Being a People Leader at a Startup
Melanie Naranjo, VP, People, Ethena
I’d been watching Ethena’s trajectory and was happy when Laura Del Beccaro introduced me to Melanie Naranjo, VP, People at the company. After stints in fashion and media, Melanie found tech startups where she happily settled into Ethena. Startups can present great opportunities for People leaders to be innovative. In this conversation, Melanie and I talked about:
The role of a People leader at a startup
How she defines a high-performing culture
Why high-performing cultures are so critical to startups
Three questions she asks to assess if an employee is high-performing
The CEO and People leader relationship
Her advice for startups looking to hire their first People leader
I’ve been really looking forward to our conversation. I’m wondering if you could tell us a little bit more about yourself.
Yes, happy to. My name is Melanie Naranjo. I head up the people team at Ethena. We're a compliance training company, so everything from harassment prevention to cybersecurity. Funnily enough, I started in the fashion industry. Not for me. Went into the media industry. Interesting. And now I'm in the tech startup world. There's something just really lovely about working in startup land because you get to build things from the ground up, you get to break things, you get to experiment just a little bit more. There isn't quite that level of red tape. There's just a hunger and openness to try something. If it doesn't work, we'll try something different. So I've been enjoying my foray into the tech startup world for the last two and a half years. I don't think I'll ever be able to go back at this point.
Love your background. What kind of roles were you in?
I was in the people world the entire time, but it's funny that you ask that because one of the things I liked about the people field was that every company needs HR. Every industry, no matter what, so if I get tired of this industry, I can switch to another. Something I think people don’t think about enough is the fact that HR is very different depending on the type of company and industry where you work.
The culture is different. The CEO's priorities are different. The relationship between stakeholders and HR is vastly different. I have learned a lot going into different industries. Yes, HR is needed everywhere. And also, HR looks very different depending on where you're doing it.
What was your path into the people world like?
I sort of stumbled into HR, which I think is common for most HR people. I don't think most people grow up thinking, what do you want to be when you grow up? I know, an HR professional. I'm not saying it's a bad one. I love being in HR, but certainly, nobody was sort of incentivizing me to be in HR when I was a child. I think we get our stereotypes of HR from characters like Toby from The Office.
So I sort of stumbled into HR when I was trying to figure things out in college. Not sure where I'm going to land, there was an HR opportunity, and I picked it up. I started as an intern. The lucky thing is that I started at coach, the handbag company, and one summer I went into talent acquisition. The next summer when they invited me back, they put me on the L&D team. So I already started seeing different versions of HR. It was great. HR is not just one thing. HR has many different functions within HR, getting to see the different sides. And then when I started post-college, I was in a generalist role.
I assumed that this was the norm because you sort of build your foundations before you start to specialize. I was talking to someone a couple of weeks back where many people, you know, as they were entering the people field had been incentivized to specialize. You want to be a specialist because you want to show that you're an expert in one area. I have found the generalist path a better one not because I place higher value in it or think that someone who's a specialist doesn't have as much skill, but more that I think it offers a certain level of stability in the event of a rough economy. If you can only recruit and you stop recruiting, it's very hard to move you somewhere else. If you can only do L&D and the budget for L&D gets cut in half, you may lose your job. So I was very generalized from the beginning. I started in payroll and benefits but slowly picked up other things. The more experience I got, they put me into more HRBP functions where I was able to provide advisory support. I picked up some recruiting along the way. And now I head up the people team at my company, but I was only able to do that because I had a generalist background.
So that's been my background – started interning, payroll and benefits, talent acquisition, and then slowly now my specialty revolves around performance management, and executive coaching. In the past couple of years, which is very exciting because I work at an HR tech company where we are selling to buyers who look like me, I’m getting to step into marketing land a little bit. I host monthly workshops for HR professionals. I post a lot on LinkedIn to share thought leadership posts. It's been a really cool opportunity to pick up this very nuanced, very niche skill, which is one where someone like me is particularly valued for the value they bring to the business itself.
I'm curious how you got into tech and what interested you in the opportunity at Ethena.
I've been with Ethena for the past two and a half years, and I always wish that I had a more intentional answer for this one. I think people will say, “Oh, Melanie, you must have really done your research and known that tech was for you.” The reality is no. I went into this a little bit in a bit of a cavalier way if I'm being quite honest. And it's because really what I was doing was I was joining a company whose mission and values I stood by, which for the record, I encourage for anyone who's looking for work. Studies show that one of the leading drivers of burnout actually isn't your workload – it's whether or not there's values alignment between you and your company. If you are working at a company that doesn't do things that you stand by or are proud of, you will burn out quickly. I think this comes back to the pandemic because I think this is really when it started being such an important factor.
I think for a long time people sort of accepted that you were never going to love your job and for the record I don't think everyone has to be obsessed with their job but I think you should be proud of the work that you were doing and I think that when the pandemic hit there was this bit of an existential crisis where people sort of realized the ephemerality of life and sort of thought is this really where I want to be working is this really what I want to be doing? Do I stand by these values? I like to give a common example. So I'm vegan. If I worked at a meat factory, I'm pretty sure that that would be tough for me. Would I really want to go the extra mile to help this company succeed? Probably not.
Ethena reached out to me. They are a company whose entire mission is to help people succeed and to build more inclusive and ethical workplaces. As part of my interview, they sent me a sample training. It was a comic strip of a queer Hispanic woman going through a day in the life of just, here's what it's like, here's the experience and just seeing the thoughtfulness in it.
I saw this training and I saw myself in it and I just thought, “Wow, if in the interview alone, I already feel so seen and so included and so aligned with the mission of this company, I know I'm going to love it.” That's how I ended up at Ethena, which happens to be a tech startup. Now, being in a tech startup, I do feel very intentional about my next job. You know, if that comes hopefully not for many, many years. But for my next job, I think I would stay in the tech startup world because of some of the things I alluded to earlier on, which is I realized that I had a real hunger for experimentation, for trying new things, for innovating, which in all honesty just gets harder the larger the company. There's more red tape. There are more levels of approval. The impact and the risk, the blast radius is so much larger because you have so many more employees that you are working with.
It's quite clear to me that the tech startup world is much more aligned with my interests and the way in which I approach work, which is that I want to break things. I want to try new things. I want to take risks. I don't want to do things just because that's the way they've always been done.
A people function’s responsibility is to drive the business strategy through your people strategy. Your job is to make sure that your people strategy is empowering your business strategy. If there is no people strategy, there is a very expensive part of your business philosophy that you are not nurturing and you're just leaving by the wayside. Employees are every company's most expensive asset and yet they are the most under-invested assets.
How big is Ethena today?
We are a small but mighty team. We have about 60 employees across the US and Canada.
How big is your team?
The people team, I'm a team of 1.Yep, very scrappy. That's how we do things in the startup world.
That makes sense. Most startups tend to underinvest on the people side early on.
Yeah, I think that's exactly right. I remember being pleasantly surprised when they recruited me in the first place because at the time we were maybe a little under 40 people and I thought, oh really, you're going to hire an HR person at 40 people. That's exciting. So I think that goes to your point where I do think that the people team tends to be under-resourced, understaffed, and undervalued (at startups).
One of the benefits of working at an HR tech company is that I don't have to make a business case for HR. You know, if we don't believe in HR, what kind of business are we in? So that's been easy. And I will say, I'll add just one extra thing. I really hear you and agree that probably most companies could do with larger HR teams. And also one of the things that I'm finding cool about being in such a scrappy team is that you were just forced to find a way to do more with less. Almost by necessity, I'm innovating in ways that I wouldn't have thought to do otherwise. One of my favorite perks that we did at Ethena was a result of not having enough resources on the people team and also wanting to innovate.
I think you have the classic example of trying to build engagement, especially at an all-remote company because we are distributed across the US. People would say, we want more get-togethers, we want more opportunities to bond with each other in person. We tried for a while to solve the problem ourselves. Okay, I'll host a cheese-making class. No, no, that's not inclusive. I'm vegan. I don't eat cheese. Okay, why don't we do a happy hour? No, no, that's out at pick-up time. I'm a parent that, you know, that doesn't work for me. Or, you know, let's go play golf. Who wants to play golf? That's such a bad idea. We just realized this is not working. First of all, I don't have the resources to keep trying these new things that are not working. Two, I'm not going to be able to make everyone happy with any single thing that I put together. And three, why am I owning all the responsibility? Why aren't we distributing the workload here? So we just told employees, “You can expense up to $100 a month to hang out with each other, however you want. You set it up. I don’t need to be involved.” It worked so nicely because I didn't have to lift a finger. People tell me what they want to do and people get customized opportunities to bond with each other in ways that work for them versus us trying to force them to go to the classic pizza party that nobody wants to go to. It's been so great. Our employees have gone to Broadway plays. They have had dumpling-making classes virtually and so many cool things that quite frankly, I would never have thought to do myself.
A high-performance culture is one in which every employee is driving high value. Value can come in many forms. It can come in directly, for example, someone on the sales team who is closing deals. It can come more indirectly, for example, someone on the marketing team who is building that funnel and pipeline and getting all that business further along the pipe to a salesperson. The point is, with every single employee the idea of them quitting should hurt.
I think startups often under-invest in the kinds of people they bring in, often with no experience. I understand that they need something cheap but they need someone who went the generalist path, who has a sense of what you need to do.
I think that is such a smart point. I want to emphasize this for a second. Many companies, and I have talked to so many people in this position, to your point, hire a very junior generalist to run HR at their company. The reason they do that is because they're not thinking about the strategic side of people.
A people function’s responsibility is to drive the business strategy through your people strategy. Your job is to make sure that your people strategy is empowering your business strategy. If there is no people strategy, there is a very expensive part of your business philosophy that you are not nurturing and you're just leaving by the wayside. Employees are every company's most expensive asset and yet they are the most under-invested assets.
So often companies will bring in a very junior HR generalist to run HR, but what they really mean is they want someone who's going to run payroll and benefits. That’s fine to keep the lights on but in terms of being proactive, strategic, and making sure that the people that you are paying quite a lot of money to are working for you and bringing high value, it's a missed opportunity.
Yep. Startups need to hire at the right level and think about driving your business strategy through your people. I know it feels like a big investment but if you don’t, the person gets overwhelmed because there’s a mismatch between what the company is going to need versus what they have in the person. I always think about what you need a year down the road rather than just what you need now. Yes, you need benefits and payroll but that’s bare bones. You need more strategy down the road.
I think that's spot on and I will flag that I think one of the challenges here is that most CEOs and I say this with empathy, that most CEOs I don't think understand the value of a true people leader. I say this as someone who was in this position. Our CEO, Roxanne Petrea, who I love, she's amazing. She's been open about this. I'm not saying anything that she wouldn't be comfortable with me sharing. When I interviewed for the role and we first started chatting, her idea of HR was payroll benefits and compliance. She didn't realize all the other values that a people leader could bring. Through partnering with her over time I was able to open her and educate her on that. Now we partner well on so, so many things, but it's one of those things that most CEOs don't know.
I say that for two reasons. One, to your point, CEOs listening in, pay attention. There's so much more value that your people leader could bring. For example, how do you retain your performers? Oh, you're not able to even attract the top talent that you're looking for. They can help you with that strategy. Or, oh my gosh, why is there so much in-house politics between your leadership team? These are all things that your people leader can help you with. The second reason that I flag this is I know a lot of HR people are interviewing right now. I know there are a lot of people looking for work. And the common refrain that I hear is often, no one that I'm talking to gets it. No one gets the HR philosophy. It’s very hard to work at a company where there's no buy-in. This is the norm because most people haven't been educated on the value that a high-value HR leader can bring.
A good people leader can help with building a high-performance culture. What are some of the characteristics of a high-performing culture? How would you define that?
In its simplest form, I would define a high-performing culture as one in which every single employee is driving high value for the company. Those are the terms that matter to the CEO. Something that a lot of HR leaders miss is speaking the CEO language and appealing to your audience with arguments that appeal to them, not that appeal to you. Sometimes I think people forget, you know, the person on the other side of the room is not an HR person. Their top priority is not employee experience. Their top focus is driving revenue. Their top focus is not going out of business. So when HR people can speak in their language and argue for things in ways that appeal to them, they’re much more effective at making their case.
A high-performance culture is one in which every employee is driving high value. Value can come in many forms. It can come in directly, for example, someone on the sales team who is closing deals. It can come more indirectly, for example, someone on the marketing team who is building that funnel and pipeline and getting all that business further along the pipe to a salesperson. The point is, with every single employee the idea of them quitting should hurt.
If you have an employee who, if they quit, it’s like “Eh, it's fine, we'll make it work. That is not a high-value employee, that's not a high-performing employee.” I have three questions that we have our managers at Ethena ask themselves about once a quarter to do a pulse check on whether or not their employee is high-performing. We keep it very brief. It's three questions because if we give them this nine-point document, they won’t go through the effort to do that work. Second, it gets very confusing. If you ask someone, Is your employee a high performer? What response will you get? Typically, something along the lines, “They're really nice, or They don't do this as well, but they're really good at this, or oh, but I really like them, well, but they're trying really hard.”
That's not what I'm looking for. I don't say that because I don't care about the employee. I care about the employee but at the end of the day, my goal is to drive business success through our people strategy. So those three questions really cut to the meat of it. They are one, if this person were to quit today, how would you feel? Relieved, panicked, or neutral? Two, is this person ultimately making your job easier or harder? I think this catches people by surprise. I firmly believe that every employee's job is to make the next person's job a little bit easier to free up their time so that they can focus on the things that only they can do. It's not a manager's job to do their direct report's job or make their job easier because quite frankly, that means that they are missing out on higher-value work that only they could do. The third question is, if you could go back in time, knowing what you know about this employee today, would you hire them again? This is usually the one that really gets people. “Do you know what? I'm not quite sure.”If the answer to any of these questions is no, or if it's iffy, it doesn't mean we fire the employee. It means, okay, something's off and we need to initiate a discussion.
Those are great questions. They're very crisp and like you said, they're direct questions and aren’t fluffy. I think that HR/People have a fluffy reputation but in my experience the best are not fluffy at all. They’re trying to drive business value. Those three questions get right at that.
I’m glad that you framed it in that way, the stereotype that HR has about being fluffy. I don't think that that stereotype is entirely untrue. I see it as an HR person. And I say that as an HR person who was trained with that mindset for a long time. For a long time, HR was more administrative than strategic. I’d say only in the last few years has the call for strategy become more prominent as a result of the pandemic and social uprising. I think HR professionals who aren’t communicating or thinking in business terms, or are thinking in fluffy terms for example, we should do this because it’s the right thing, we should do this because it will make employees happy, guess why? That’s because no one has ever told them otherwise.
My new CEO, Roxanne, has been tremendously invaluable to me. For the first time in my life, I've worked at a company where it is in my CEO's best interest to grow and thrive as an HR professional because I'm putting myself out there. I'm helping build an employer brand. Up until then, when I promoted something in a “fluffy” way and the CEO didn't like it, guess what happened? The CEO just ignored me. They just dismissed me and never talked to me again and never bothered to give me feedback. My current CEO, I remember she pulled me aside very early on and said, Melanie, if you can't speak in sales terms, if you don't understand what CAC is, what ARR is, and then you trying to win us over, you are going to lose my attention every time. Here are the things that I need you to learn. Here are the terms that I need you to speak in. I want our employees to be happy and also understand that my core priority is keeping the company in business and bringing ARR to the company. So how are you going to prove that you are helping me achieve these goals with what you are trying to push forward? So she gave me that feedback very early on. They say that because a lot of CEOs, I think, you know, they hear an HR person, they don't like what comes out of their mouth, and they just walk away and assume this person doesn't know what they're talking about. This person knows what they are talking about but you have not communicated to them that they are not touching on the things that are of highest importance to you.
It’s really important that any CEO who doesn’t like what the HR person is doing or feels like they don’t get it, what feedback have you given? What role have you played to help shape the direction of your relationship?
Great advice. It's wonderful that she gave you that feedback. You know, happiness is good but we need to have a business because if we don’t, how can we pay people?
100 % same here. It helped me grow monumentally. I also want to acknowledge the empathetic human side of things that many CEOs want to give people the benefit of the doubt. They’re nervous, they probably think the feedback wouldn’t be welcome. They don’t want to hurt the person’s feelings. They worked so hard on this thing. I'll just like, you know, slide it under the rug. The reality is, that your HR person feels that they notice it, and they don't like being dismissed. It is so much better to have a direct conversation so that they can adjust and course correct and have a dynamic partnership with you. My relationship between myself and my CEO opened up so many doors because once I was able to start speaking in her language, it built her trust in me. It opened her up to vulnerability, where she was then able to say, do you know what? I'd love to get your take on this other thing. Or do you know what? You were really helpful in this other thing that we were working on. I wonder if you might have a good idea for this other project that I'm working on. But that only happened because we had an opportunity to build trust and because I was able to prove myself. I wouldn't have been able to do any of that if she had never had that conversation with me.
People/ heads of HR and CEOs, they butt heads all the time. The important thing is how you manage conflict effectively. How do you learn? Everyone's going to fight. But how do you fight? Well, how do you argue? How do you do that effectively to build a stronger relationship?
The relationship between CEOs and people leaders is so critical. Have you had an experience or talked with folks with this kind of friction? How do we get through it?
100%. I think in part because something that people often overlook is that the people function has a lot of responsibility, but very little actual authority. Our jobs are to advise, to guide, to reflect, point out things that may be going awry. We don't actually have the power to enforce. I can't say we're changing performance reviews. I can't say we're firing this person. I can't do any of that, and nor should I. I do believe in the power of checks and balances, but we have very little authority. It's all about influence and advice. With that said, I think that sometimes HR professionals and CEOs, they butt heads, and it's because they are both focused on the culture of the entire company.
It does come down to culture at the end of the day, whether you're talking about performance management, whether you're talking about, you know, our work-life balance philosophy, where you're talking about ARR strategy, it all comes down to culture. So understandably, you've got these two people who are butting heads because one person is supposed to advise on it, and the other person's the decision maker. Also, in many cases, that person is that person's boss. So how hard can I push? You have control over my direct job. There are also certain power dynamics at play here. Typically, most CEOs tend to identify as men, many of them white, and most heads of HR are women, many of them women of color. So all these other nuanced dynamics can come into play and make that relationship that much more challenging. I think if you are struggling with your current CEO and butting heads, I don’t think that means you should pick up your bags and quit. Quite frankly, that's going to be true wherever you go.
Wherever you go, your CEO and your head of HR are going to butt heads a little bit. And that, in my opinion, is as it should be. Again, checks and balances. It is important that the CEO not let the HR person go rogue and have unlimited funds to do whatever employee experience they want to do. It is also important that the head of HR push back on the CEO if they are just, I don't care if people are working till midnight every day and weekends, because the HR person is thinking long term around burnout, retention, let's think about our people strategy and whether or not that's impairing our business strategy.
Let me jump to some specifics because I think that's always helpful. If you are butting heads with your CEO, I would encourage you to think a little bit less about the live argument and how to win them over and think more about what the aftermath of that discussion looks like. Here's what I mean. Many people in HR, in any role, you propose a thing, it gets vetoed and you're like, well, I guess it's done. Or, I'm annoyed, they never listen to me. I think not enough people pause and leverage that as an opportunity for data collection. So if I get a no, my response isn't, okay, great, thank you. It's, okay, is this a no for right now or is it a no forever? What would it take to turn this no into a yes? What is the most stressful thing about my proposal right now? Which is the thing that you hate the most right now? I think that when you ask these really killer follow-up questions, you will prepare yourself better for the next one.
One of my favorite questions to ask is just really direct. Hey, do you know what? I've noticed that our sales leader, they are effective at winning you over on things. And I've noticed my last few proposals have not won you over. I'm curious to learn what is the difference between how they propose a thing and how I propose a thing and how I could create a more compelling case argument for you. That way you're not creating this dynamic of how dare you, now we're fighting against each other, or I'm so jealous, how come the salesperson gets what they want? You are creating this environment where you are telling your CEO, I wanna learn more, tell me more, and let's make this work. And your CEO now can give solicited advice rather than this difficult unsolicited advice. And also they might be forced to think a little bit more intentionally, right? They might realize, “Oh, you know what? Maybe there wasn't that much of a difference. I just wasn't, you know, being as attentive. Or do you know what? It's a very clear difference. The salesperson was using terms that matter to me and you were not.” All of that is invaluable data.
People/ heads of HR and CEOs, they butt heads all the time. The important thing is how you manage conflict effectively. How do you learn? Everyone's going to fight. But how do you fight? Well, how do you argue? How do you do that effectively to build a stronger relationship?
What advice would you give to a CEO who’s looking to hire a people leader?
Use the interview process as a data collection opportunity. Ask all the questions. Don't go in with a mindset of I know what I want out of an HR person because, and I say this in the nicest way possible, you probably don't know the full breadth of opportunity and possibilities out there. Go with open-ended questions such as, ”What value do you think the HR function brings to any given company? What do you think is the role of a head of people? What do you think are the biggest issues right now in the people's world? What do you think are the biggest areas where heads of people and CEOs butt heads? How do you think they should effectively work through challenges?”
Collect data, go in with an open mind, not an opinion, and then look at all the data before you to determine which of these things that have been put forth before you that might work best for you.
I love that. Most people go in with preconceived notions. We’re humans, right? We think we know what it looks like. It strikes me that your approach begins to build a relationship.
I think so. I mean, it's key, right? If you can't build that relationship, you're never going to work effectively together.
Melanie has a great newsletter How to People. Subscribe here.