans, as compared to most Europeans, Asians and other cultures, are often seen as outspoken, rude and loud — think the “Ugly American” stereotype. Only, Israeli’s seem to have elevated this to an art.
This is what I want to talk about today — the cultural stereotypes, and market “bias” you will encounter when you expand in the US, and how to navigate them successfully.
Why we LOVE Israeli’s
We all know that Israel has been a consistent source of high-tech innovation, producing an incredible range of tools from everyday items like the USB stick, to mapping technology most people use on an every-day-basis to navigate from point to point.
For many Israeli start-ups, expansion into the US is an important part of their growth journey, if not the key to their scaling and financial success. There are almost 700 technology companies in Israel with offices in the US right now, and many more on the road to expansion.
In 2014, Waze CEO & Co-Founder Noam Bardin published an article about why, when and how to move your start-up to the US. “If your core market is the US,” he said, “it is critical to be there for product feedback. In general, except for very few cases, the US market should be your first. If you are successful there you can be successful anywhere else.” Probably true.
Google “Israeli start-ups,” and you’ll find countless articles about ‘Startup Nation’ and the many lessons we can learn from Israeli entrepreneurs. They are famously innovative. Tenacious. High energy. Technically gifted. Bold risk-takers. Driven to succeed. I’m sure it’s no surprise that these traits are also openly sought in Silicon Valley.
Boundless innovation. Incredible tech. Visionary leaders. Don’t change a thing on that front. However, searches for Israeli start-ups are more challenging than those for most other non-US “birthed” start-ups…why?
In my experience, the biggest issues that arise in recruiting for Israeli companies have to do with cultural differences, misperceptions and the communication challenges that arise from having teams separated by 10 time zones and 7000 miles.
When I have worked on behalf of even the most successful Israeli founders, I’ve encountered a less positive perception…consistently. It slows down, and complicates recruiting great talent at best, and it costs time, money and potentially leads to market failure at worst.
Why you kind of SCARE us
The market feedback and stereotypes were consistent. Hard to negotiate with. Aggressive to the point of combativeness. Doesn’t partner with us. Brutally direct. “Not a culture fit for me.”
The most common conversation I have with executives when they learn the company I’m calling them about was founded in Israel is built on this stereotype:
− They’re concerned that development and R&D are probably in Israel, and the company is pushing for sales and marketing in the US. To them this means that the company values tech and product, but doesn’t necessarily value sales, probably doesn’t really value marketing, and certainly doesn’t give a hoot about culture, team, or work-life balance.
− They’re concerned that decisions will only be made in Israel, and — based in the US — they’ll have the responsibility to grow business in the US, but little access to the decision-makers and little access to the strategic direction behind the scenes.
− They are worried that there will be an “us vs them” set up from the start.
Unfortunately, the market’s sensitivity to this culture “chasm” makes it more likely to become a self-fulfilling prophecy.
Something goes wrong with your inaugural hire and the market starts to assume it’s a culture thing. For example, a client of mine recently had to fire their head of marketing. That head of marketing was creating silos, miss communicating with sales, and essentially failing to do the job. This was costly to the company; lowered moral; and they had to let her go. It was the RIGHT thing to do. What she messaged into the market was the culture was stifling, they wouldn’t give her any budget to do the job, that she was micromanaged. When I got into market to find their CMO this came up over and over again. Not fair, but shows the danger of under hiring; and of how these mistakes, when added to a culture issue = brand issues for my client in the market.
So what to do? There are several rules to live by when you are expanding into the US, ready to hire your US team and want to do so with minimum angst and maximum success. Those rules are simple but not easy:
• First: Partner with high quality, data-driven people and DO trust their counsel. Ask for the data, review it together, then take their counsel.
• Second: Develop a balanced scorecard. Measure for what will matter to your business.
• Third: Be realistic. Don’t under hire; but don’t over hire either.
• Fourth: Don’t fall into the compensation trap
First, you must partner to be successful in a reasonably efficient time frame.
Israel is 5700 miles from New York and 7,400 miles from Silicon Valley. You are getting into a logistical situation that isn’t going to be straight forward. To succeed in a reasonable period of time you absolutely have to partner with high quality, data-driven people who know the market, and then trust them to help you navigate it. Your high quality investor will probably have a talent partner, so partner up with them. They will have seen this movie many times. If there isn’t a talent partner, leverage your US GP’s network and resources. They’ve seen what you’re about to do countless times — both successfully and…not — so seek their counsel on how to address organizational structure, compensation, and communication.
If you try to do it on their own, you will likely fail. You can’t hire who you know, you should not use the same resources who so aptly helped you get to success in Israel. Expand outside your own network. What got you to the point of expansion INTO the US will not carry you through expanding and scaling IN the US.
Israel is a direct communication culture vs our more indirect one. US CEO’s will say “I disagree,” Israeli CEO’s will say “You are wrong.” American’s are direct, on almost any global spectrum, but Israeli’s are even more so. Further end of that spectrum.
When you are a small company, there’s room for true and false. As you grow, the construct of true and false just isn’t there as clearly. You are used to being the “smartest” person in the room, but now you need to be the person who makes everyone else feel they are the smartest.
If you don’t partner, and you try to do it with your own network, and in that same style that got you into the US, you will likely fail and you’ll leave some collateral damage. The biggest impact of these mistakes, and collateral damage, is you can burn through the market when looking to build out their teams, and — in turn- help perpetuate the stereotypes of Israeli CEOs and leaders trying to do it on their own.
Another major step toward building partnership in the US market is to move to the US. If that’s not possible, then that CEO needs to commit to spending significant time in the US, and must truly partner closely with their US investors and colleagues early and often. Waze, Palo Alto, Imperva, Houzz, Lemonade; these CEO and founders have moved to the US for the critical growth stages. If you take away the time zone problem, then you can just focus on communication.
Two: When you’ve established your initial US partner network, and are ready to expand your team, know who and what you are looking for. Agree on it, and be able to repeat the message as to “who and why” easily. Develop a balanced scorecard for each executive you seek to hire based on this “who and why” statement. Assess skills against what you need to succeed in your first year success metrics. Ensure that you and your core team agree on what you want before you get into the market. Take the time to define what it is you are looking for, and make sure you can find some “personas” who fit that profile.
Collaborate on this scorecard with your US talent partner — if you have identified one — and your investor GP team. Share it internally and make sure that anyone with a “yes/no” vote agrees on the criteria well before you get into market.
Make sure you are assessing the candidates against a well thought out scorecard for the competencies you need to succeed now.
Think of it like house hunting. Don’t waste your time looking at beautiful houses inland if you must be on the beach. It’s a waste of your time, and it will, in turn, contribute to burning through the market and potentially creating ill will. So define the parameters, like you would a neighborhood or a location, and then asses these skills consistently.
Three: As you build your scorecard, be realistic. Look to hire the right person for where you are now, and where you are looking to go in the next 18 months. If you are a $20M devops company looking for a CMO, you will not likely hire the CMO of Atlassian, so don’t use him as a benchmark. Use his profile before he joined Atlassian — when he was CMO of Teespring — as an example. Or, look at his direct reports at Atlassian now. This is not unique to Israeli startups. A $30M high growth and wonderful DevOps client out of Europe told me he “had to hire the CMO from Slack.” It wasn’t going to happen. However, we did hire a great scale-up CMO who had marketed/sold in a very similar bottom’s up way, and we hired the CMO from Slack as a board member. Much more appropriate all around. The company is now a global Unicorn.
If your company is a $50M security startup, do not hire a big resume from Symantec, it will just cost a lot and likely be a huge mismatch. That mismatch can be redacted into the market as a “culture fail” by an Israeli company.
Don’t under-hire either. Make sure your initial hires are the right hires to achieve your one- to two-year goals. Hire a unified but diverse team of execs in the US with different background than the founding team.
I see many of these companies make huge mistakes by hiring a junior person to do an experienced executive’s job. Yes, they might learn on the job and move up, but if they are remote from other senior leadership team members, if it’s their first time in an international senior leadership role, and, it’s your first time expanding into the US?…it’s more likely a recipe for a mis-hire.
And, when that person quits and blames the situation on “another Israeli founder” the market won’t question it, and replacing them will be that much harder.
Look for executives who have worked for Israeli companies successfully. At a minimum look for execs who have worked for European or other non US founded companies and are used to communicating across time zones, and can influence and lead remotely. These initial hires will set the bar for all subsequent US hires.
Address communication upfront, and try to establish an open flow of communication instead of command and control. Talk about it openly with executive-level candidates and get their input.
FOUR: Sometimes the biggest “trap” in hiring beachhead employees is compensation. Don’t fall into it.
Do your research. Get good market data. Don’t set your compensation ranges in a “box” and don’t do it based on your Israeli team’s comp. Comp varies from region to region in the US and it certainly varies a huge amount from country to country.
Be open about what you don’t know and get that information — from a few sources. Again, if you have US investors with talent partners, reach out to them. There are great sources, like OptionImpact that — as a VC-funded tech company — you can get free and unfettered access to just by filling out their comp surveys. It’s a user-generated content database, but it’s also the “gold standard” used by top firms (VC and VC recruiting) in the US. So use it.
Set the comp before you get into market, and make sure you are at market. Then when you go to offer, know what’s important to your candidate; and still be at market. You shouldn’t be above market, but you definitely shouldn’t be below it. If you lose a great candidate on low compensation because you are “out of the ballpark” there is a huge opportunity cost. Know what market is and be there.
This information / and informed approach will keep you out of that “trap” of under offering initially, or shooting too low, or having unrealistic expectations.
In closing, the many Israeli CEOs who have successfully built out companies in the US, the top VCs and the well-known US CEOs running top tech companies on both coasts overwhelmingly said that what was most important to them as they scaled up was true partnership, open communication and trust. If at all possible, move to the US, to New York, to the Bay Area, to the base you’ll expand from. Seek out confidants who can evolve into trusted partners; go outside your initial network that’s served you so well to get to the stage of expanding into the US. It’s a different network that helped you grow in Israel, than will now help you grow in the US. To have a good partner you have to be a good partner, so be that partner.
