Babbling VC

What's Up with the Facebook Compound

So, as some of you may have heard, I was in "the Valley" last week and amongst many stops, Facebook was one of them. I am about to start generalizing heavily but bear with me. There's a point behind this. 

Not only did I visit Facebook's new offices, but I was also at Google's offices amongst other places. I've been known to show up in "the Valley" and infiltrate an office here and there but one thing really struck me about this past trip. So, politically correct banter first: thank you Facebook for having me. I really enjoyed being able to hang out with an old friend....one of your newer employees....while enjoying the benefits that your offices in "the Valley" have to offer. I am thankful. I have no axe to grind with Facebook. I am not a shareholder nor do I plan on being one any time soon. I am a user though. I like you guys. BUT, your new place of business is kinda weird and I wonder whether I am missing something. 

So, let me start off with Google. Forget the whole "don't be evil" banter and Deathstar references about this business. When you go to visit them (or one of their employees to be precise) you have to drive to their campus. First thing you notice when driving on to the campus: a soccer field. The day I arrived, it was sunny (duh, it's California.....it's always sunny). Nevertheless, you see that soccer field full of happy Google employees, playing games, in the sun. Drive further on to the campus (all fairly open without any "gates") and you see many more happy employees walking around, to and fro. Some are on very colorful bikes which Google provides to go from one building to the next. Further, you walk up to any specific building (where your said friend or business partner has invited you to meet them) and basically, enough people are walking around that you can easily just basically walk in anywhere. Really quite easy to wander into any building (you're supposed to create your own badge and be picked up but I cheated). Being that I meant no harm (and generally like Google) I can be considered "safe". I was secretly pinning for a great lunch but you expect that when going to Google and yeah, shoot me, I like to eat. Anyway, long story short, I went to Google, felt like it was a really open place, saw tons of happy employees out and about, easily walked in and felt all happy and cuddly while there.......and yeah, the food is damn good. I even heard that you can invite your friends and family over whenever you want them to come and eat with you. Yup, you saw above my love of eating. If I can do this with my loved ones, you will grab my heart. 

Now fast forward to Facebook. They bought an old Sun campus if I remember correctly the story I was told. This used to be a bunch of separate buildings just like every other campus in "the Valley". Yet, what did Facebook do with this campus? They put up walls between each of the buildings, basically creating a compound. I really don't like "compounds". This reminds me of Waco, Texas. Generally, "compounds" are not good and I wonder why everything has to be closed off? It's kind of odd that they gated everything in. Further, when you arrive at the main building, seemingly the only way in, there are all these turnstiles and you sure as hell ain't getting in without registering, creating a badge and getting picked up by whomever you are visiting. It's really nice and modern and you use iPads to create your badge but it's really "controlled". I wasn't expecting this at Facebook and it struck me as odd. Further, once on the campus, it's kind of a courtyard which all the office buildings surround. There's a cool, huge "HACK" sign on the main "square" (actually it's painted on or was the stones themselves...can't remember) which can supposedly be seen from space. Maybe it's a jab at Google? I don't know but fun.

Anyway, walk around and there's a bunch of other cool stuff. They were just putting together all the bikes to get around from one building to the next. Kind of unnecessary to me since it's really not that far from one building to the next and you can't leave the "compound" but hey, Google has em. Further, everywhere you look, there's food. A BBQ stand here, a taco stand there. A coffee place here and the cantina there. It's all about food. Whereas Google seems about sports and outdoorsy kinda stuff, Facebook seems about keeping you there, and making sure you are fed (any sports facilities are outside of "the compound" if there are any). Everything is enclosed or at least I got this impresson. Why? I found it kind of restrictive. Heard Zuck sits with all his developers and is in the middle of things but who really cares. He's still in "the compound" and you sure aren't getting anywhere near him without being invited. Don't get me wrong. The food was amazing and I was super jealous of this campus. We just DON'T have this level of employee catering in Germany regardless of where you work. I'd happily be somewhat "drone" to have this type of catering available to me every day. But it was so different from Google. It just seemed so odd to me considering this is Facebook.....the NEW big boy on the block. 

I didn't visit the newer offices of Twitter on this trip. It would be interesting to see how they hang or how the other larger players in Facebook's, Google's and so forth's world are set up. But in summary, Google had an air of outdoorsyness (is that a word?) about it. People seemed to enjoy being outside, were healthy, interacted with one another, were open, family was welcome, everything was plush, green and so forth. Don't know about you but really positive feelings and just my take from a short visit (I may be totally off). Facebook on the other hand seemed closed off, corporate, shielded, concrete and controlled. It was suppossed to be fun and cool but it wasn't. It was all about "us", "this is our world" and "Facebook against them" type of positioning. Again, the campus wasn't even finished and I may have missed a ton of stuff. I just mentioned all these things to a colleague and he opined that this is definitely worth a blog post. So here it is. A hunch! Nothing more than my random thoughts on short visits. But Brogrammer compound verses sporty, nature friendly, family place it is when I compare Facebook's offices to Google's. Take it for what it's worth. I wonder how this effects the staying power of said companies, one an established player and one newly public and growing. I sure am curious where both are in five years.

Let's Not Go Overboard Now That Facebook Is Public

YOU are not Marc Zuckerberg. I, too, am not Mark Zuckerberg. Only he is celebrating becoming a millionaire (no, billionaire) overnight. Well, technically, he is just collecting his due after eight years of hard work. Whether he deserves it or not is a whole other story and not something I am getting at. What I am getting at is that he is a one in a million story. You probably have a better chance of going pro as a basketball player than matching what Mark has done. Actually, you will more likely be struck by lightning than have either of the above scenarios happen. It is an outlier and shouldn't be considered common place. Nor should you make any major decisions based on what Facebook did. Learn where you can but do not consider them your peer. 

Without sounding all grim, I want to just reiterate what I told a ton of my portfolio companies back in 2000. There will be wild successes and overnight millionaires. Keep at what you are doing regardless. Don't get distracted by them making it and you still slogging away nights. If you truly believe in what you are doing, you will continue to do so. The world goes on and your chance will come. Or not! That's the way things roll. The start-up world unfortunately produces far more failures than it does successes. Only those companies which attain the sweet spot of a team that jells, the right market opportunity, optimal timing and some unicorn dust go on to greatness. 

Nevertheless, there are lessons to be learned from Facebook if you are a start-up. They were not the first social network. They did not have a senior founder team of experienced players. They weren't originally in Silicon Valley. There was a ton of founder fallout (see the movie). Hiccups in terms of regulations and roadblocks came up along the way en route to IPO. You probably get it by now. It was not a walk in the park to their public listing and it only seems easy in hindsight. This is the reality behind Facebook and every other start-up.

"It's usually simple but never easy!"

As long as you focus on that and adapt to your situation you will increase your chances. Just don't get blinded by the light of Facebook's wealth generation. Focusing on that will in no way help you achieve what you are aiming for and at most will only make you bitter. 

Where You Live Doesn't Matter Anymore But Your Mindset Sure Does

Surprisingly, after spending another week in the Valley, I've come to a conclusion that it really doesn't matter where you live anymore. As much as I believed for a long time that you had to be in the Valley to truly have the full benefit of the surroundings, this is no longer the case. Now don't get me wrong. You still have to get over there fairly regularly if you want to be on the cusp of innovation.  It IS necessary to see it with your own eyes, to breathe it in and to talk in person with the right people. There's only one way and that is physically to get your ass on a plane and fly over (or drive....or swim and really "be the man!") I know this to be true simply because I always return from the Valley energized and raring to go. 

The reason behind my change in thinking isn't driven by having seen another region which is similar to Silicon Valley. I still believe SV is truly in a world of it's own. This was driven home while I walked around the new Facebook campus (thanks Heiko!) You simply won't see this scale anytime soon in other regions. Berlin, London, etc. just won't get to where SV is fast. Maybe Berlin has a chance if tons of stars align and you have a boatload of patience but I am not betting on it.  

The point, you ask? Well, it no longer matters! You can be just as successful building a business in Berlin or London or Timbuktu for all I care. Now I hear you all thinking "no shit, Paul! Everyone has written about this a million times trying to hype their respective region." You are very correct in thinking this. What most people, including myself, missed or better said, underestimated is that the people are what matters. It no longer has anything to do with the region. It is ALL ABOUT the people on your team. Also nothing really new but surely worth LOUDLY repeating. 

What I am getting it is that the best entrepreneurs will make it happen. It's not enough to have good founders. You need a full team of get-shit-done folks. What's changed in the past 10 years is that you can now find such people outside the Valley. Yes, they remain few and far between but they increasingly exist.......and they TRAVEL! Why do you think developers are so goddamn expensive and hard to find outside the Valley too?

Further, a mindset of "get-stuff-done regardless of where you are" is growing. Ever more people say "fuck it, I'm going to live where I want to live". Be it because they want to be near their families, friends or like myself, immersed in Europe. You know what? I like it here. I'm staying. Maybe not forever in Hamburg but I sure as hell like the South of France. Switzerland is nice. Crap, the coastline of Croatia rocks. (OK, ok, secretly, I love the damn Autobahn and driving really, really fast! :-) Germany, yeah, you still rock!) I also don't need strip malls everywhere I go. I don't much care for the house prices of McMansions in the Valley. Others may and I have nothing against that. What does matter though is that I don't plan on exiting "the scene" soon. I want to continue doing everything possible to grow innovation in Europe. I'm not the only one and I also really, really like interacting wth folks in the Valley. There are cool, smart, motivated and hungry people there but also wherever you go. They are the ones I want around me regardless of where I live.  

This makes me smile. I am glad to see this clearly upon my return to Europe. I have an even greater respect for the entrepreneurs here making it happen. Yup, it's harder and we may have more hurdles in our way as oppossed to being located in the Valley. But there are planes and it's easy enough to get over to the Valley (and increasingly NYC which has it's own benefits). I wish folks from the Valley spent more time on our shores. It would benefit the whole environment just as much and each time I see folks like Jeff Clavier, Dave Mcclure and many others here, I see how they add huge value. But, like I already said, it doesn't matter where you live. It's the mindset and you either have it or you don't. That unfortunately won't change just be relocating. 

 

Damn, The Samwers Are Entertaining (& Dangerous)

The Samwers have become the talk of the town when you're en-route in Germany. I was at Thomas Promny's D3Con event Friday and was again reminded of this. No, actually, I am reminded of how prevalent these guys are in the German VC scene whenever I leave the confines of my home. Not one party, event, business pitch nor even at times dinner conversation goes without mention of these infamous brothers. They're constantly in the press, Jason is spouting against them, Nero is ready to canonize them (were they dead) and every other blogger hangs on each and every email which slips out of Rocket Internet. 

Well, my opinion of the Samwers hasn't changed whatsoever. See this Quora answer I wrote back in 2010. This still holds true today and will so in the future. Without blowing too much sunshine up their butts, I am basically a fan of the Samwers. No, not because they're touchy-feely good guys but because they've got all kinds of business prowess and have about a billion reasons more in the bank than I do to prove it. 

Why are they dangerous then? Because everyone else is scared shit of them! I stood with multiple VC's and angels yesterday and they all basically repeated their fear about launching businesses. In the US (actually globally) the question at every pitch used to be "What will Google do"? In Germany nowadays, the first question is "Will the Samwers copy it?" I've even heard people saying their strategy is to start companies in spaces in which the Samwers won't go. These areas are not lucrative enough for Rocket to even bother. 

PEOPLE! ARE YOU $/&§"!'ing NUTS???

Can you imagine if people packed it up in the Valley once Google showed up, or before that eBay or before that Cisco or before that Microsoft? You get my gist! Competition will always be there. The more lucrative the opportunity, the more cutthroat the path to get there. Yet there is always an opportunity to compete. Do something better! Do something different! It's not rocket-science to understand what Rocket does (get it, get it, wink)! It's execution combined with boatloads of cash plus experience. Add a ton of balls and bravado to that equation and you have yourself a chance to compete. I'm biased but look at what Project A or ShortCut are doing. Mark my words, more will come, they'll grow and there will be competition. 

I'm sorry if I'm making this seem easy. It's not! It's extremely hard and the Samwers don't want you to compete. Actually, they'll probably poach your employees or talk smack about you behind your back or whatever. You think Google had it easier as the 25th search engine on the market? Focus on what's relevant and either compete or go do something else. Steal their employees or nab their investors for your endeavour. Nevertheless, I'm super happy that the Samwers are who they are. They have raised the bar in Germany, people will eventually compete and we'll all be here in five or ten years bitching and complaining about someone else. I'm good for now having enough small talk fodder at events. Thank you Marc, Oli and Alexander.

Gauging VC’s According to Herd Sentiment

I spent a couple of days in London at the London Web Summit, wonderfully organized by  Paddy and Mike. It was a meeting of the minds when it comes to the internet scene in Europe and was fairly well attended. In addition to meeting a lot of old friends at the event, I felt that there was also a lot of opportunity to meet new people. One thing which kept coming up in conversation though was VC’s and what I thought of them. I guess people feel I have some thoughts on this considering this previous post!

For some reason, now that I am no longer directly a VC, people figure I’ll speak much more openly about my opinion of them. To be honest, I’ve never been one to hold back in this regard, not really giving a shit whether my opinion „hurt“ my chances as a VC or not. I never saw reason to not be open and transparent about my thoughts in this regard and was actually taken aback when someone questioned whether I feared „retribution“. Note to crowd: VC’s may at times act like the mob but they don’t have the balls to „execute“ like the mob (get it, get it, wink, wink). Yet, what I found most peculiar was the feedback people were requesting of me now. In summary, I’d say it was basically along the lines of „can we work with this guy and trust that he’ll deliver what he promises?“ Further, a second point seemed to be „will they be able to get me to another financing round and if not, will they screw me when they’re my only option?“ Finally, a point that bled through in the questions asked of me was „will these guys be around in 5 years time?“ Are you sure this is what you really want to know from me? Or do you basically want to know whether you can believe the hype?

I can easily answer all these questions here by giving you one piece of advice. Don’t believe the hype when it comes to VC funds or specific investors. In the course of three days I heard multiple stories about both people and their firms . One VC was supposedly a rockstar and loved by those they funded and their firm. Yet from another person, they were the biggest scam out there. This is how far apart the opinions were: 180 degrees. Further, I was told that one fund was super supportive from start to finish, making so many things happen. Yet a day later, another entrepreneur told me how he basically never saw this investor after they wired the money and the turnaround time on anything he needed from them was tedious, even to the point of almost costing him additional funding and thereafter his exit. 

There’s a long story which could be told here listing other experiences. That’s not necessary in my opinion. I’l repeat what I always say instead of dragging this out. Do your homework. Spend time with the partner who is going to lead your deal. Make sure you meet others at this fund. Ask entrepreneurs whom they previously backed what their opinion is but preferably come to your own conclusions. Go and get drunk with the partner in question. Are they a dick when inebriated? They’ll probably be a dick when under pressure too. Do they speak poorly of their partners? Bad idea! They will speak poorly of you. Call them on the weekend (make up a reason to.) Do they act pissed that you would bother them on a Saturday or Sunday? If yes, problems! You will in the  future need to call them on a weekend and it will be far more important than something you call them on now. Ask a receptionist at the office of said fund what they think of the partner you are dealing with (be chatty and inquisitive). Find out who the responsible partner worked with in the past (colleagues) and ask them what they think. You’d be surprised what I’ve heard from people who worked at banks or consultancies what they thought of guys who left for VC. There is so much that you could do.

Unfortunately, here’s the KICKER! You probably won’t do much of this. Here’s where I get pissed off about all that you read above. There’s so much content out there about this. There’s not much left out in terms of how to screen your investors and figure out who is what. Yet, I keep getting questions when at conferences which are purely based on hype and public opinion of partner or fund. When you dig a bit deeper, which is usually super easy to do, you find out completely different stories. Clearly though too many people skip this step when raising capital. Don’t! It’s like marrying a girl after one date. It’s like having unprotected sex. It’s like jumping from the bridge without checking the depth of the water. It’s like driving at night and turning off the headlights in the pitch of dark. I could go on. You get the point. Luck is statistically not on your side when gambling. 

 

Dear German VC's: Being Plan B Sucks

I've always defended Germany and venture capital here. Yet, it's always been a bit behind and slow to adapt and I think it may be completely missing the boat (again). Further, the damage may be irreparable if the VC's don't adapt quickly. While the US goes in one direction, Germany seems to be going in another. This all became evident to me from the amount of noise (positive) you hear about two very specific funding options in the US: AngelList and Kickstarter. Hence I thought I'd share my thoughts.

I may be a bit alarmist but I spent the past 12 years as a VC watching the segment establish itself. I think it's come a long way and I'm quite proud to have been part of that evolution. Yet, the writing's very clearly on the wall. Multiple funds that set up shop in the late 90’s have finally withered away (it takes ten years until a fund stops running on fumes and goes away). A few of the early players such as Earlybird, Target and Wellington remain (keep fighting the fight guys....fist-thump!!!) but that's about it. A few have shown up in the past couple of years such as HTGF, Hasso Plattner Ventures, some corporates and so on (welcome, please be around in 10 years). Unfortunately, I still wouldn't say that there's a solid base of German VC's established. Ask any entrepreneur where they send their business plan first and it's usually a UK based fund (Index, Accel, Balderton) or even a US investor (USV, Redpoint, Kleiner, etc.).The German VC's remain Plan B. 

Meanwhile, what have the hungry young players done? Well, look no further than Rocket Internet, Team Europe or HackFWD for example. Former entrepreneurs in Germany all started incubators instead of funds. Sure, they eventually ended up starting funds too (Rocket and Team Europe) but that's a normal evolution and smart. I think it's a shame that the majority of things coming out of these shops are copy-cats but still, they're taking advantage of the opportunity, executing like mad. Like it or not, it's working for most of them and it's the opportunity which you can milk fastest. Please stop reading now if you think VC, incubation, accelerators or what-not are about warm-fuzzy-change-the-world-together motives! It's about making money first and foremost.

So, back to the original topic: If you look to the US, who's doing the most innovative stuff in the financing space? In my opinion, it's AngelList and Kickstarter. It's absolutely amazing how far these two vehicles for fundraising have come in only two year's time. They've completely thrown the model on its head and are working. You can hardly follow anyone in the space on Twitter without hearing about AngelList or Kickstarter repeatedly. Further, look how quickly they are able to get companies funded and up-and-running. This is the future of early-stage financing and an evolution of activites such as Y-Combinator. Actually, a large VC fund, USV, is backing Kickstarter and since 2009!!! How's that for noticing the tide of change! 

Germany though???.....................you hear that???..............it's a big, fat sucking sound of nothing-ness. Kickstarter? Nothing like it that I have heard of yet. AngelList, nope, nothing local. All the smart angels from Germany are on AngelList anyway. Boat missed? Hell yeah! So, what to do about it? Well, if the VC’s were listening to me (they probably aren’t) I’d recommend that a couple of them get together and throw some money in a pot to get a Kickstarter like platform started. Further, it would make sense that someone localizes AngelList for Germany. I don’t think it makes much sense to create another, German-specific AngelList but get someone on the ground representing it here. Figure out a way to partner and get it working here fast. (By the way, those of you who piled into SeedCamp, great....but you can't all bet on one horse and Index beat you there anyway!)

This will generate the dealflow down the road (just like Kickstarter) that gets you the innovative start-ups you need to fund and grows the ecosystem. I’ve already written once about how Germany doesn’t have an Old Boy’s Network and I think this is a ripe opportunity to kick things into gear. Get together, start some seed financing initiatives and copy what’s worth copying: the financing models which grow innovation instead of the start-ups themselves. 

Update: one point which may not be clear in the above post and I realized after reading a Tweet is that I am talking about coming up with creative, new financing initiatives. Kickstarter and AngelList are already two years or more into their evolution. They are not something new. They simply are something that's been missed as an opportunity here in Germany for the past two years. You can come up with your own innovative ideas on how to finance early stage businesses without copying. Yet, Germany hasn't historically been highly innovative on the venture model end of the spectrum. Therefore, do what you can with what you have. 

Letting Go & Losing Control

We usually know when we have to let go and give up control, yet I oftentimes simply find it so hard to do. Parents probably know this situation best in regards to their children. Yet at the same time, I sure do too as a former VC and manager. It's often extremely hard to let an idea, an employee, an innovation or team loose because it means you give up some control. You can no longer micro-manage every step of the way. You may also no longer be able to claim the success as all yours. Nevertheless, the inability to let go and give up control probably leads to failure far more often than we realize. Further, it's completely emotional and not rational at all.

I don't have children yet but I'm already panicked about ever having a daughter and letting her go on her first date. Same goes for a son who for the first time rides away on his bike to meet up with friends or whatever without my being able to watch his back. I know of all the adventures (and disasters) I managed to get myself into as soon as I made it around the corner, out of sight (but never out of mind!) Yet, I am who I am because of the positive AND negative experiences I faced and mastered. What didn't kill me, made me stronger (I know, I know, it's cliched but fits here!)

I'm building teams now now again with Michael and have to come to terms with their independence. No longer being a typical VC, I am far closer to their day-to-day business. My goal is to hire the best-of-the-best and let them run with our ideas. It's a fine line though between managing each and every step of the evolution and simply being there to support them whenever they're not able to get across some hurdle. Likewise, I had to learn as a manager to let employees do their own thing. Sure, they make mistakes and things go wrong but no one ever learns by not trying and constantly worrying about the consequences. If you hire people whom you have to micro-manage, you're at fault and not the employee. Teams have to be let loose to evolve as a team, to "figure it out" for themselves and to be successful. Cords have to be cut to companies so that they can deliver on their promises. Their success depends on the company working towards a clear goal as a unit. 

Innovation usually thrives amidst chaos far more often than it does in a controlled environment. VC's have to let their portfolio companies do their own thing just as much as board members have to know when they're meddling instead of supporting. It took me years to figure out how to offer my support and help motivate people instead of trying to tell them what to do. We usually default to this mode since we think we can always do it better. "I'm the manager or boss or dad or VC....whatever, and I know best!" You may think you're helping to avoid disaster but it doesn't quite always work like that.

The best managers (and parents) tend to lead, motivate and delegate instead of micro-manage, steer and control. I can't know everything about each and every situation. Further, I will hire people who are best for the job, meaning they can probably do it better than I can. I'll let them go. Putting them in control and offering help and support wherever I can is definitely the challenge as well as the key to success. 

Get On The Field Or You Ain't in the Game

I was reminded of never turning a blind eye to opportunity this week. I realized that one event, which in hindsight never received much attention from me, ended up being so lucrative. It deserved a note here again.

Way back when (ok, a couple years ago), I originally started the Open Coffe Club ("OCC") meet-ups in Hamburg. Thankfully Tobias from Hamburg Start-Ups took over fairly quickly to keep this event running. I just didn't have the time to do the necessary advertising and marketing for it. Good thing he did as it remains a great local event in Hamburg. Had it not been for this event, a bunch of things wouldn't of happened. 

A couple nights ago I was at the office opening party for apprupt. I have to admit there was a sense of accomplishment circling through my head as I hung out in their new offices. I think they're at 30+ employees now and in the new space will quickly be at 50 or more. Yet, I remember meeting the founders, Jascha and Kjell, originally at the OCC meet-ups. Initially they just said hello but were persistent in building a relationship. Good thing they were ankle-biters. Otherwise, I would of never seeed invested in Jupidi which ended up becoming apprupt. Score 1 for OCC. 

Not surprisingly, many of the Americans who showed up in Hamburg were introduced to me at OCC. Expats are always looking for ways to meet people and at the same time, I was always happy to meet Americans showing up in town. I figured they had to be "my kind of crazy". Kevin Dykes was one of these guys. He's become a good friend and is making his mark now on the Berlin start-up scene. Further, I met Michael Backes there and guess what, we just launched Liquid Labs together. Score 2 for OCC. 

Without going into the detail of every connection that happened via OCC (and there are a couple more), you get the point that even small, local events can work wonders. Further, if you don't show up to the field, you won't be part of the game. LeWeb, TheNextWeb, Founders and so forth are great events. Don't get me wrong, I go too. But you have to be networking all the time. You never know whom you are going to meet where. Further, you have to be open to meeting new people and seeing whether something may come of it. Maybe not today or tomorrow but eventually. This is what the smart founder, out on the "playing field" whenever possible, always has in the back of their mind. 

Stick to "Clean Business"

This is the opening scene as well as "outro" of Nicolas Cage's film "Lord of War". I'm not going to write much! I'm not going to get political about the movie either. It's a great film to see how the dirty side of business works. Watch this opening scene.....amazing. Highly recommend the movie too. Remember, this is based on the true story of five gunrunners. 

 

Hire Only Those Who Want to Work for You

I know that most managers like to pride themselves on getting things done, basically being "closers" when it comes to sales, hiring and so forth. Nevertheless, when it comes to hiring, one thing to keep in mind is that you don't want anyone working for you who in hindsight regrets the decision. Sure, the job can end up being horrible or you as a boss are a total nightmare. These are not the things I am addressing (that's your problem to work on).

Oftentimes though, people are not ready to take a certain step in their career. They may not be ready to move to management. Maybe they feel like they're involved in a project they want to finish and bring to completion. Relocation isn't always something people are open to. Lateral career steps also are tough to do as I recently wrote. One way or another, you may have someone on your hands who thinks they've been forced to take a job or feel like they've been "talked into it". Bad idea! 

As much as you want to recruit someone to your team or for a project, focus on the role and the person you are putting into it. Just being focused on the "deal", i.e. getting the person to sign your contract, is not the right thing to focus on. Don't be "this guy" when it comes to hiring:

 

You want a fit on both ends. Whomever you hire should be burning with desire for the job. They should want to get up in the morning and get to the office. They need to be engaged in what their task at hand is. You don't want someone who continually second guesses their decision to join your team or take on a specific role. Further, you don't want them second guessing your decision to hire them or reposition them. This will kill the working relationship faster than you can react. 

Have the discussion about goals and why the person is deciding to do what they are deciding to do beforehand. Let them know why you're doing so too before signing contracts. Ask the tough questions regarding motivation, fears, alternatives and so forth. I'm floored often by how little managers find out about the people they are recruiting. Sure, you can always fire people later on but who wants to do this. It's not a fun process and both sides end up suffering. The employee has to go find another job and you have to replace them. Further, whatever work suffered as a result of this decision has to be caught up on. Be compassionate to the people whom you plan on hiring or repositioning. Have a talk above and beyond the sales pitch for the position. Get to know them and make sure they know you and why you want them on board.