You often hear how important it is to look at a person or company’s history before hiring, investing, etc., and although it is crucial, it is also crucial to do more than look superficially. Conversely, just looking superficially can cause significant damage and lead you into a bad decision.
Using track record when hiring
Probably the most important factor when considering a candidate is what they have previously done in their career. While a weak candidate can shine for a day of interviews and a great candidate may not be good in an interview environment, what a person has done previously in their career is a strong indicator of what they can do for you.
The challenge is how to analyze a person’s track record. If you look on LinkedIn, 90 percent of people are all in the top 10 percent. In some cases (though I have found it rare among candidates for senior positions), people lie about their prior roles and achievements. This issue is easy to uncover; you just need to ensure you do your due diligence on background and reference checks. The one caveat is not to rely on the references that you are given, as almost anyone can find three or four people (often friends) that will say good things about them. You need to dig deeper, for key positions and achievements figure out who they reported to or worked with, then reach out directly to those people (I usually use LinkedIn) to get the real story.
The other key element of checking candidates’ track records is understanding their true roles on the major achievements they tout. In the game industry (though you see similar experiences in any industry), candidates will lead with the successful games they worked on. For example, you may get a resume for a Product Manager who touts that he worked on Candy Crush. While he may have been responsible for its success, he may also have been the person who proofread the reports on the game’s progress and did not create anything. I have seen designers who were part of major hits but their biggest contribution was getting coffee for the people who really led design. Before crediting someone because of a project they were involved with, dig deeply with them and with their references to understand their true contribution.
Using track record for investment decisions
Investing is the other area where track record is a powerful tool, impacting everything from venture/angel investing to investing in public companies. On the former, investors always use the track record of the management team when making investment decisions. What is important for investors to look at is not just what successes the management team has been involved with but more importantly how they contributed to those successes (similar to what I recommended you look at in a job candidate). Many people were in the right place at the right time; maybe one of Playfish’s first hires was not necessarily one of the creators of the free to play model, and lacks a skill set to replicate that success. Investors need to use track record to understand if the management team has the skills for success, and not just look at wins and losses.
When investing in companies (either public or mid/late stage), it’s also imperative to look beyond the obvious at the track record of their products (or services). Every market is hyper-competitive so it is crucial to understand if the company has a competitive advantage when developing products. Do they have a creative sense, like Apple, that always provides a competitive advantage? Do they have an understanding of quality, like Honda, that provides a perpetual competitive advantage? Do they have a pricing advantage, either through lower labor costs or better logistics, that they can always undercut competitors? Even if a company has one or two successful products (if they were successful because of timing or other extraneous factors), if you cannot answer the above questions positively chances are they cannot replicate this success.
- Track record is one of the most powerful indicators of whether a potential hire or potential investment will be successful.
- When looking at hiring candidates, you need to look at their track record beyond the obvious. You must understand how much they actually contributed to the successes for which they take credit.
- When investing, you need to understand how the team or company you are investing in created the track record. Was it skills that will help them succeed again or extraneous factors that cannot be replicated?