Here’s a guide on how to hire for a startup from a founder who learned it the hard way (and continues to learn). I’ve made countless mistakes running my startup, from hiring salespeople too early to spending too little money on hiring.
My name is Saurav Agarwal and I’m the Co-Founder and CEO of SIERA.AI, a post-seed stage 30-person IoT+SaaS startup in the mobility space. Our vision is to enable great working conditions for industrial workers by increasing productivity and safety hand-in-hand. Currently, we’re on a mission to make warehouse and factory forklifts smarter and safer.
Why You Need to Hire Right for Your Startup
There is a common saying in business, most problems are NOT how problems but who problems. That could not be truer. So listen up, get your hiring in order and hire ONLY A players, everything else will be much much easier after that.
Top 7 Startup Hiring Mistakes I Made
- BEING CHEAP: I tried to save money by hiring junior/inexperienced resources. In the early days when you don’t have any money in the bank, you may need to hire inexperienced people who are ready to work for equity and intern salaries or free ramen. However, if you stick to that strategy for too long, you will pay a huge cost (missed milestones, product issues, angry customers/investors, stalled growth). Just blind enthusiasm and 16 hour work days will not produce results. Even your junior team members need mentorship and coaching in their domain to succeed in their careers. You need to hire domain experts as soon as you get funded. Yes it will take longer to hire and yes it will be expensive as hell…but it pays off.
- NOT THINKING DEEPLY ABOUT JOB DESCRIPTIONS: As a startup founder, you must think extremely hard about the role for which you are hiring. You are not a big company. You need smart, hard-working people with very specific skills who can handle high levels of stress and stay loyal to you through bad times. So sit down and write down a tight JD (job description). Define the role’s mission (objective), responsibilities and skills required. Ignore those folks who say that you need to keep your JDs loose and open-ended to cast a wide net…NO. The only way to make the best A hire is to write a tight JD which describes your ideal candidate, then go find the person that best fits the JD.
- NOT BUILDING INTERVIEWING AS A SKILL: Trust me, just because you’re a smart and hard-working startup founder, it does not mean you know how to hire. Hiring based on gut feel does not always work, hiring based on a strong reference can also fail. Yes, I’ve made some crappy startup hires; hires who came recommended by a trusted party, and execs who had all the right things on their resume. So do yourself a favor and read up on how to interview. Implement a system that works for you. I highly recommend The Who Method. It has worked wonders for our company and for me personally. It has helped our company in creating a standardized interview process as well as a measurement tool for comparing candidates to each other and to our requirements.
- GETTING DISTRACTED FROM HIRING: Trust me, building a strong team is your #1 job. You must always be interviewing. There were times when I knew I needed to replace someone or fill a gap in my team but other activities (fund-raising, sales, etc.) took higher priority and I ignored hiring. It almost always snow-balled into bigger problems for the company. Set a goal for yourself and stick to it. Now, I’ve set a discipline to conduct 2 interviews every day.
- HIRING THE WRONG EXECUTIVES: As a startup founder, when you’re hiring an executive. Only hire an exec that has worked at the same stage as you are and enjoys it. If you hire someone with only big company or late-stage experience, they will struggle (really badly) and so will you. In the end, it’s a lose-lose for both parties. Remember, senior executives are great at selling themselves and you may even get intimidated if you’re a young founder. Early-stage is hard. You need battle-hardened execs who can weather any storm. DO NOT ignore this advice for god’s sake. Executive hires are expensive and it takes a long time to figure out that they are sinking your ship. Firing them is even harder as you have to now explain that to your board.
- NOT HIRING SOMEONE WHO HAD DONE THE JOB BEFORE: This is the easiest mistake to avoid. Once you’ve defined your job description. Hire someone who has already done the job that you need them to do. That way, this new hire can ramp up quickly and deliver results, they will also not make the mistakes they’ve made before. So you’re essentially reaping the benefits of their previous employer’s investments. You do not have the bandwidth to spend weeks training someone in a new domain. If you’re building a SaaS CRM application, then hire an engineer who has worked on CRM applications. Period. In my case, I should have hired an electrical engineer who had worked on forklift electronics…I didn’t and we suffered for it. You’re always going to have excuses to make compromise hires; shortage of candidates, time sensitivity, too expensive. Just ignore the noise.
- NOT FIRING A BAD HIRE FAST ENOUGH: This sounds harsh, but if you know that you’ve made a bad hire, just fire them now. It’s not fair to you or to the hire to be stuck in a bad situation. You will feel frustrated that your “great” hire isn’t committed enough or smart enough. While your new employee might be thinking you’re an asshole for putting a huge amount of pressure on them and expecting miracles when they can’t figure out how to do the job right. You can be candid and respectful in the firing process, and let them know at a high level why you would like to part ways. I recommend, keeping a 90 day probation period in every hiring contract. Set clear expectations for the onboarding journey and what you expect to see in the first 30/60/90 days from your new hire.
(Bonus) Not Hiring a Full Time Recruiter Early Enough
Look, recruiting is a full-time job and you need someone in your team to own it as a KPI. If you have funding in the bank, just go ahead and hire a great recruiter. A full-time recruiter can help you manage your candidate pipeline, source great candidates and manage external recruiters. Trust me, scheduling and rescheduling interviews in and of itself can be 8 hours a week job. The best recruiters will likely teach you to interview and manage the recruiting process. You should definitely hire a great recruiter before you hire your first Director/VP. Why? Because your senior leadership will need to build a team quickly and need a recruiter’s help to do that. Most execs are not great at sourcing candidates, and some don’t even have a strong network to tap into.
7 Tips on How to Hire for a Startup
Here are 7 tips from my experience on how to hire for a startup. If you think of something else, feel free to leave a comment!
- PLAN YOUR HIRES: If you go out to hire someone when you need them, its too late. You need to look ahead and see who you are going to need on the team in the next 3-6 months. Start interviewing candidates for those roles right now. Do not stop interviewing no matter how busy your schedule gets. Make time to interview at least 2 candidates a day (that’s my arbitrary rule).
- SPEND THE MONEY: Yes you heard that right, hire the best person you can find for the job, at whatever the cost (unless they ask for totally ridiculous sums of money beyond top market rates). Do not compromise on the quality of your hire to save a few thousand or even tens of thousands of dollars. A great hire produces 5-10X of an average hire and it will just pay off for itself.
- BUILD A GREAT RECRUITING TEAM: Hire a full time recruiter and work with top-rated external recruiters. Using this combo, you can keep your hiring speed and quality up. Don’t be afraid to pay the fees for a great external recruiter. Just make sure you have provisions to get a refund or a replacement in case a hire does not work out.
- MAKE HIRING EVERYONE’S PROBLEM: Train your entire team in how to hire A players. Again, The Who Method will work great for this. As the team grows, you cannot alone interview at all stages for all roles. So, your team needs to be trained in how to hire right. This is extremely critical, you cannot be the only one owns hiring. Also, don’t forget to ask your new and old employees regularly for referrals. Give out healthy referral bonuses, its super cheap for the company in the long-run.
- DO ROLE BASED HIRING: Define the role’s objective, required skills and experience in as much depth as you can. You should force yourself to hire people who have been in that role before as much as possible. Do not hire someone just because they say they can do the job. Hire the person who has proven in past experiences that they have done the job. Ofcourse, this doesn’t apply when you’re hiring interns or fresh grads.
- LET IT TAKE TIME: Try not make a comporomise hire just because its taking too long. Sometimes you may have to hire a B+ player and train them to be an A player. So make sure that they are capable of being trained into A players. It’s not ideal but its acceptable in situations that demand it (tight labor market, time sensitive milestones, cost of hiring etc.).
- LEARN HOW TO INTERVIEW: You are not a great interviewer. Okay, I said it. Now learn how to do it right. Pick up the The Who Method book and learn from it, or find something else if you don’t like it. Make sure you practise the methodology in each and every interview you do.
(Bonus) Hire Leaders For Key Functions Early
Startup employees need to wear many hats. You as the founder, probably wear the most. If things are going your way, your business is growing. It’s time to delegate. A lot of founders try to do too much themselves, as a result, results suffer. I’m guilty of it too. You need someone to own a number, KPI, or metric. Typically, junior/individual contributors have a hard time doing that. So either elevate a great team member to a manager or hire a manager/leader.
If you listen to Jason Lemkin of SaaStr, he will tell you to hire VPs early, since great VP hires are accretive. I agree. A great VP takes a bunch of stress off a founder’s plate. But hey, you don’t need to hire an army of VPs at your Seed-stage startup. So you may hire senior managers or directors. Just don’t wait too long to make leadership hires. In some cases, you might even hire a leader and let them bring in/hire their own team.
Be sure to hire only A players for your startup
Good luck to you in your founder journey. I wish you the best of luck in making the right hires for your startup!
On a side note, if you’re a founder learning how to hire right, you’re probably also raising money? Here’s my startup fundraising guide to help you out…