Avoiding failure in early stage hiring

Nearly a year into Homebrew, we’ve learned a great deal about startups, investing and ourselves.  And we’ve also reinforced many of the things we believed to be true about each of those things.  Probably least surprising (and most painful!) to us and the companies we meet is how challenging it is to hire in today’s ultra-competitive talent market.  While the immediate goal of startups is to get to product/market fit, the right team needs to be hired before that can happen.  And when demand outstrips supply of talent, it’s easy to take shortcuts and to make hiring mistakes, especially when it feels like people are the main constraint to moving forward with your business.  As a result, we spend an incredible amount of time with Homebrew family companies focused on helping with hiring, including trying to help avoid common hiring mistakes.  Unfortunately, it’s an absolute certainty that hiring mistakes will be made, but you can improve your chances of success by being mindful of a few simple things.

Here are what we believe to be the most common mistakes (in no particular order and not a comprehensive list) that founders and startup teams at the seed stage make in hiring their earliest employees. Please share your thoughts on these and other hiring mistakes that founders should be sure to avoid.  If you have hiring tips or tricks, we’d love to hear about those as well because hiring is an area in which everyone can always be learning and improving.

Choosing aptitude over attitude: It’s easy to believe that a highly skilled candidate who doesn’t fit the culture of your company or who can’t play well with others will still help you quickly tackle the problems you face.  But history shows that undervaluing attitude and overvaluing skill actually leads to more problems, less output and lower team morale.  Make sure your hiring process includes a thorough screen for culture fit and for an attitude that reflects the characteristics that you believe to be the foundation upon which you want to build your team, product and business.  The right attitude alone isn’t always sufficient, but it’s always necessary.  Aptitude alone is never sufficient.

Hiring specialists over “generalists”: Early in a company’s life, the reality is that nothing is certain, including which aspects of the product will be successful and which skills are needed on the team to scale beyond present day.  Accordingly, startups can’t afford to have team members that are only able to do one thing well and not stretch beyond that one thing.  I suggest that startups hire “T-shaped” generalists who have a superpower but also have the flexibility in thinking, curiosity and desire to take on more than only what they know incredibly well.  Early team members are ideally multi-tool athletes with a particular strength who can also fill positions of need whenever and wherever they are found.  Hiring people who only do one thing really well can limit your potential paths to success as well as make it more difficult for those team members to be successful themselves during the early phases of the business.

Being seduced by credentials: “But she worked at Google and Facebook! She was a Director so she’s obviously a total rockstar. We need to do everything we can to hire her!” It’s easy to be allured by high profile names and senior titles.  But at a startup you need people who can get shit done and who don’t wait for others to tell them what to do.  Having done it before can be tremendously valuable, but only if he or she has really done it before.  Don’t rely on recognizable company brands and lofty titles when hiring.  And be wary of candidates who seem to be escaping from a large company rather than running to a startup.  Ask the questions and do the work to find out what the candidate really delivered at his prior job, how he went about doing it and whether he has the potential to continue to grow.  Experience at the right company or in the right role can matter, but there is no substitute for making things happen and having the potential to excel in the future.

Rushing to fill a need: Every company has a position that has been open too long or that seems critical path to success.  So it seems justifiable to hire the candidate who is “good enough” or who can “do what we need right now”.  But once you capitulate on a hire that doesn’t quite meet the bar, it becomes easier to repeat that behavior.  Introducing a mediocre hire into a high-functioning team inevitably creates friction, reduces trust and slows down progress.  Waiting to make the right hire is always less expensive (in time, energy and money) than fixing the damage done by hiring someone just because there is a gap that needs to be filled right away.

Being stingy with equity: I believe that being generous with equity for early hires is critical for building a culture where every team member has a founder mindset, feels responsible to the company first and is fairly rewarded for taking early risk.  A proper vesting schedule ensures that these early hires only earn their equity if they are contributing significantly to the success of the company over the long term.  In addition, issuing larger amounts of equity is a far better way of compensating hires given startups are typically cash-constrained and need to focus on giving themselves as much time (i.e. cash runway) as possible to establish product/market fit.

Ignoring hiring mistakes: This one happens after the hire is already made but it remains true that most founders fire too slowly.  Founders find it really difficult to trust their gut instincts around an employee’s fit for the company because they originally did so much work to make sure that the hire was the right one.  Founders also tend to look at it as a personal failure if a hire doesn’t work out.  But it’s important to accept that absolutely no one bats a thousand when it comes to hiring.  If an employee has lost your trust, finds it difficult to work with others or proves unable to deliver results, make the decision to move on immediately.  In my experience, founders always fire six months too late, even though they sensed the right answer earlier.  Trust your intuition around your team and make the hard call because it will save you and your team many months of pain and expense.

Other mistakes that are worth mentioning include 1) introducing too much diversity of thinking too early 2) overselling and not being honest about the company and role during the hiring process and 3) giving senior titles (VP and C-level primarily) too early.  There are many hiring landmines, but most of them can be avoided with some careful thought and a well-defined hiring process.  Investing early in hiring right pays off in multiples down the road, and beyond making sure there is money in the bank, is the primary responsibility of founders.  In a market where talent is scarce and the best talent has lots of options, it’s difficult but critical to maintain a rigorous process and to not compromise on the qualities of the team that are important to you and your culture.

2 thoughts on “Avoiding failure in early stage hiring

  1. Pingback: Successful startups say “no” | Venture Generated Content

  2. Pingback: Successful startups say “no” | Startup Products

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