Deciding to Hire if You’re a Small Startup
In the last few weeks, I’ve had a steady uptick in conversations related to small startups and their hiring decisions. Some want to put the hiring on pause because of the COVID-19 pandemic, some see this as an opportunity to grab the best talent. In either case, the questions are the same: who do I need and when and where should I start looking?
There’s no playbook, unfortunately. Every startup is built from a different set of people. Every startup has a different market and need. But there are a few guiding principles and approaches that can help.
Who do you need?
I’ve shared this image below on other posts, but it rings especially true here:
The key message is that people really matter. Really, really matter. I would never invest in a bad team, no matter how amazing the idea is. But an amazing team can be mentored into a better idea. They can pivot and find real opportunities.
Who do you need to build an amazing team? In terms of roles and gaps, reflect on where you are now. When it comes to the “core four,” who are you missing?
Finance and HR can be outsourced or built-in as part-time. Customer success may or may not be a full-time investment for early startups, depending on your business model and market — but probably not. Where in the core four are you light?
An even better question to ask is: where can you and your team better free up their true potential and value? If you’re a visionary leading the charge on a new market but wrapped up in day-to-day operations, time to get an operator. If you’re building the next version of your product but distracted by sales calls, time to get a seller.
When should you bring someone in?
Yes, people in startups wear many hats, but the right hire can create a huge amount of value and unlock a new horizon of growth. This is both from the perspective of what they can bring to the table and from the perspective of what they could free you up to do more of.
Take this as a thought exercise: sketch out your growth over the next 12 months, in the status quo. Then, sketch out what that growth could look like with the right person added to the team, not only from what they add but also from what they free you up to do. If you don’t think the curve will really change, then it’s probably not going to be worth making that hire for a long time.
If, however, the value between the curves is bigger than the cost of a new hire, don’t wait. Start looking for that person today. It takes a while to find the right person. Three months is fast. Six months or longer is what it might really take.
How do you find the right person?
When it comes to the actual search, there are five ways to find good people, often used in combination:
Leverage your network
Leverage your team’s networks
Leverage your investors
Post the job to the public
Hire a recruiter or search agency
Leverage your network. Relationships matter and you’re probably already connected to a ton of great people who could be or know who could be perfect for the job. Post on LinkedIn, send a few notes to close friends, ask around. A lot of great hires are made this way, but keep in mind that there’s bias in the process here and you run the risk of just finding people that look and think like you.
Leverage your team’s networks. Your team or your employees are another rich source of referrals. In the corporate world, referrals generate the most consistent and well-qualified leads. If you’re a larger company, you can think about a referral program to incentivize the process, but probably the easiest thing to do is just ask. Note the bias danger as above.
Leverage your investors. If you’ve already had funding from an individual or institutional investor, leverage the crap out of them. Every VC has a deep well of resources to help startups make the right next hire, some even have people on the bench waiting to interview for great companies. And they’ll provide great mentorship along the way.
Post the job to the public. It’s a bit of a scatter-shot approach, but it also can’t hurt to post the job to the wider community. Put it on your company’s website and write out a posting for Indeed, AngelList, your local startup groups, and a ton of others.
Hire a recruiter or search agency. Finally, you can always go pro. Get a search firm or recruiter to help find the right talent if you really need them. It’s not a cheap option, but with the right firm speed and quality go up compared to trying to do it on your own. Expect to pay 20–30% of the first-year salary as a fee for the service. This is about three months of salary, so do the math on whether it’s worth it versus the opportunity cost of not getting the right person in the next three months.
How do you choose the right person?
“When you’re in a startup, the first 10 people will determine whether the company succeeds or not. Each is 10 percent of the company. So why wouldn’t you take as much time as necessary to find all the A-players?” — Steve Jobs
I’ll write a longer post on how to design and conduct an interview, but the key message is: put in the time upfront. Define clearly what you want in a candidate, both in terms of their role and their overall potential and fit. Write it out on paper as job success criteria, and then define what good, bad, and in the middle look like.
Use this structure to approach the interview, to for the things that matter. Use this structure to stay focused and to stay fair. Ask for deeper stories and more examples as good behavioral interview tactics. Probe and learn more. Past performance is the best predictor of future success.
It’s worth mentioning here that, although we talked a lot about job specifics, everyone will wear multiple hats in a small company. Don’t hire just on experience and expertise. Intrinsics matter more. I would rather have a rock-solid A-player, one that I know could do any job thrown at her, than someone who has deep experience in the role. Adaptability and positive attitude should be job criteria, too.
Take the time to reflect on what you need for the company, and for you. Where are your gaps, and where are you spending time that would be better spent elsewhere? Don’t just look for the value someone new brings, but also for the new value that they unlock in freeing you and your team up.
When you decide to make a hire, invest the time it takes to actually find amazing people. The second-biggest regret that I hear from startup founders is that they didn’t hire the right people fast enough. And, if you make the wrong decision, don’t live with it. The number-one biggest regret that I hear is that they didn’t let go of the wrong people fast enough.
Originally published in The Startup