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- PayPal Lawsuit Against Google Reveals Recruiting Saga And A Deal Gone Sour
- Startup Mantra: Hire Fast, Fire Fast
| PayPal Lawsuit Against Google Reveals Recruiting Saga And A Deal Gone Sour | Top |
| Google is making a bold play to enter mobile payments , and PayPal doesn’t like it one bit. Shortly after Google announced its new mobile wallet for Android phones today, Paypal filed a lawsuit against Google and two former PayPal executives who now are in charge of mobile payments at Google ( Osama Bedie r and Stephanie Tilenius ). The complaint (embedded below) alleges “misappropriation of trade secrets, and “breach of fiduciary duty.” It revolves around Osama Bedier, who was the VP of Platform, Mobile, and New Ventures at PayPal before he was recruited to work at Google by Android chief Andy Rubin, Google co-founder Larry Page, and Bedier’s former PayPal colleague Stephanie Tilenius (who now heads up Commerce and Payments at Google, and I interviewed yesterday onstage at Disrupt NYC). The lawsuit reveals that Google was negotiatiating with PayPal for two years to power payments on mobile devices. But just as the deal was about to be signed, Google backed off and instead hired the PayPal executive negotiating the deal—Bedier. The lawsuit lays out the sequence of events: By 2010, the executive in charge of the negotiations for PayPal was Osama Bedier. The executive in charge of the negotiations for Google was Andy Rubin. PayPal and Google had a deal finalized and signature-ready on October 26, 2010. By that time, unknown to PayPal, Bedier had just finished a series of job interviews with Google senior executives, culminating with a meeting on October 21 between Bedier, Google Senior Vice President Jonathan Rosenberg, and then-President of Google Larry Page. Though Google's leadership had directed negotiations toward the October 26 finalization months earlier, it now balked when presented with the very deal they had requested. The companies had a term sheet, a two phase roll-out with dates, and all other details nailed down. But, in the interim, Google's leadership had interviewed Bedier, Rather than inking the October 26 deal, Google instead at the last minute professed a shift in mindset on the entire structure of the deal. Bedier was offered a job at Google on October 31. He didn’t take it immediately, but after a few months of back and forth, he finally accepted the job in January, 2011. All of this coincided with Larry Page taking over as CEO, and a shift in Google’s strategy to build instead of partner in mobile payments. The lawsuit notes that Bedier knew all of PayPal’s future plans for mobile payments, as well as an internal detailed analysis of Google’s weaknesses in the area. Not only that, it accuses him of storing “confidential eBay information in locations such as his non-PayPal computers, non-PayPal e-mail account, and an account on the remote computing service called ‘DropBox.’” What did Bedier do with all of these “trade secrets”? The implication is that he used his knowledge of PayPal’s strategy to craft Google’s mobile wallet strategy (yup, the same one revealed today). He also used that knowledge to sell Google’s mobile wallet to big retailers: Bedier has also been part of a Google team making sales calls to major retailers, PayPal is informed and believes and on that basis alleges that during these sales efforts, Bedier has been and is improperly comparing Google's products and services with PayPal's products and services in discussions with customers that both PayPal and Google are courting. In particular, on information and belief, Bedier's comparisons incorporate PayPal trade secrets, including PayPal's schedule for deployment, anticipated features, and back-end approach to mobile payment, point of sale, and the benefits of a wallet in the cloud. And finally, he actively recruited other PayPal employees, just as Tilenius helped to recruit him (which is why she is named in the suit as well). Assuming this thing gets settled before it goes to court, how much is hiring Bedier going to end up costing Google? Photo credit: Flickr/ Henk-Jan Winkeldermaat View this document on Scribd CrunchBase Information PayPal Google Information provided by CrunchBase View this document on Scribd | |
| Startup Mantra: Hire Fast, Fire Fast | Top |
| Editor's Note: This is a guest post by Mark Suster ( @msuster ), a 2x entrepreneur, now VC at GRP Partners . Read more about Suster at his Startup Blog , BothSidesoftheTable. I have often said that what separates real entrepreneurs from pundits and bystanders is a bias towards getting things done versus over analyzing things. My credo has always been JFDI . It's the hardest thing to teach people who come out of big companies, out of conservative jobs. At the big consulting firms, investment banks and established large technology companies we're taught to produce long reports, make sure that every document is perfect quality and that every possible bit of diligence has been done. Good enough isn't. And so things operate on a CYA basis. That doesn't work in a startup. There's a certain cadence that you can feel when you spend time hanging any well-run startup company. The management team has to have a bias toward making decisions. They know that a 70% accurate decision made quickly and based on sound principles is better than a 90% decision made after careful consideration. The startup entrepreneur knows that they're going to be wrong often. They're flexible and willing to admit when they're wrong. They don't create a culture of punishment for mistakes. They live be the credo that if you're never making mistakes you're not trying hard enough. In my mind the sign of a great entrepreneur is the one that spots the 30% scenario quickly and adjusts but doesn't get gun shy about rapid decision-making in the future. In fact, analysis paralysis drives me fucking bonkers. It is not uncommon in a meeting for me to say, "There are three choices: A, B, C. My gut tells me that we ought to do B. But let's decide as a group. I don't care if my view isn't selected. Let's make a decision and move on." Many people find this uncomfortable. The world is filled with people who don't like having to put their neck on the line and say what they think. I don't really care if I'm wrong as long as I'm not dogmatic if evidence later shows we need to change course. So that was a long walk into the topic of recruiting. But given that I believe the success of startups is almost entirely correlated with having extra-ordinary talent, the ability to source, select and inspire new staff to join is one of the greatest early tests of entrepreneurs. There is an old management adage that says, "Hire slowly, fire fast." The idea has become conventional wisdom. It says that you need to take due care in selecting team members. It also says that you need to act quickly when your instinct says somebody isn't working out. Only half of this adage is accurate for startups. Hire Slowly? This is the bit I have a problem with. I don't think that recruiting is any different than any other decision process in a company. You're never really going to know how somebody is going to perform in the role, how good of a cultural fit he or she is going to be and how motivated they're going to become until they're on the inside. I'm not arguing that no screening is required. There are obvious questions you have give staff to get a gut feel on cultural fit, intelligence, aptitude and the like. But here's the thing. I see many teams that feel the need to interview another 3 candidates just to be sure. They suffer the decision on the way in. They over think the decision framework. I come from the " Blink " school of recruiting and decision-making. If you haven't read it, you should. As humans most of us are inherently good at reading people and our innate instincts for "fit" are much better than our ability to analyze humans on a spreadsheet. I also subscribe to the views that you should always be recruiting (ABR) and when great people pop up you hire them and then find a way to make the role fit. I'd much rather have the super bright, super ambitious, great cultural fit in my business now than look for the "perfect" person who's done this job before and maybe find them in 3 months. 3 months is a lifetime in a startup. If you haven't read it I've written before on these topics: 1. Attitude over Aptitude 2. Only Hire A+ People 3. Hiring at a Startup And just as my gut feel about the likely success of startups is often determined by looking at their velocity of product development and market progress of their product, so too is recruiting a factor in my assessment. Great leaders and great teams have the ability to find potential staff, evaluate their fit, inspire them to join and onboard them. They have good recruiting velocity. Any team that I work with that struggles to hire people quickly knows that I'm likely frustrated because I have many other companies that I work with that aren't so slow. And when we didn't ship product on time, didn't get the biz dev deals we wanted competed, didn't get our market messages out and the founder says, "sorry, I had too many other priorities – like fund raising" they know it will fall on deaf ears with me. Time spent onboarding new talented team members always yields more productivity than doing everything yourself. "But we don't have budget!" Great entrepreneurs find a way. Recruiting cadence matters. Fire Fast? I've written in the past about changing jobs too frequently and I received a lot of blow-back from technical people who said, "I had asshole CEOs. When we hit a bump in the road he was very quick to slash-and-burn." I was trying to argue that it's OK to change jobs a few times when you're young and that "things happen" but that if things happened 5-6 times there is probably a pattern that isn't completely the fault of some asshole boss. But people don't like to hear about firing or job cuts, so I was flamed. So I have been reluctant to weigh in again on the topic publicly. Brad Feld and I were discussing the topic at lunch at the most excellent Glue Conference this week in Boulder. He encouraged me to write this post and after smoking me out on Twitter I had no choice. ;-) Outed. So here goes. I have never regretted firing anybody. Not once. I have on many occasions regretted not firing somebody quickly enough. I don't take any pride in letting somebody go. I recognize that it affects somebody economically, can affect somebody's personal life and is one big blow to the ego. But if you're afraid of firing people you shouldn't be an entrepreneur. No startup company has any spare capacity for dead weight. I've made every excuse to myself in the past, "I can't fire him now, he owns the customer relationships and it's a crucial point in our sales process." Or, "I haven't given him a long-enough chance to prove himself – let me see how he develops" or even, "it will have a big impact on morale because she is well liked. I can't afford that right now." I've heard VCs use similar rationale, "We knew the CEO wasn't working out but we couldn't fire him because it would have made it too hard to get a fund raising round done" only to later regret not moving more quickly and reacting to the obvious discontent of the rest of the startup team. I've lived through every excuse. And for every firing procrastination I've made, one month afterwards I've always felt the exact same way, "Why didn't I do this three months early?" Trust me: if you know, you know. If you know, do it now. Things don't get better. Your "Blink" instincts are right. You won't patch things up. Delaying the inevitable is not going to make things smoother with your investors, biz dev partners, customers or employees. There is only one answer: fire fast. Firing somebody is no different than the other 10,000 decisions you need to make in your company to survive. You free up much needed budget. You free up the org chart to bring in new blood. Almost universally your staff will come out of the wood-works and say, "thank you, he needed to go." When people aren't pulling their weight other members who are know it. And they're grateful to work in an organization where they're valued and slackers aren't. When you have to fire somebody, don't pussyfoot about. Don't make up fake excuses about why they're going or try to pretend it's a redundancy or something. Tell them specifically what isn't working. Don't be mean for the sake of it. Give them suggestions of how they might think about the situation differently at the next company. Give them honest and constructive feedback. If the sacking is legitimate, chances are they knew in their gut it wasn't working and will appreciate the candor. Obviously make sure that you're following a legal process. In the US and UK if the termination comes reasonably quickly you're almost always OK but please double-check with your legal advisors. To be clear – I'm not advocating creating a slash-and-burn employee culture where there is a constant revolving door. I do believe that you set the tone in your company that you as a founder work your arse off and expect it of others. You make sure people know it's a meritocracy and the best staff will rise to the top. Age and experience are irrelevant. Good people get ahead, bad people get asked to leave. So there you have it. Most companies hire slowly and fire slowly – the exact opposite of best practice for startups. Pick up your recruiting cadence. Take a risk on people who you think will be a good fit. Don't look for perfect resumes. Take some chances. Trust your gut feel. And when you got it wrong you move on. You'll recover. Move fast. Don't delay the inevitable. Check your legal framework. Get your papers in order. Treat people with respect and professionalism. Be open and productive. But honest with them about their shortcomings or why they aren't working culturally. But fire them quickly. Flame away. Image courtesy of Joeff via Flickr. | |
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