Topgrading

Topgrading Tips will continue to offer leadership tips, but more and more case studies are popping up – successful Topgraders willing to share their insights, failures, and best advice.  So, from time to time Topgrading Tips will be a mini case study.

This short case study is amazing, the title is not hyped, and the case study has some great lessons for all managers.

Meet Aaron Patzer, founder of Mint.com, and a 28-year old who just sold his company to Intuit for a cool $170 million.  I read that he attributed some of his success to using Topgrading methods.  So I called Aaron, and here’s a brief version of his story …

Aaron grew up in Indiana, got into computers at age six, paid for school by designing websites starting at age 16, graduated Duke in computer sciences and electrical engineering, dropped out of a Ph.D. program at Princeton, and received a MSEE instead.

He joined IBM, got three patents on Play Station and quit because IBM seemed to promote people on the basis of seniority and Aaron guessed he would not have a fun job for more than a decade.  He joined a start up, wrote code and soon he was interviewing candidates on the phone.

With about a 600 IQ, Aaron wasn’t satisfied with his interviewing skills, and he picked up my big, fat book, Topgrading:  How Companies Win by Hiring, Coaching, and Keeping the Best People.  I suspect he memorized the book and particularly the Topgrading Interview Guide.  He asked the questions about education years and then investigated a person’s career by asking about – for EVERY job – successes, failures, bosses (“I figured if a candidate’s last 3 bosses were jerks, I’d be one to hire him.”), boss appraisals, and reasons for leaving.  Aaron “got it,” the power of gleaning patterns and the importance of asking “why?” 1,000 times.  He used the TORC (Threat of Reference Check) Technique and asked finalists to arrange reference calls with past bosses.

Aaron says Topgrading is the best business book he’s read, although he says the first part included name dropping with famous Topgraders, and too much “selling” of Topgrading.  He instructs his managers to go to Chapter 11 for the practical advice (which today is available in a much more exciting tool, the Topgrading Workbook – click here for information).  And I suggested that his managers read Chapter 12, the legalities of hiring, written by the largest employment law firm in the US and written to keep managers out of a minimum security prison.

Back to his success story – at age 25, Aaron was working 75 hours per week and frustrated with the additional hours necessary to manage his personal finances using Money or Quicken.  The bolt of lightning struck – he’d create the best personal finance software.

So he did it, he launched Mint.com, with occasional self doubts.  After all, he was attacking Microsoft and Intuit with no business experience, no leadership experience, no knowledge of Java web services, and by the way – no money.   Ahh, but he already knew how to hire A players.

Google Mint.com to see details of his business, videos of how someone can enter a few super secure credit card and bank accounts in 6 minutes and immediately begin saving money and time.  And it’s free.

So, at 26 years of age Aaron started hiring people for Mint.com and now he has 40 employees.  When he sold Mint.com to Intuit, the company made him head of their personal finance division, so there will be a lot more opportunities to Topgrade.

How did he Topgrade Mint.com?  He used the Topgrading hiring methods, with a few tweaks to really, really zero in to be sure he wouldn’t make a mistake.  For example, he asks engineers general questions about their methods to determine if they are so customer service oriented that they sit with users and note any frustration.

And what is his track record?  Four mis-hires out of 40.  Not bad!  A couple of others quit for good reasons – a dad died and another one of Aaron’s employees returned to Asia to take over the family business.  Looks like a 90% success record, with successful hires not just “okay,” but true high performers.

Aaron Patzer makes assembling a team of outstanding performers look easy.  He didn’t happen to mention one small factor that actually does make Topgrading “easy” – he’s clearly an A player!

Recommended Resource: The “Cliff Notes” for Topgrading is the 176-page Topgrading Workbook, a bit shorter than my 650-page tome!  The Topgrading Workbook explains each of the crucial Topgrading steps, and then presents the fun, illuminating exercises that teach how to do it.  Those are the same exercises we use in our Topgrading workshops.  For more information or to purchase, click here.