Moz CEO Rand Fishkin talks about company culture at the 2013 GeekWire Startup Day.

Moz — back then called SEOmoz — was growing rapidly two-and-a-half years ago and the company needed four-to-five new employees to keep the momentum going.

Moz’s referral program didn’t work so well.

So, in an effort to attract the best engineers out there, they did what many other companies do: Launch a generous referral program.

The deal: Find an engineer that eventually becomes a Moz employee, receive a $12,000 check in exchange. Additionally, your referral would receive a $12,000 signing bonus.

While the idea brought in talented new Moz engineers, it backfired on the company. Moz CEO Rand Fishkin, speaking at today’s big Startup Day, was sure the plan would work — but he was wrong.

“It attracted the wrong types of people,” he said. “It attracted a lot of people interested in the dollars and bonus, but who were not particularly interested in the mission, vision and culture at Moz.”

Rand Fishkin.
Rand Fishkin.

Even worse, Fishkin said, is that it created a detrimental perception internally within the company. Since the new software engineers received signing bonuses and extra perks, there were suddenly “classes” of employees at Moz.

Some employees thought that since they were not hand-picked in a way the referred engineers were, they weren’t worth as much to the company.

“You can imagine the type of cultural problems this created, especially over time,” Fishkin said. “It was not a lot of fun.”

StartupDay_2013_200x225 copyMoz shut down the program after learnings from its mistakes. Fishkin also gave out some other advice for company culture, including:

  • “Don’t let your role define your influence. Let your influence define your role.”
  • “Build a recruiting brand beyond your product brand.”
  • “You can coach the head. You can’t coach the heart.”
  • “There’s no such thing as 10X engineers (or 10X anything)”
  • “Build a vision-based framework that’s clear to everyone at the company”

We’ll have more from Startup Day on GeekWire today. We’re hearing great advice and insight from industry leaders — here’s an agenda of today’s events. If you’re on Twitter, check the hashtag #gwstartupday to see what people are saying from today’s event.

Previously on GeekWire: Washington Gov. Jay Inslee at GeekWire Startup Day: We lead the world in ‘innovation per dollar’

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  • Fishkin Fan Club

    Let’s be honest here. Was it the bonus that hurt moral or Fishkin’s constant need for attention via Geekwire and pointless press releases.

    • Tony Wright

      Rand is in the business of (wait for it) INBOUND MARKETING. This include all of the marketing that doesn’t cost money, like SEO and getting free attention/links via talks, guest posts, blogging, and “pointless press releases”. In short, getting attention is (part of) his job and helping customers with that is the mission of the whole dang company.

    • balls187

      I think someone may have hacked the Fishkin Fan Club account!

  • http://moz.com/rand Rand Fishkin

    Thanks Taylor! Just to be clear, during the promotion we did attract some good folks, too, but most of those were engineers who said they’d have found and joined Moz regardless. And of course, it was no fun for our technical folks to spend lots of time interviewing people who didn’t really want to work at Moz for any reason other than the bonus.

    • A UW Student

      Just want to say, great talk today Rand! You’ve got awesome charisma on the stage.

    • http://blog.CascadeSoft.net @CascadeRam

      >> “It attracted a lot of people interested in the dollars and bonus, but who were not particularly interested in the mission, vision and culture at Moz.”

      You talked about morale issues, but it is hard to see how this blanket statement can help morale.

      Btw did all those people leave the company in 1-2 years ? Is that the criterion for deciding whether these people were in it just for the $12,000 ?

      The follow-up disclaimer in your last comment “Just to be clear, during the promotion we did attract some good folks” looks like a cop-out.

      • http://moz.com/rand Rand Fishkin

        We actually didn’t hire any of the “just in it for the money” folks. It was pretty easy to tell in the interviewing process. The challenge was having a flood of interviewees that sometimes passed the technical/competency bar, but so frequently didn’t pass the culture/values bar.

        The morale issues I talked about were mostly related to the internal emotions around having two “classes” of team members – engineers (who were perceived to be more valued/important because of the bonus) and everyone else. Mozzers are good people and they show each other a lot of empathy, but it was a challenging time and created a lot of mixed emotion.

        • http://blog.CascadeSoft.net @CascadeRam

          Thanks for the clarification, Rand.

          Sometimes interviewers look for someone who fit a familiar pattern and mistakenly assume that a different type of person may not be a productive employee even if he/she clears the technical/competency bar. Of course, it is also possible that the people you refer to wouldn’t have been productive employees.

          I’m also not sure how the “good” employees think that they would have found SeoMoz even without the bonus (given the fact that they didn’t find SeoMoz before the bonus). Similarly, it is also possible that the ‘technically-competent, cultural misfits’ may have found SeoMoz without the bonus. Anyway, just some thoughts that may or may not be helpful to you. You were obviously closest to the situation and all I know is what I read in this post.

          • http://moz.com/rand Rand Fishkin

            It certainly could be a case of us having a perception that wasn’t actually a result of the bonus program. That said, in general, we’ve seen a lower number of candidates since stopping the program, but on average better cultural fits, so we’re sticking by our potentially anecdotal conclusions :-)

          • http://douglastarr.com/ Douglas Tarr

            You are probably making anyone who interviewed during this time frame feel doubly bad now. First, they got rejected, second, it’s because they had inadequate beliefs about money.

          • http://moz.com/rand Rand Fishkin

            I don’t think there’s any reason those folks should feel bad. First off, even during that time, there were a wide variety of reasons we passed (just like there always is). The higher concentration of non-matches for the reasons described above doesn’t eliminate other issues.

            Second – getting rejected by a job might just mean you didn’t have a good interview. Our interview process is pretty tough, and I think there’s plenty of very talented folks who didn’t get an offer.

  • http://thinkspace.com Peter Chee

    Rand is an exceptional startup CEO and leader. His transparency in what is successful and what bombs is admirable and most people could never put themselves out there like that. He’s also generous with his time and always replies to questions. I always learn something whenever he speaks. Great job today Rand!

    • balls187

      Plus he smiles with his eyes, which I <3.

  • balls187

    tl;dr; I <3 Rand, and I <3 Moz.
    Without having heard the full talk, it seems like this was a problem with misaligned incentives, and possibly a failure (sorry) in leadership to address the concerns employees would have with this new influx of employees. An allhands with possibly a Rand style white-board session explaining the cost-benefit here: We need more quality people, which will make your lives better. To accelerate this, we're going incentivize joining Moz.

    Moz employee's could themselves earn $12,000 for a successful referral, and given that employees and their networks are the *best* recruiting resource a company has, I'm not exactly sure why the employees felt jaded by this program.

    Additionally I'm somewhat dubious about the conclusion without supporting data. What was the original premise? If you incent people with money, you will get people who are incentivized by money, which there isn't anything wrong with that. However if you are specifically trying to avoid people in that bucket, it seems like this program would have been based on a misunderstanding of incentivizations.

    They failed the culture/values test (CVT), but I'd love to find out more detail, especially since this has parallels in Moz's business. How did organically sourced candidates (through the website, or through non-incentivized referrals) CVT performance rates compare to those that were sourced through ads, headhunters, this referral program and other Paid sources?

    Then how did these $referrals do compared to headhunter candidates, and candidates through ads?

    My intuition suggests that the incentiviation program just increased the number of candidates in the top of the funnel, yet the conversion rate for these candidates was on similar to the conversion rates from other Paid candidate acquisition models.

    What is also left unclear: Did Moz eventually meet their staffing needs, or are they having to work aggressively to deal with resource constraints?

    To my earlier point about monetary incentivization, as someone who left his job to start a company, I've taken on debt to keep the lights on as I pursue my passion for building a fitness social network for house cats. If that business fails (it won't, it's going to disrupt everything), if I re-enter the market, a $12,000 signing bonus would be a huge boon to my financial situation, and could be what makes me choose one job offer over another.

    • http://moz.com/rand Rand Fishkin

      Agree with a bunch of what you’re saying.

      Yes – we should have done a better job explaining it internally, and thinking through/messaging all the potential issues that would arise from having a bonus for only a single type of team member.

      Yes – incenting people with money and then hoping to attract people who are incented more by the mission/values was not the smartest thinking on our part.

      Interestingly, over half of the bonuses that we did pay out through the program went to Moz employees, who referred their friends/colleagues. That was the good part. The bad part was Mozzers who referred friends for non-engineering positions and didn’t get any bonus. Both sides felt weird about that.

      In terms of staffing needs – yes, we did eventually meet our targets and slowed hiring in Q2 of this year. We recently ramped back up, but are brainstorming different ways to incent/attract.

  • Ben Macfarlane

    Loved the presentation. Is the video going to be posted online?

  • shubik

    “Don’t let your role define your influence. Let your influence define your role.”
    “Build a recruiting brand beyond your product brand.”
    “You can coach the head. You can’t coach the heart.”
    Americans love these cliches and truisms… Or are these quotes from Lotus Sūtra?

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