The New PMF: A Candidate Framework for Company Selection and Evaluation
Part 1 of a 3 part series on how to successfully join a new company
Hi there, it’s Adam. 🤗 Welcome to my weekly newsletter. I started this newsletter to provide a no-bullshit, guided approach to solving some of the hardest problems for people and companies. That includes Growth, Product, company building and parenting while working. Subscribe and never miss an issue. Questions? Ask them here.
This is part one of a three-part series on how to successfully join a new company. In my last set of posts I described the hiring experience—specifically for making your first Growth hire. With the continued layoff crunch in the tech world and a job market flush with great talent it’s important for the candidate pool to understand how best to identify, choose, and onboard successfully to their next role.
Part 1: The New PMF—A Candidate Framework for Company Selection and Evaluation ⬅️ (this post)
Part 2: Reverse Interviewing—How to interview a company as well as they interview you
Part 3: Your Activation Experience—Onboarding successfully in your first 90 days
Recently I wrote a post about how I think many (not all) of the current layoffs in tech are symptoms of poor management.
Several commenters agreed with my take and made the point that some of the burden should be on the employee for appropriately vetting companies and their leadership. While I agree with this position I am also of the opinion that there is a huge amount of information asymmetry in the company evaluation process. Leaders and management know far more about the company’s strategy, financials, investor relationships, culture, and overall health than an employee who is considering a company.
It’s like buying a used car – the seller knows a lot more than you do.
We’ve all heard about Product / Market Fit (PMF). I had a take on this a few months ago. I’d like to introduce a new type of PMF for evaluating companies as a candidate - People, Mission, and Fiscal Discipline (or Financials for short).
I’ve done a lot of coaching and mentoring over my tech career am often asked about how I found the companies that I did. One part of that is privilege – I’m a cisgender, white, male from an upper-middle-class family. That has given me the privilege of choice that many do not have. And it’s true that my background has opened a lot of doors for me. At the same time the choice to walk through a particular door–that decision-making process–is one that I’ve honed across many roles.
Everyone has their reasons for picking a company—their own set of criteria and non-negotiables—but I’ve found throughout the years that crystallizing around three pillars has helped me avoid disaster several times and generate success. And every time I haven’t followed my PMF framework it ends up worse than I would’ve liked. When I’ve retro’d both my good and bad outcomes it’s clear that I either hit on all three pillars successfully or I sacrificed one to my detriment.
The PMF framework provides three themes that you can use to evaluate companies and decide whether you’d like to trade your next several years for their paycheck. I’ll break that down in the next section.
What is PMF for Candidates?
The three pillars of PMF are People, Mission, and Fiscal Discipline (for brevity I’ll refer to that third pillar as Financials going forward).
First, I’ll say that these are my pillars. As we talk about at Reforge – this is a tool, not a rule. Your criteria and needs may be very different from mine. The point is that you should have an evaluative criteria and I find that simplifying it into these pillars has been beneficial.
Let’s dive deeper into each pillar.
The first pillar is People. You spend more waking time each week with your co-workers than your family and friends. You want to make sure that they are good, driven, upstanding people. They’re not your family, but they are your teammates. As such you want to make sure that they’re enjoyable to work with, they challenge you, they can navigate ambiguity and they can discuss areas of the business that may make them uncomfortable to discuss.
At the executive level evaluating my peers means understanding how they craft strategy and make decisions. Are they able to disagree productively and arrive at a good place? Are they able to challenge each other directly – not aggressively and not passive-aggressively. Can they stick to the decisions that were made and agreed upon and communicate those effectively?
At Patreon this was a strength of my fellow leaders. Partially this is because it was codified in our core behavior: “Be Candid, Always.” Which we evolved to “Be Candid and Kind.” The fact that we had Core Behaviors at all was a positive signal and we made sure that candor and empathy were part of our toolkits.
This meant that our executive communication with each other was exploratory vs. accusatory. Phrases like, “I’d like to learn more about…” or the ability to provide feedback with a “When you did X, it made me feel Y,” meant that we fostered an inclusive environment for discussion and debate.
And this translated up and down the company – from the board room to the customer happiness emails. We had high standards for each other and we treated each other with respect. I spent 4+ years at Patreon as a result and was able to grow the business to $1B of GMV annually.
At Imperfect Foods, where I only spent one year, it was the polar opposite. Executive meetings were divisive and accusatory, collaboration on strategy was difficult and ever-changing, and the environment was competitive vs. collaborative. This translated to the board room as well and throughout the organization. Team members had personality conflicts with one another and couldn’t resolve disputes effectively. I attribute this directly to the inability of our leadership team to do the same.
At Patreon I spent over a year getting to know the team there. I met Jack (co-founder) when they were a 15-person company and continued to stay in touch throughout the next 12-18 months. Through the benefit of time and patience I was able to deeply understand what it would be like to work with the people there. I didn’t do that at Imperfect. It was the pandemic and I was woo’d by the other two pillars. I stuck to a standard interview process and didn’t dig too much deeper. In hindsight the outcome seems almost pre-ordained.
So how do you build an understanding of this pillar when considering a new company? You interview them and observe. Doa Jafri has a fantastic post on reverse-interviewing. You can check it out here. I’ll also write about this in my next post in this series.
Don’t miss Parts 2 and 3 of this series. Subscribe today!
Here are some strategies I use to better evaluate people:
1) Ask to join an offsite for some of the heavier-hitting sessions. Especially the areas where there may be disagreement. Observe how the team members interact with each other – who does the talking? Do the listeners seek to understand and ask good questions? Do they make assumptions and jump to conclusions or probe deeper? Who makes the final decision and how do they make sure that there is broader input and feedback?
2) Back-channel references. Talk to people who have worked there before OR that your peers have worked with at different companies. Ask them about how they take feedback, how they develop strategy, and how they deal with uncertainty. Ask them if they’d work with that person (or people) again.
3) Do a working session or a brainstorm with a subset of the group. Ask them for feedback on a product or marketing idea, look at documents that they’ve created in the past to articulate their point of view, and see if they’re open to new ideas (or not).
This is not an exhaustive list of course but using some of these strategies can help you understand the people you’ll be working with. It takes time but so does looking for a new job when you join a dysfunctional team.
Now let’s look at how to evaluate Mission.
“We really focus on our mission.”
“We have an amazing, world-changing mission.”
“Our mission is to elevate the world’s consciousness.”
The term “mission-driven” has become so over-used that it’s hard to understand what it really means anymore. WeWork’s mission was to elevate the world’s consciousness… through co-working? It often feels hollow when companies talk about their missions or try to shoehorn their business into a “mission-driven” framework as a recruiting and selling tactic.
And everyone’s definition of “mission” is different.
Here’s my definition of a company mission that I want to align with:
My goal in picking companies is that if I do my job well (which is to build and grow the company) then a lot of people (not just employees) will have a better outcome in life.
That’s it. That’s my evaluation criteria.
And this really became important to me in the last decade when I started working at Lyft.
My last four companies all have had excellent missions—ones where a lot of people will have a better outcome if I do my job well. This isn’t the only criteria (remember there are 3 pillars) but it is an important one if you want to be inspired to come into work every day and solve the hard problems of building and growing a company.
Lyft → Drivers earn income on a flexible schedule that works with their lives. Passengers can get access to transportation that they might not otherwise have had agnostic of neighborhood, age, race, etc. And eventually, the idea of shared rides cuts down on single-occupancy vehicles.
WyzAnt (now part of IXL Learning) → Educational marketplace for tutors. Students have better outcomes through working with a tutor, do better in school and build confidence. Tutors generate a reliable and lucrative income stream that they can use to support themselves.
Patreon → Fund the emerging, creative class. Make it easy and acceptable for a creative person to follow their passion and earn a salary just like a doctor, accountant, lawyer, or tech worker. More creators building small businesses create opportunities for their team members and enjoyment for their fans. Creators make better art when they are not dependent on selling ads and clicks.
Imperfect Foods → Cut down on food waste and build the worlds most sustainable grocer. Reduce carbon emissions throughout the food chain and provide farmers with a fair price for food that would otherwise go to waste. Provide access to healthy, more affordable food choices to people across the United States.
Now, there isn’t anything inherently wrong with someone choosing a company that doesn’t have an inspiring and world-changing mission. It’s just not my choice.
Here are some ways to evaluate a company’s mission:
1) Is their financial success directly tied to the outcomes of their customers? In the case of Patreon we only made money when creators made money. Not the same for Facebook or Youtube for example.
2) Does the company have a value or behavior system that speaks to the outcomes of their customers? At Patreon, for example, our #1 core behavior was to put creators first.
3) How deeply connected is/are the company founder(s) to the mission of the business. Is it simply a good business idea (nothing wrong with that) or do they believe in creating great outcomes for lots of people. I had a conversation with a company once who told me their mission was to “make a lot of money and have a successful IPO.” Great personal outcome; not a company mission statement.
Again, your mileage may vary – remember this is a tool, not a rule – but I’ve been able to separate truly inspiring and motivating businesses from those that are not by following this rule.
Let’s move to our final pillar: fiscal discipline.
The current economic and investing climate has really shone a bright light on this pillar of the PMF framework.
The company must make sound financial decisions with their investments, expenditures, capital raising and P&L. They don’t need to perfectly understand every aspect of their cost structure but they can’t be setting money on fire (or swimming through gold coins). You want to understand if their strategy is paired with a rigorous understanding of their financials.
Adherence to this third pillar usually means that the company doesn’t spend capital at an alarming rate and have to make massive course corrections in the form of layoffs (or worse).
Here’s how I evaluate this pillar:
1) I look for an adult at the helm of the financials. This usually means that they have a CFO or VP Finance (or other financial leader) as part of the executive team. Has this person done the job before? Are they a finance leader or an accountant who tracks the P&L but doesn’t use it to guide strategy? Will they show you their financials – including cash burn, runway, plan for next financing, path to profitability, and more?
2) I like to have in-depth conversations with this person as part of my interview process. I ask them to walk me through the P&L in detail. Together we look at acquisition costs, retention patterns, and customer value. They don’t have to be perfect but I have to believe that we can get them there. I want to understand fully-loaded costs to run the business and I want my finance counterpart to be able to explain them to me.
3) I ask to look at board and fundraising decks. I want to see the financial metrics they’re sharing with their board (if not a public company) or dissect their financial statements if they are. Is there a lot of fuzzy math and creative accounting or are they structured in a way that is honest and transparent?
I realize that this is easier for an executive role than an IC, but a company’s willingness to share this to any candidate is a large indicator and reflection on pillar #1 (People) as well. I would also say that my standards here have evolved over time as I’ve gotten older and want to make sure that the companies I associate with stay in business for more than 6-12 months!
One of the most important choices you will make is where you go to work every day. As prospective employees there is a lot of information asymmetry between you and the employer. Most of that exists because candidates lack a framework for evaluating companies. This is where The New PMF comes into play.
The New PMF for job candidates gives us a set of pillars by which we can evaluate companies across the intersection of People, Mission, and Fiscal Discipline. It’s not the only criteria you may use, but I have found through twenty years of employment–both successful and unsuccessful–that it’s one of the most reliable.
Even if you don’t use this framework I would encourage you to develop your own. It will better prepare you for the questions you should ask in an otherwise-lopsided interview process.
In the second and third posts of this series I’ll cover:
Part 2: How to interview a company as well as they interview you.
Part 3: Your Activation Experience—Onboarding successfully in your first 90 days.
See you next week!
The best part about this post is the "how". The criteria themselves are awesome and important in their simplicity. However, showing people how to evaluate the things that matter is often difficult for candidates, particularly when they don't feel a lot of agency to control the process. Reorienting interviews and evaluation to be two-way is key. This post provides a compass and a map on how to do so. Thank you.
I do have one other thing I *always* think about now (and one thing that sometimes makes sense to think about):
Is this a tech company? Or a tech-enabled company. Not unrelated to fiscal discipline, but at a tech company the problems you'll help discover and the solutions you'll help design, build, and release are the direct inputs to the company's value. Value creation is the primary measure of Product success at tech companies. But tech-enabled companies are different - at a tech enabled company you're a cost center. It's not that the work you're doing isn't critical but you're enabling some larger effort or initiative being driven by the real value creators. So thinking about Imperfect Foods: the website was the great, the ordering process was smooth. Good job, Adam! But my usage of the service ultimately came down to product selection, product pricing, and the delivery experience - three things you couldn't really "fix".
(On a very small note, sometimes some people care a ton about the domain because they have specialized knowledge.)