Hiring is hard. When you’re a startup — with no track record, scant funds, and less than top-of-line resources and benefits — it’s usually a nightmare.
Thus, many startups never make it out of the solopreneur stage, a one-person show. There’s nothing wrong with that, of course. But if you have billion-dollar valuation dreams, or heck, even if you just want the slightest chance of an exit at some point, well, I probably won’t be the first to tell you that you can’t do it alone.
I’ve been down the growth startup hiring path many times, several as a self-funded founder, and even more as a founding stage executive at a VC-backed venture. The truth is, while money makes the hiring process easier, it doesn’t make any of the decisions easier, and it doesn’t guarantee hiring success.
That said, I’ve been lucky enough to have hired some of the most brilliant and extraordinary talent during my 20-plus year career as an entrepreneur. I’ve also worked with a few bozos, because we all make mistakes.
The first hire is the hardest
While we’re here, let’s get this misconception out of the way up front. No one works for free. Ever. If a company is offering less than competitive compensation for any hire, whether that’s employee number one or employee number 50, the difference will need to be made up in equity. If it isn’t (and sometimes even when it is), you’re not going to get the full effort — and thus the full value — from that employee.
Also, despite how the math might look, two startup employees working part-time do not equal one startup employee who is all in. They usually equal one startup employee working part-time, because it’s a total pain to get results out of them. Because it’s their second job. Or their third.
Money is always the primary decision factor. So unless you land some seed investment, enough to provide at least a year or more of fully loaded salary for your first hire, plus whatever other expenses you’ll generate over that time, you’re going to have to pay for that hire out-of-pocket or with revenue. And that revenue is probably what is allowing you to run your business instead of working a second job. Or third. There’s never a good time to take a 50 percent pay cut, but that’s usually what the first hire requires.
But even if you find yourself in a financial position to be able to afford your first hire, the hire itself is still tricky — because of issues that will carry through to the next hire or two.
The second hire is almost as hard as the first
The next biggest problem with the first handful of hires at any startup is mismatched expectations. The employees will expect a lot more from you than you can offer, and you will expect a lot more from them than they can contribute.
Almost any early hire will expect a role that’s bigger than the one you have slotted for them. I mean, if you needed more leadership, you would have done more leading, not hired a second leader. To counter this, I almost always contract out roles for people I might want to hire as a leader later, when I can afford them and need more of their time.
And if you’re going to bet your company on these early hires, you’ll want them to kill themselves to help you keep your dream alive — 80 hour weeks, thankless tasks, sub-standard equipment and benefits. To counter this, I almost always offer early hires a greater than normal equity option grant with a long vesting period.
Hires three through 10 should be extraordinary
The next handful of hires, up to around the 10th employee or even later, are difficult to pull off for a different reason. At this point, you could (and should) be generating enough revenue or have landed enough outside investment to make the next few hires not as financially painful as the first.
But here’s a new problem. One bad hire in this batch can sink your company pretty quickly. A couple of not-terrible but not-amazing hires in this batch will do the same, just more slowly.
Everyone you hire in this batch needs to be extraordinary. Take your time with these hires. If you’re not 100 percent impressed, don’t bring them on. At one of my previous startups, we spent so much time trying to decide between two candidates for our ninth hire that they both found other jobs before I made the final decision. What did that tell me? I should have just passed on both, because neither was extraordinary.
Hires 10 through 20 should have an X factor
This isn’t a hard-and-fast rule, but once you get past 10 employees, you should have a solid foundation covering all aspects of your business, with leadership focused on growth and everyone either building the product or selling it.
So between the 10th and 20th hires, I like to look for people who can not only do the job, but also bring something to the table that we don’t have. It could be a skill set, a perspective, different experience — anything that will keep our culture from becoming homogenous in thought and strategy.
They should still be extraordinary, but it’s no longer a requirement. After 10 hires, they only have to be awesome.
Hires 20 through 50 should be easy
I’m not trying to be facetious here. If you’ve done hires one through 20 properly, the rest should be much easier. You should be able to review where you are and how you got there, and understand what has worked and what hasn’t. By this time, you’ll have a blueprint, a process, a method of operation. Follow that script and don’t waste too much time second guessing your decisions.
If you’re still struggling to hire after your 20th employee (or so), it might be time to take a top-down look at your company culture to try to figure out what you’re doing wrong. Do it now, because you’ll need to have confidence in that culture by your 50th hire, when culture changes start happening rapidly and jarringly.
Extraordinary talent, diverse in thought and in nature, hired at startup prices, and in it for the long term. What could be easier than that?