Mar 20 2012

Hiring between portfolio companies – playing nice in the sandbox?

I put up a post this morning over on the Foundry Group site which I thought I’d repost here with some additional comments. It concerns whether companies in a shared venture portfolio should have any special rules of engagement about hiring from other companies in the portfolio. The question of whether Foundry has a “policy” around this has come up a few times and we wanted to clarify very clearly that we  absolutely don’t (nor could we – not only would such a blanket rule be to the detriment of our portfolio, it would also likely be illegal). That said, I do know that a few of the CEOs in the portfolio have a “no poaching” policy when it comes to friendly companies. That may include companies backed by the same investors (Foundry or others), or it may just apply to a few companies where the businesses have a tight relationship and the CEO feels that actively recruiting from that company would be detrimental to that relationship and therefore detrimental to their company. To me, this is the real key. Arbitrary rules around hiring and, in particular, recruiting practices seem spurious. Altruistic in their ideal, but flawed in execution. And in any event I think the lens here should be a business one. Companies with which you have an important connection are in a different class relative to recruiting efforts than other companies. There’s no real moral line to be decided – the business relationship itself is what drives the decision. Curious what other companies do in regards to their recruiting practices. Comment away!

The question of how we handle companies within the portfolio company hiring from each other has come up a number of times recently and we thought it would be a good idea to hit the subject head on, publicly.  With over 40 companies in the Foundry portfolio, and with many of these companies concentrated in specific geographies (in particular Boulder, San Francisco, Seattle and New York) there are often times when an employee from one company in which Foundry has an investment applies for a job or is approached by another company in which Foundry has an investment.

To be absolutely clear, Foundry has no policy relating to the hiring of employees by one portfolio company from another. We believe in the free and fair movement of people and ideas and we don’t ask that portfolio companies refrain from hiring employees from each other. Ultimately it’s up to each company to determine their own hiring practices based on what they believe to be the best interests of their business.