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Great engineering talent is the life-blood of the innovation economy. Startups across the nation, from New York to Silicon Valley, are in an all-out war for the workers they need for their ideas to thrive. Over the next decade, we believe there will be one million more technical jobs than the domestic workforce can fill. Comprehensive immigration reform is an opportunity for our nation to invest in her innovation engine.

Current immigration policy already stacks the deck against small, innovative companies who don’t have the resources and hiring flexibility of corporate behemoths or offshore outsourcers. Today’s paper-choked H1-B system only accepts visa applications once a year in April, and, if you are lucky enough to win one, finally lets you hire the candidate six months later. (If you aren’t, tough luck. Wait a year to restart the process, pushing out the earliest start date 18 months.) That level of inflexibility and delay is simply not an option for startups, for whom every hire is mission-critical and every day counts. Perhaps as a result, less than two percent of H1-B visas currently go to employees of young venture capital-backed technology companies.

Unfortunately, the Senate’s current reform proposals would create new hurdles for startups without addressing the fundamental process flaws in the current system. Although increasing the number of H1-Bs is a step in the right direction, the new accompanying red tape all but ensures that startups will be squeezed out entirely. Startups have to be lean and nimble to survive. Forcing them to prove they’ve exhausted domestic options before making a foreign hire, or limiting their subsequent ability to make staffing changes, will further hamper their ability to compete. So will requiring them to meet minimum salary levels set for large corporations, since startup employees often happily accept lower salaries in return for equity upside.

Regulations embedded in current reform proposals punish startups for the sins of the outsourcer. Our young technology companies are hiring as many Americans as they can, not pushing valuable jobs offshore or replacing U.S citizens with lower-paid non-citizens. According to a Silicon Valley Bank survey earlier this year, nine out of ten employers in consumer internet and enterprise software said it was a challenge to find qualified workers to fill open positions. Similarly, a recent analysis by the Brookings Institution found 46 percent of job openings that go unfilled for one month or longer require science or technology expertise. Moreover, growth in the tech sector means hundreds of thousands of new, high-paying jobs for Americans. A recent study by the Bay Area Council Economic Institute finds that for every new high-tech job, 4.3 others are created in the local economy.

Rather than reinforcing a broken system, here are some concrete proposals that will level the playing field and turbocharge American innovation:

First, exempt startups (defined as companies less than five years old with fewer than 500 employees) from the H1-B cap, or at a minimum allocate a separate quota to allow them to compete fairly for talent.

Second, allow startups to apply for and use H1-Bs throughout the year to reflect their need for agility.

Third, eliminate requirements for “recruitment” or “non-displacement” attestations or minimum pay levels for startups.

Fourth, create a new “Startup Visa” that allows foreign-born-born entrepreneurs who raise at least, say, $250,000 of funding from qualified U.S. investors to live and start their business here.

And finally, simplify and bring the entire H1-B process online for everyone. (I’m sure there are plenty of startups that would jump at the chance to help with that last objective.)

As the Gang of Eight’s immigration package winds its way through committee, let’s not miss a once-in-a-lifetime opportunity to accelerate American innovation, by funneling the world’s best and brightest to our country’s best and brightest young companies.

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, Andreessen Horowitz.

Every aspiring CEO has heard of David Ogilvy’s famous admonition, usually paraphrased as “Hire people smarter than yourself” or words to that effect.  In my case, following that good advice has not been hard.  Applying that criterion has meant that I’ve had an enormous pool of qualified candidates to choose from.  As I’ve progressed in my career, however, I’ve come to believe in the importance of another, less discussed principle as the company grows:  Hire people who are different from you, and who will have the courage to challenge you when it matters.

Time to step up:  Hiring the VP of Sales

For the technology founder-led companies we love to back at Andreessen Horowitz, recognizing the need to “hire different” is particularly important when the company is transitioning from initial product development mode into sales mode.  If you’re an a16z founder, you’re very likely an engineer or computer scientist.  Virtually all of your early hires will have been engineers or developers.  While you’ve hopefully hired people who are smarter than you, they may not be that different from you.  Now you’ve got a product, it’s time to hire a VP of Sales.  Prepare to hire different—very different!

A typical sales culture is different from a typical engineering culture in almost every aspect—from personality types to values to dress code to working hours.   Introducing sales DNA is highly likely to clash with your engineering culture.  That prospect will feel quite uncomfortable, but is absolutely critical if you’re serious about building a real company.

While on an intellectual level you may recognize the need to hire an executive who’s different, it can be really hard to act on it in practice.  Most of us are naturally more comfortable with people who are like us.  If as a first-time tech founder CEO you feel entirely comfortable with that VP of Sales candidate, she’s probably not the right one.  The right candidate will feel risky to you from the cultural fit point of view.  So, you’ll want to know what the team thinks.  However, the interview feedback from the team is likely to make you even more uncomfortable.  Here are some real examples of technical team feedback from interviews of highly qualified sales candidates:

I’m worried that he’s rough around the edges and would clash with our people.”

“His tone was very A-type salesman.”

I fear for the culture if she were to come aboard.

He had very limited understanding of our product.

“I don’t think he has much idea of what we do and how we do it.”

“I think he could generate massive revenue, but he’d destroy the culture by building a Salesforce-type sales organization.”

So, hiring the right sales leader will involve not just overruling your own emotions, but rejecting the strongly held opinions of several members of your team.  Remember you’re not recruiting her for her knowledge of the company, but for her knowledge of the outside world.  As my partner Ben puts it: “Generally, you want product leaders with superior internal knowledge (knowledge of the code base, knowledge of the culture, knowledge of the people).  With sales people, it’s the opposite—they need to have external knowledge (knowledge of customers, purchasing processes, customer org structures, customer cultures, . . .)”.

Two-way street

While you and the team are trying to evaluate this unfamiliar animal and assess whether you can handle it in your habitat, don’t forget she’s evaluating you too.  Just as you’re asking yourselves things like, “Will this person destroy our culture?”, she’s asking herself, “Are these guys serious about building a business, and will I get the support I need to build a winning sales organization?  Will this CEO have my back with the company and the board?”  She won’t need everyone’s buy-in day one—a good VP of sales will earn that over time—but she will need full and sustained support from you and the board to put in place the processes, people and sales culture that can transform a great product organization into a great business.   This is your time to lead.  The way you handle the recruiting process will speak volumes about whether you’re the leader she wants to bet her career on.

Hiring different at Opsware

At Loudcloud/Opsware, we went though three VPs of sales in the first four years of the company.  Each one of them was well liked and an excellent fit with the culture, but not one of them was able to consistently hit our quarterly sales targets.  By 2003, looking for our fourth sales leader in as many years, we met a guy named Mark Cranney[1].  He seemed very well qualified, and he gave us several pages of references to call if we wanted proof.  However, virtually everyone who interviewed him had similar feedback:  “He might be a great sales guy, but there’s no way he’d fit here.  Way too risky.”

Ben Horowitz and I called every one of his references.  They confirmed that Mark was an exceptional sales leader who had consistently achieved great results.  But could we take the risk of introducing such a culturally different executive into Opsware’s strong culture?  Only Ben and I seemed to think so.  We hired him.

Hiring Mark, and the many sales professionals he added to our ranks, was indeed a shock to the system.  It created significant tension in the company at times, as sales culture met engineering culture.  It was a tension that we badly needed—a healthy tension between the demanding outside world of customer needs and competitive pressures and our sheltered inside world of PRDs and predictable development schedules.  Mark was unreasonable—he told it like it was, not how we wanted it to be.  It stretched every part of the company, from engineering to marketing to legal to finance.  Gradually, we became a more customer-driven organization and we started making our numbers.  Over time, cultural discomfort shifted to mutual respect and even to affection.  In the years that followed, we won hundreds of the world’s most demanding enterprise IT accounts, met their needs with market-leading products, outpaced a brutally tough competitor, and grew bookings and revenues at a rapid pace.  For Opsware, hiring different was the key to unlocking the company’s true potential.

The courage to challenge

Strong leaders don’t just hire people who are smarter than them, or different from them.  They also look for people who have the courage to challenge them, and they create a culture that encourages people to do so.  Ironically, being surrounded by lots of smart people makes it harder to speak up, particularly for more junior team members.  “If all of these smart people think X makes sense, who am I to challenge them?”  The more senior you are, the less likely you are to be challenged, and the more you will have to work to encourage it.  “She’s the CEO—she must know what she’s doing.  I’m not going to question it.”  I don’t know about you, but if I were the emperor, I’d want someone to tell me before I walked down the street naked.  Like the emperor, you won’t hear diverse opinions if you don’t actively solicit them—and resist the temptation to slaughter them with your ferocious intellect the minute they’re expressed!

At Andreessen Horowitz, we’re fortunate to have a lot of very smart people, more senior and more junior, around the table when we talk about companies we’ve just met.  It takes real courage to speak up when everyone else seems to love (or hate) some opportunity we’ve just seen, but we particularly want to hear that different view.  We work hard to encourage people to speak up.  The best investments are often controversial, and vigorous debate leads to better investment decisions.

The same applies to business decisions.  As CEO, it’s your job to make the call.  Having people around the table with the background and the courage to be controversial makes it more likely you’ll make the right one.  As your company grows, recognize that you’ll need to hire different, and strive to build a culture that encourages and rewards constructive challenge and diversity of opinion.


[1] Mark now runs the Market Development function for Andreessen Horowitz, connecting the firm and our portfolio companies with the world’s top corporations.

I recently had the privilege of attending F.ounders, a unique event for a select group of tech founders and others from Europe, the US and Asia, held in my hometown of Dublin, Ireland.  In the best Irish tradition of limericks, this is a tribute to the event and its own remarkable founder, Paddy Cosgrave.  (For more on F.ounders, check out The Next Web’s article on the event).

F.ounders 2011
A Chronicle in Verse

Prelude
While Old Europe stressed over Greeks,
The Irish did “Davos for Geeks”.
The mix was eclectic
And the pace it was hectic.
They’ll be talking about it for weeks.

Thursday
We started by crawling some pubs
Led by teams of gregarious Dubs.
With two pints of Guinness
Or stronger stuff in us,
We were tempted to head for the clubs.

but instead…
In a booze-induced state of divinity,
The F.ounders converged upon Trinity.
To a beautiful hall
Lined with books wall to wall
Where we steadily grew in affinity.

By the time that we moved on to dinner,
It was clear we were onto a winner.
Don’t look now, but there’s Bono Vox!
And the number of techies here rocks!
Here a Valley guy, there a Berliner.

From there it was back to the Green.
The Horseshoe Bar was a happening scene.
Take some young entrepreneurs,
Add some potent liqueurs,
I’m sure you can guess what I mean…

Friday
Nursing hangovers but otherwise unbowed,
We joined with the Mansion House crowd.
Where the panelists waxed vocal
On social and local
And mobile and payments and cloud. 

Would the wonders of F.ounders never cease?
To the Áras, with an escort of police.
We were spellbound by the resident,
Soon-to-be former President,
The remarkable Mary McAleese.

Then on to the Guinness Hopstore,
For fine food and black stuff galore,
With Riverdance inspiration
We succumbed to temptation,
And ended up on the dance floor.

Saturday
Scott Harrison inspired us with Charity:
Water of purity and clarity.
He held us enchanted
We’d no more take for granted
What flows from our taps with regularity.  

Then dinner under Dublin Castle’s eaves,
Where once were brought rebels and thieves.
But for modern Young Turks,
One of Jim Fitz’s works:
Che Guevara, made entirely of Steves.

And for those of us still on our feet
Off to Krystle, 21 Harcourt Street.
For a mad grand finale
Halloween bacchanal,
A wild drunken Irish trick or treat.

Sunday
As the day broke we made our return
To our blessed oasis, Shelbourne.
To pack up our things.
We’d been treated like kings.
But it was finally time to adjourn.

Coda
F.ounders’ quiet but flawless organization
Showcased Ireland as the top tech location.
While Gaelic hospitality
And easy informality
Cemented a stellar reputation.

But what gives this event its mystique,
You won’t find in any review or critique.
Between the panels and craic,
There was time just to yack.
Conversation made F.ounders unique.

So let’s give a big F.ounders cheer,
For the people who brought us all here.
To Paddy Cosgrave!
And to Daire and Dave!
To the F.ounders team!  See you next year!

Slán agus beannacht libh go léir!

Twenty-five years ago, I funded my Stanford MBA by becoming a junkie—a spreadsheet junkie, that is. IBM had just acquired a high-flying Silicon Valley technology company called ROLM, and the IBM execs needed data and analysis to manage and track their progress against their business goals. As a young engineer just entering the business world, I was surprised by just how extraordinarily difficult it was for managers to obtain relevant information on a timely basis to guide their decisions—even in the corporation that invented business computing.

Their difficulty was my opportunity, and I earned many thousands of dollars writing ever more sophisticated Lotus 1-2-3 macros to automate the extraction and analysis of market data for my new white-shirted bosses from Armonk, NY. The money’s long gone, but the key lesson from that time remained with me as I advanced into more senior management roles in six subsequent companies: for a manager trying to make high-quality fact-based decisions every day, it’s really hard to get good data.

Business Intelligence – Big Market, Low Satisfaction

It turns out that it’s worth a lot of money to customers to try to solve this problem. In fact, their willingness to spend has funded a lot more than just my MBA in the last 25 years. It’s spawned a $25 billion industry known as Business Intelligence, or BI, devoted to extracting and making sense of the masses of data trapped in corporate IT systems, with a couple of billion dollar revenue companies (Business Objects and Cognos) and one half-billion dollar company (Hyperion), along with thousands of smaller software companies and consulting firms.

But these companies achieved this level of success without even really solving the problem. For many IT buyers, traditional BI solutions came to epitomize everything that was wrong with large-scale enterprise software.

  • Just to get started required a spend of at least a million dollars on software and hardware, with maybe another million on consultants for deployment and integration with a separate data warehouse, as well as the unwieldy ERP or accounting systems that were the source of the data.
  • Maintenance and upgrades cost another 20% a year.
  • Deployment would take six to 12 months, by which time user requirements might have changed.
  • Trying to add a field or two to a dashboard, or create that new report format requested by the CEO might take weeks because changes and ongoing maintenance typically depended on a small team of dedicated experts with deep knowledge of the back-office systems and BI solution.

It’s no wonder, then, that many traditional BI implementations fell well short of their promise—confined to a small set of users and dashboards, or even shelved entirely.

As a result, that first wave of big BI pioneers is no longer with us, at least not as independent companies (SAP bought Business Objects for $6.8B, Oracle bought Hyperion for $4.5B, and IBM bought Cognos for $4.9B—all in 2007). In their defense, they did a pretty remarkable job with the technology and software business models of the time and created billions of dollars of value for their shareholders. Furthermore, their solutions continue to generate sizeable legacy software sales and consulting revenues for their new parents.

BI in the Cloud – The Chance to Do it Right

Business users’ appetite for timely, relevant information and analysis for decision-making hasn’t diminished since I wrote my first Lotus macro back in 1984. In fact, it’s stronger than ever. What has changed fundamentally in the last few years is our ability to meet enterprise customer needs efficiently and effectively.

The SaaS delivery model means the customer starts to see value from their software within days or weeks, with an up-front investment of thousands, not millions of dollars. Changes and upgrades are seamless, and included in the monthly subscription. The cloud enables consumption to be scaled up and down on demand on a pay-as-you-go basis. The platform shift to SaaS and cloud computing creates an opportunity to finally deliver on the promise of Business Intelligence.

Like their peers in other large established software categories, the old BI vendors are valiantly striving to port their legacy client-server stacks to the cloud. In any platform shift, however, the big winners are the new entrants who designed their product and business model around the new platform from the beginning.

Introducing GoodData

Just like Salesforce.com in sales-force automation and Netsuite in cloud-based ERP, we believe there’s an emerging opportunity for the right new entrant to build a giant new franchise in BI. We’re putting our money on GoodData. We’ve followed the company closely since we invested in their original seed round, and we’re delighted now to be leading a $15 million expansion round to capitalize on the strong lead they’ve established in BI for the cloud.

Our enthusiasm starts, as always, with the Entrepreneur. CEO Roman Stanek is that powerful combination of brilliant product visionary and compelling sales guy. He started two successful software companies, Netbeans and Systinet, from his native Czech Republic prior to founding GoodData in 2007. He’s assembled a stellar team to pursue the BI opportunity and they’re executing very well.

We’ve been highly impressed with GoodData’s Product. Like its market-leading peers in other SaaS categories, GoodData was built on a multi-tenant platform designed expressly for the cloud. Unlike other BI offerings, it’s a complete solution, avoiding the traditional struggle to integrate one vendor’s BI product with another vendor’s data warehouse. While it can be implemented within days, the product is built for large scale. That’s critically important, because when you offer business users true operational business intelligence on demand, adoption and utilization grow explosively. (For example, there were 2 million report executions on the GoodData platform in July, up almost tenfold in six months.)

GoodData has already signed more than 100 direct and 2,500 indirect Customers, including mid-sized enterprises like Enterasys Networks and Pandora, as well as large corporations like Time Warner Cable and Capgemini. When we spoke to them, they said things like:

“The great thing about GoodData is that it’s been valuable right from the beginning – no waiting game…Our sales team now has direct access to metrics that used to take days for our engineering team to produce.”

“With GoodData we don’t have to jump through hoops to view our critical data.”

“GoodData has rapidly become our source of truth.”

“It’s put the power in the hands of our end-users.”

GoodData’s target is the ever-increasing number of established enterprise customers now migrating to cloud apps like Salesforce, Netsuite, Google Apps and Zendesk, as well as the new generation of players like Pandora who have built their entire business on the cloud from the beginning. Because cloud applications are dramatically easier and cheaper to implement, customers are deploying far more software than they did in the old world—one customer we talked to already has 18 cloud apps.

Roman and his team realized from the outset that it all starts with Apps: a cloud-based BI solution that provided dashboards, reporting and analytics on top of individual cloud apps as well as across apps—for example, combining website data from Google Analytics, marketing analytics from Marketo and CRM data from Salesforce to produce an integrated Lead to Cash report—would be hugely valuable to these customers. They already support most of the leading SaaS and cloud apps, and the number is increasing by the week.

However, they’ve gone further than that, creating an innovative Partner program called Powered by GoodData that allows leading SaaS and cloud providers to embed dashboards and analytics directly into their own applications. For example, help-desk software leader Zendesk—itself one of the most impressive exemplars of the new generation of cloud-based app providers—makes a compelling solution even more compelling by providing GoodData’s advanced dashboarding and analytics to its best customers.

In Conclusion

Business Intelligence, and IT as a whole, has come a long way since my days as a spreadsheet junkie—and the best is yet to come as the shift to the cloud becomes mainstream. Management’s demand for relevant and timely information for business decision-making will continue to grow, and cloud-based BI will make it accessible to more users, in more companies, than would ever have been possible under the old regime.

As veterans of the original cloud computing company, Loudcloud, we’re excited to add GoodData to the list of Andreessen Horowitz-backed companies that are leading the charge to that brave new world.