It is very hard. A few warning signs I have noticed over the years:

- Superficial knowledge, but claim they know the field. When you dig deeper you find knowledge lacking. Wikipedia can help uncover this sometimes, amazingly.

- Do not read new business books.

- Haven't heard of "classic" books in the business world, e.g. good to great, crossing the chasm etc

- Business model based on a poor understanding of technology (e.g. "User generated content but restricted access site")

- No track record

- 50 years old and not rich.

- Afraid to execute (give them a hard task to complete which they could fail at and it won't get done).

- I'm always right about stuff I know nothing about syndrome. You want a partner who is complementary; he should be able to recognise what you bring to the table and should defer to you when he doesn't know.

Good luck!

Is reading new business books really a necessity? The few that I've read seem pretty vapid. I'm sure there's some useful advice in some of them, but surely an experienced businessperson would already have the basic knowledge and abilities down.

If a top business guy in a startup spent a meaningful amount of time reading new business books, I'd be a bit suspicious.

Your other 'warning signs' seem right on to me.

I would say yes. Thirst for knowledge is a common trait I have noticed amongst the repeatedly successful, and usually manifests itself by having read most of the literature on ones topic.

Perhaps you are overestimating how long it takes to read a business book. Most can be finished in a few hours due to their padding, and reading 10+ new books per year shouldn't be hard even for the uber-busy. It's not like reading a tome on prolog.

I totally agree re: thirst for knowledge. But I'd be more impressed by a business guy who read widely _outside_ his field.

Tangent: one way in which the internet and e-books will definitely affect book publishing, for the better, is that there will be less need to stretch a single idea to book length. Many nonfiction books should really be ~30,000 words long, and once everyone has a Kindle there's no reason for them not to be.

The field of business is very large:

Sales, marketing, accounting, project management, finance, legal, strategy, intellectual property, human resources, presentations, customer development, branding, writing, business planning and more are all topics that good business guys understand well.

Add into that the market specific knowledge (manufacturing, regulations, distribution channels etc) and you have a pretty broad reading list.

Most do have pretty detailed domain specific knowledge from working in that industry in some capacity.

Tangent: Agreed, though hopefully < 30k.

Most of them are very fluffy. Even the good ones, with a unique idea (say, Innovator's Dilemma) have to pad the good stuff to make a book out of it. And hence, a side project of mine, Squeezed Books.

You're rigth, I guess if you apply what PG have said about hackers to business people you have it.

Has he convinced you to do all the work and accept all the liabilities while he gets to keep all the profits? If so, he is a savvy business person. Otherwise, not so much.

P.S. Don't let him write the contract.

Start working with them. It becomes immediately apparent. I'm on my second startup, we just raised funds and brought on a VP of marketing, and we did it by telling one guy "congrats you're on the team" and a week later realized that he wasn't the right fit, so told him "goodbye" and then we told another guy "congrats you're in the team" and after a week we all agreed he is totally awesome, and he's still the guy, and we wouldn't have been looking for him if we didn't think of the other guys first week as his job interview.

Also, sales & marketing != biz management

This is great advice. Also, by all means, never sign a big contract up front (no matter which side you're on). Just have him pay you cash for a week or two, that should be all the time you need to make a judgement.

From my (extensive) experience, there is no way to know in advance. The only way to guard against surprises is to tie ownership to execution.

Set specific performance goals for both yourself (modules released, SEO rankings, whatever's relevant) and "the suit" (capital in the bank, number of users, number of paid subscriptions, etc). Tie each goal to percentage ownership. If goals are met, you vest. If goals are not met, you find another partner or scrap the project altogether.

Also make sure that the goals are on a somewhat concurrent timeline. "Suits" generally have trouble executing on a "beta" product so if you do not set concurrent goals, you will keep developing new features and never, ever have the chance to see your partner in action.

What I mean is, push really hard for a bare-bone set of requirements that you both agree to be "good enough" as the first iteration of your product, and as soon as that feature set is in place, your partner needs to execute (again, whatever's relevant to you - sell some subscriptions, get some marquee clients on board, raise capital, etc).

Good luck!

Im a "business guy" out of Stanford GSB and if I was going to look for a hacker, I would expect to see a list of things that s/he had done. The more impressive that list the more likely I would be to work with that person.

Seems to me you should simply take the flip side. For me, savvy isn't the right word. There is something very self-interested about it. Instead, I would look for a business person who has actually helped build something. Preferably something very interesting.

Also, while im not big on references, it might be nice to talk to another hacker, whose work you respect, who had a positive experience working with that business person.

Lastly, I would definitely not judge a business person by which business books he has read. Business people should help you build something of value, not regurgitate the most recent tagline of a management fad.

By reading books and simply regurgitating the most recent tagline of a management fad you are doing it wrong.

Business books are a primarily a source of other peoples failures and successes. Businesses have such a long gestation cycle that it doesn't make financial sense to make the mistakes yourself.

In those business people I have met that aren't well read, often times their entire business strategy could be drastically improved by reading a couple of seminal pieces. But, for them, ignorance is bliss. I know which one I would choose.

The best sales/marketing/mgmt people I've met are those that take a systems-focused approach. On some levels, this is very similar to designing your db layout, or the user flow through your application.

Good sales people design a repeatable process around selling. They investigate the market, build a call list, and execute through the call list. They then refactor based on results. They do not throw shit wildly at the wall and hope something happens.

Good management people design business process in similar ways. Customer service is a system. Calls come in, they are processed, logs are created, and evaluations are done quarterly of the system. Apply similar methodology to hiring, to finance, to marketing, to accounting, etc. The hardest people to find are those with good strategic vision -- so if this is your idea, you need to be that person.

Some of these things are harder to assess than others. Look for people who use data to make decisions, who are 'doers', and who can describe to you the process they plan to take. Look for people who have a track record of these things in other, perhaps non-startup ways.

I would test them by suggesting some shiny objects and see if they go after them. i.e.

"Yes, Bob, we should do what you're suggesting but we should also do X, Y and Z."

If they don't say "No" or something to the effect of: "Those are good suggestions but I think we really need to focus on getting a prototype out the door, some real customer feedback, etc. Then we can revisit these great suggestions and see if they are still in alignment with the product."

Cheers

I would say references are a good start. If they are respected by their peers and customers that's going to be a good sign. The other thing is obviously their track record. If they've done good things in the past like increase sales x% or launch new initiatives. But do your own research into these matters, your 'truth' means more than what a business person says.

I've had similar concerns and got lucky meeting people through either acquaintances or through work. So before there was ever a business partnership relationship I got to see how the person worked with customers and other coworkers.

Good luck.

With all due respect, references are worthless. The person wont give you references of people who wont give him glowing reviews.

Perhaps past employers might work, but I think what you say about their track record is really the only way, outside of just knowing someone or a referral from someone you trust.

References are far from useless. It's like interviewing: if you let the candidate give you fluffy BS answers you'll get snowed every time.

Listen carefully and dig deep. Don't just settle for "I know this guy and he made me a bunch of money." Ask the reference what the guy did to make money, what was his plan, how they met, why he decided to work with him, why they aren't working together any more.

Imagine you're sitting down for lunch with the reference and having a conversation about the person he's referring and you'll do a better job of understanding what he's all about.

Sorry, I just dont see it that way.

Interviews are also notoriously bad for hiring. They may make you feel better about a person, but they arent actually better at predicting future outcomes most of the time.

History and Examples are much, much more valid for everyone. For example. who needs references when I could just SHOW you something I did. What would you trust more -- some stranger, or your own eyes and ears?

It is very hard to figure out. I am IMHO a savvy business person and even I have a hard time figuring it out. Ultimately it takes time and getting to know the person.

The only advice I can give to accelerate this process is to ask lots of questions. If he has an answer for everything, that's actually a bad sign as it typically means he's BS'ing.

You want someone who's humble enough to admit where he isn't sure what will happen or how things work.

Absurd certainty and BS'ing is ok although not preferred for salespeople. But it's a sign of impending doom for a manager, especially for a startup.

Someone that made a lot of money once... may be savvy. Someone who has repeatedly made money on different ventures... very likely savvy.

There are a lot of people that hit the tech lotto because of being in the right place at the right time (e.g., google employee #20). There are many fewer that have hit after hit.

My experience (direct and indirect) says that someone that is business savvy will likely leave you feeling fucked over. To be successful in business you often have to push the boundaries of what is legal and acceptable to most people.

Work with him for a trial period. Set a goal and see if he helps you achieve it or even exceed it.

You could also ask him to defend his management experience to you. Has he demonstrated results in a particular area before (winning new business for a similar product, for example)?

well what is his plan to market your product when you finish.

this reminds me of this post I read a while ago, hacker started a startup...it took off, so he decided to hire a sales guy to take it to the next level. The guy was "awesome", a genius at sales or so it seemed. Well he hired him, gave him some equity(I think), and then sat and waited for $$$ to roll in. Well it turned out the guy was just a big bullshit artist and didn't really know anything