6. Selling & closing

6. Selling & closing

Just like in sales, closing is part science and part art. The science is your conversion rates, iterating on your process, all the way down to your close rate. The art is personalizing how you close each candidate.

There are many things candidates have in common when picking a job, but then there are many things that are highly personal. The art is understanding when to apply general best practices vs. when to tailor to each candidate.

This section will cover high-level best practices, a framework for how candidates make decisions, and specific tactics/best practices for closing at every step of the recruiting funnel.

High-level best practices

  • Ask questions to understand your candidate’s motivations - Everyone has different motivations. Knowing what motivates your candidate will help you sell to them. Also, if your candidate has the wrong motivations (e.g., cash comp), they may not be the right fit, to begin with. A big part of this will be asking the right questions.
  • Start closing early - Closing is an on-going process beginning with your initial outreach, continuing with your first coffee chat, throughout the interview process, through the offer stage, and even beyond, until your employee’s first day. Don’t wait until you make an offer to start closing someone. It doesn’t feel genuine, and candidates won’t like it.
  • Run a tight process - One of your competitive advantages as a startup is speed. Use this to your advantage. Keep momentum strong by always having the next step.
  • Make sure your candidate is ready before making an offer - The single biggest mistake I see founders make when closing is extending an offer when they’re ready to make the offer instead of when the candidate is ready to accept.
  • Use a comp data set (e.g., Pave) to make your offers - Align on a compensation philosophy allowing you to be consistent and transparent when making offers. If you’re going to negotiate, know what your levers are before jumping in.
  • Get creative and involve the entire team - As a startup, you can get super creative with the close by tailoring it to each individual. Get your whole team involved, whether that’s co-founders, founding team members, investors, advisors, or even customers.
  • Spot curve-balls and handle them quickly - It’s critical to know about competing offers, counteroffers, and exploding deadlines from other companies so that you can respond quickly.

Understanding motivations

Every candidate has different motivations. Understanding their psychology is key to knowing how to best position your opportunity. There are a couple of frameworks out there, ranging from theoretical to practical (e.g., Maslow’s Hierarchy of Needs McClelland’s Needs Theory 5F’s from Who).

I like the 5 F’s (fit, family, freedom, fortune, fun) because it’s practical:

  • Fit — Is the company a good fit for me & my values?
  • Family — Will I be able to prioritize my family?
  • Freedom — Will I have freedom and autonomy?
  • Fortune — What’s in it for me financially?
  • Fun — And then how much fun are you going to have?

Most candidates will consider at least these five categories and sometimes more. The art and personalization is in figuring out how the stack ranking works.

  • Some candidates might value freedom more coming from a big company where they have less autonomy.
  • Others may be valuing fortune if they’ve been part of a few startups that didn’t pan out.

A lot of selling is understanding someone’s primary motivations and getting to know the candidate; this will allow you to frame your opportunity along the dimensions that actually matter to them. The best way to do this is to ask discovery questions and listen, starting with your very first conversation.

Tactics for closing at the top of the funnel

The close starts with your very first conversation with a candidate. In fact, at Gem, we call our first touchpoint with every candidate the “initial sell conversation” because it’s mostly about closing.

The initial sell conversation

In the initial sell conversation, you need to get great at:

  1. Making candidates comfortable by building a strong rapport. Do your research ahead of time to find a conversation topic that steers the conversation in a natural, non-sales-focused tone.
  2. Getting to know what’s important to them, which is very similar to “discovery” in sales.
  3. Telling your startup’s story.
  4. Doing a small amount of qualification on whether they’re a good fit, but if and only if you’ve done bullets one through three.
  5. Suggest, and lock in the next step.

Your main goal with your first conversation is to get the candidate excited about your startup, so they want to take the next step. If they’re a passive candidate (e.g., they agreed to meet you for coffee from a cold email or text), your most important job is to sell them. 90% of your time should be spent closing (10% can be you evaluating them). If you don’t spend enough time closing and spend too much time evaluating, the majority of your candidates will fall out of the funnel here.

And closing doesn’t mean “pitching” your company straight out of the gate. Get to know them first. Once you’ve given them a chance to tell you what’s important to them, share a bit about your company and tailor “your pitch” to what’s important. Only after you’ve done these things should you ask a few questions to evaluate them.

If someone is actively interviewing or applying to your company, you can spend a bit more time evaluating them upfront, but I’d still recommend spending half your time getting them excited once you’ve qualified that they may be a good fit. And if it’s clear they aren’t the right fit, you should still carve out a few minutes for their questions.

Ask discovery questions

So how do you get to know what’s important to someone? In sales, there’s a concept of “discovery,” and it’s how we understand what’s important to our buyer. Before a pitch or demo, we ask questions to get our prospect talking to learn what’s important. Recruiting is the same.

Here are some questions I like to ask to get to know my candidate:

  • “What prompted you to reply?” e.g., if I reached out over email
  • “Sounds like you’re starting to think about what’s next. Have you thought about what’s important to you?”
  • “What’s motivating you to make a move right now?” This gets at motivations and timing.
  • “What kinds of opportunities are you exploring? What types of companies? What size?” Get specific.
  • If you learn someone is considering both startups and larger companies like Stripe, ask them if they’ve thought about the tradeoffs? Get them thinking about the tradeoffs and which are most important to them early.
  • If someone is coming from a large company, or you learn they’ve just bought a house/have kids, do a little bit of discovery around comp early on. You’re not legally allowed to ask certain questions like what they’re making, or whether they have kids for that matter, but you can ask, “what are your expectations around compensation?”
  • It’s common to have other stakeholders, whether that’s a partner, family, mentors, or parents. Ask, “As you’re thinking about what’s next, is there anyone else you need to get on board?”

Just like in sales discovery, you can have a set of questions you generally like to ask going in, but you should tweak them to each situation. If you master discovery, it should feel natural and conversational.

In some cases, you uncover hard blockers where no amount of convincing will win a candidate over. In these cases, be straightforward, verify it’s a blocker, and then try to be helpful. For example, in the early days of Gem, I would sometimes discover that an engineer needed to make a minimum cash comp that was too far from what we could offer. My talk track would go something like, “look, it sounds like you need to make $180k, and we probably won’t be able to bridge that gap – is that going to be a blocker? I totally understand; how can I be helpful? We work with some of the best recruiting teams. Can I introduce you to a later-stage startup, like Segment or Plaid?”

Tactics for closing during the interview loop

Closing continues throughout the interview loop. This means running a tight process with clear next steps, continuing to do discovery, and giving them a sense of what it would be like to work with you.

Run a tight process with a quick turn-around

If you grab a coffee with a candidate, follow up the same day. If you bring someone onsite, target a 48-hour turnaround. Speed is one of your advantages as a small startup.

Always have a next step planned

Just like in sales, you can’t move someone forward if you don’t have a next step. It’s easy to move someone from phone screen to onsite once they’ve entered your interview process, but knowing the right next step may require more nuance at the beginning and the end of a hiring process:

  • Going into each meeting with a candidate, I have a range of next steps in mind, and by the end, I always suggest a next step.
  • If an “initial sell conversation” went really well, I’d ask if they’re ready to interview. If not, I might suggest a coffee with my co-founder or grabbing lunch with the team.
  • Usually, I’ll schedule that next step live, “Why don’t we pull out our calendars and schedule it now while we’re both here?”

Continue to do discovery throughout

I always aim to learn at least one new thing in every single touchpoint. The more you know about a candidate’s motivations, the better you can sell to them. It will feel genuine and like you’re on their team.

Give them a sense of what it feels like to be part of your team

Invite them to optional events. This may pique their interest or help them better understand your company and feel connected. At the bare minimum, we time our interviews so they can grab lunch with the team, but if they’re interviewing on a day when we have All Hands, we time it so they can attend. We’ve done this for team standups, interesting customer meetings, etc.

Use preemptive language

One fun trick is to use preemptive language. If they notice something quirky about your office (e.g., in Gem’s case, all our hot sauces or dogs) or your culture, say, “you’ll see a lot more of this when you join.” This gets your candidate to start imagining themselves at your company. Don’t say this all the time. Feel it out if you have momentum with the candidate. If you do this well, your candidate may find themselves saying “we” a lot.

Tactics for closing at the offer stage

As you get closer to making an offer, mistakes get costlier, and the stakes get higher. Also, the dynamic shifts after you make an offer, so it’s critical to understand whether the candidate is ready to receive one. Once you’ve made an offer, get creative, and involve the entire team.

Understand whether your candidate is ready

Before making an offer, it’s important to understand whether the candidate is ready for one. If there are big question marks in the candidate’s mind, address those first before making an offer. This is the single biggest mistake I see founders make with closing. We agonize so much over whether someone’s the right fit for our startup and forget candidates are agonizing over our opportunity just as much, if not more.

In sales, this would be like negotiating terms before our prospect said they want to buy. Why is this bad? Just like in sales, as soon as you start to talk about dollars, it completely changes the conversation. Suddenly, it becomes tough to have an open conversation about other important dimensions.

Before making an offer, make sure you understand a few key things:

  • Will the candidate have any competing offers?
  • What’s their timing?
  • Do they have any reservations or concerns? Address these first.
  • Are there any obvious reasons why the candidate may not accept that they aren’t telling you? e.g., do they have a bonus or vesting where they need to stick around for a few more months?

Know these things. If you don’t, you’re flying blind.

As a litmus test of how ready a candidate may be, I like to use the 1-10 method. I’ll ask, “assuming we can iron out comp, on a scale of 1-10, how ready are you to accept an offer?”. The first few times, I heard many encouraging six and sevens and moved straight to offer. Literally, none of them accepted. Now, when I hear six or sevens, I know I have some ground to cover.

  • At the offer stage, anything less than a nine or ten means you have work to do.
  • The key is to ask follow-up questions to dig in. “What would it take to get you to an eight? A nine? A ten?”
  • The 1-10 technique can be a catch-all for things you didn’t discover initially or things that came up in the meantime.

Pre-offer checklist

Once you’re ready to make an offer, follow a basic pre-offer checklist:

  • Make sure you are 100% aligned on the role and title.
  • Know exactly how much cash/equity you plan to offer and how much wiggle room you have.
  • Have an email draft queued up and ready to send with the formal offer, so all you have to do is press send once you’ve presented it verbally.

Structuring an offer and negotiating compensation

Check out our dedicated guide to structuring an offer and negotiating compensation:

Compensation & Negotiation

Presenting an offer

When presenting an offer, you’ll want to present a verbal offer before sending a written offer. Talking through your offer verbally gives your candidate a chance to ask questions and gives you a chance to offer additional context and read their reactions — in-person or over video is always best. Just like in sales, we always present pricing proposals in person or over video because watching body language is key. Are they smiling? Are they leaning forward? Are they excited?

Lead with transparency, especially when it comes to equity. Try to figure out how much they understand about equity.

  • Have they worked at a startup before? Do they understand how options work? Do they understand dilution? Liquidity? Do they understand 409A price vs. preferred price?
  • If they don’t have a great understanding of equity, you can educate, which builds trust.
  • If they’re savvy, a lack of transparency is fatal because the candidate may think you’re trying to hide something.

We recommend taking a transparent approach to all of closing though. Startups are risky, and you are asking someone to put a lot of trust in you by joining your small startup. If you’re not willing to share “here are our biggest challenges,” “here are the milestones we need to hit to raise our next round,” “here’s our runway,” or if you’re dodgy about your revenue, you’ll lose credibility big time. The best people you want to work with will see right through it.

After presenting the offer, ask this simple question — “We’re all SUPER excited to work with you. Is there anything else we can do to get you onboard?” — sometimes, you get a simple answer and may even be able to close them on the spot (e.g., bumping their base by $5k or paying for an online course they want to take). If you don’t ask, you’ll never know.

After the offer

It’s all hands on deck, so involve the whole team:

  • Even if they didn’t chat 1-1 with your entire team, have everyone send them a congrats email.
  • Dinners are another great way for everyone on your team to get a touchpoint.
  • Consider sending them a card signed by the team.
  • At Gem, we send a video montage from different members of the team.

Lean on people outside of your team for external validation. Investors, board members, advisors, and even mutual friends can be a great way to offer an “outsider” perspective. I’m surprised at how few companies leverage their investors in this way. We offered a chat with our lead investor from Accel, Dan Levine, for everyone on our founding team. Dan still hops on calls with a ton of candidates (especially leadership hires). Good advisors and investors will be excited about this because helping you close your early team is one of the highest-impact things anyone can do.

You could even consider involving your customers. We had customers hop on calls with most of our early customer-facing roles and every leadership hire. Hearing their enthusiasm for your product and team will be contagious!

Get creative with your offer

At Gem, we always look for ways to get creative at the offer stage and move mountains to close. We’ve bought refundable plane/EDC tickets, introduced a candidate to the Silicon Valley producers, and even recorded an original Justin Beiber music video parody for a candidate when we discovered she enjoyed playing guitar and recording cover songs.

For example, we learned early on that one of our early engineering candidates really liked to travel hack, where you use points to fly first class around the world. We found out there was a certain airline he wanted to fly for a while, but could never use points, so we booked him a refundable first-class ticket to Paris to give him along with his offer letter.

He was blown away by the personal touch and came onboard. Guess what? He told all his smart engineering friends about this baller trip he took as part of signing with Gem and now have several more travel hacker friends that have joined since. This may sound extravagant, but we thought of it as a much more thoughtful version of a ~$5k signing bonus.

After they accept

Closing does not stop after your candidate signs. I’ve seen so many people reneg and fall out of the process after signing over the years — I’m never 100% confident until they start on day one.

Keep the momentum going:

  • One thing you can consider doing is ramping them up on low-urgency work. Nothing on the critical path because you don’t want to make it high-pressure.
  • Add them to All Hands, company offsites, and team meetings. Frame these as optional and give them a heads up that you’ll add them in case they can make it.
  • Have everyone on your team add them on LinkedIn.
  • Send a welcome gift or card if you haven’t already.
  • Schedule a coffee/lunch/dinner with them before their start date.

Navigating the close

Naturally, curveballs will come up in the close, such as competition, counteroffers, and exploding deadlines from other companies. It’s critical to know these things so that you can respond quickly.

Dealing with competition

Be sure to ask who they’re interviewing with. Ask early on and continue to check in throughout the process. Sometimes candidates aren’t comfortable sharing at first, so you can ask what types of opportunities they’re exploring.

  • Once you uncover competitive offers, ask how they’re thinking about their different options. Ask them to stack rank on the dimensions important to them.
  • Focus on the aspects of your opportunity that are unique and align best with what you know they value from your discovery call.

If you don’t know who they’re interviewing with or who they have offers from, you’re going to have a tough time knowing how to close.

Dealing with counter offers

Sometimes a candidate’s current company will counteroffer, which throws a big wrench in everything. The good news is you can follow a few simple steps to position yourself well before a counteroffer is made:

  • Candidates are less likely to renege on an offer once they officially sign, so get them to sign your offer before telling their employer.
  • Once they’ve signed, I always ask the candidate if they want some coaching on conversing with their current manager.

Still, counteroffers may happen. When they do, you need a playbook:

  • I like to lead in with the following question, “Sounds like they made a counteroffer. But why now? They clearly think you’re worth it, so why are they only offering to pay you fairly now?”
  • Counter-offers are typically a bandaid and rarely solve the root cause for why someone was looking to leave. Share the following statistic to pivot the conversation away from comp and back towards their original motivations — nine out of ten people who take counter-offers leave within a year.
  • After this, I always share our philosophy. We never counter. And hopefully, it gives you confidence when you join Gem, it’s going to be equitable, and no one’s making more than you because of something arbitrary like a counter.

Handling exploding deadlines

We typically avoid deadlines at Gem. Deadlines work in some cases, but not always. Senior candidates aren’t going to take the job because you give them an exploding offer. They know their worth, and they can find another job. We use deadlines when we have two front-runner candidates in the pipeline for a specialized role.

If you feel strongly you need to drive urgency, you can consider starting a clock with the candidate, but let them choose when to receive their offer. For example, “once we make an offer, you have X days to decide. We can make the offer whenever you’re ready, but we want to make sure that you’re in the right headspace to think about it beforehand.” This can also come back to the 1-10 scale.

What if the candidate has an exploding offer from another company?

  • It’s crucial to coach them on how to deal with it, including how to get their recruiter to push the deadline. I’m surprised at how few candidates know how to handle this, even experienced ones.
  • Try this talk track with your candidate, “If they really have your best interests in mind, they should be OK with pushing back the deadline. If not, you may want to think hard about whether they have your best interests in mind.”
  • Arm your candidate with talking points like, “I value my career and I want the next company I work for to be my home for many years. This is a really important decision for me, so I need more time to think things through.”
  • If they have a tight deadline, map out the rest of the interview process ASAP, and tentatively schedule all of the next steps even if you don’t know the outcome of a debrief.

Closing thoughts

That was a lot to cover, but selling and closing are super important. In summary, here are a few of the most important do's and don'ts of closing:

  • Don't wait until the last minute to close - Don’t do this. It doesn’t feel genuine, and it’s not effective.
  • Don't give an offer without knowing whether the candidate is ready for it - While you might be tempted to, let the candidate start the clock and work on their timeline, not yours.
  • Do make your offers verbally or in-person - This gives your candidate a chance to ask questions and provides you a chance to offer additional context and read their reactions.
  • Do lead with transparency - If you’re not willing to talk openly about your startup and trust your candidate, how can you expect them to trust you and take a leap of faith by joining?

Special thanks to Jose Guardado

This selling and closing guide is based on a talk I give at YCombinator to startup founders to close candidates. I also incorporated some great tactics that I learned from Jose Guardado, who used to talk at YC before me.

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Feedback? Suggestions? Ideas? Comment directly or email steve@gem.com