A Startup’s Secret Weapon: Equal Pay

Longtime entrepreneur Peter Sisson has a strategy for attracting and retaining a cohesive team: eliminate salary envy.
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TRANSCRIPT

Question: How do you make smart hiring decisions?

Peter Sisson: It's very hard. Hiring is the most important job of the CEO, and it's the hardest in many ways, because if you think about it, the screening process is broken, right? You get an e-mail and a résumé, and you're supposed to figure out who this person is. So clearly, the screening process means you're leaving some good people behind. If you can find someone who you're somehow connected with, that sort of is the pre-screen process, either through someone -- so that helps with the screening. You know, different people look for different things. Part of the reason I'm an entrepreneur is that I am not a political animal. I don't think I could ever succeed, quite frankly, in a big enterprise where, in my opinion -- and this may be unfair to people in big enterprises -- where half the battle of getting ahead is playing the political game correctly. It's not purely about the best ideas.

In a startup environment, you get a chance to see your ideas tried very quickly, and it's not about who you play golf with. When I'm hiring, I try to look for people who have succeeded in environments where politics probably wasn't part of their success. And there are ways to read that. You can read it in body language and in answers to certain questions. But I really try to wean out the political animals and focus on people who are really good, not just really politically savvy. And the other thing I do is, I think it's very important to ask them some questions that are more on the human side, not just -- you know, the work stuff is a given. Do they have the skills? You're going to get that out of the way pretty quickly. But then you've got a sort of, is this someone I want to work with? Is this someone I can trust? Is this someone who's a team player? And one of the things I did with my first company, actually, with WineShopper, was the condition of being hired was that everyone was going to make the same base salary, and it was going to be low. And you know, this was when, with Kleiner Perkins and Amazon backing us, there are a lot of people who were coming to us with dollar signs in their eyes. And I said, I want to wean out the people that are really passionate about this opportunity, so I'm going to only offer -- and these were people from big companies, seasoned people -- I'm going to only offer $130,000 in salary. I'll take that salary, and everyone will get the same salary. And for the first year everyone's going to get the same salary. And then after that it'll be more merit-based.

And that was really effective at building a cohesive team, because one, people who were in it just for the money, that was a turnoff for them, and they were out the door. They never even applied. And then everyone felt like -- there's this whole sort of salary envy thing that can happen in a management team, like how come that person's getting paid more? If everyone knows that everybody's paid the same, then it sort of breaks down that one potential for tension in the office. And it worked great. We built at WineShopper -- it was probably the best management team I've ever built. I mean, it really was an excellent team. And so it's a tough process, though. And you do have to move quickly when you make a mistake.

Recorded on October 1, 2009