The earliest employees in a startup can make or break the business. The right people need to be more than just great at what they do.
A couple of months back I had the pleasure of meeting Sunny Gupta, serial entrepreneur and founder of the Nasdaq-listed Apptio. Sunny spoke about how he’d built and scaled his enterprise software companies. The key takeaways were:
- Strategies to successfully transition between key growth phases.
- How to convince CIOs they had a pain point and would greatly benefit from a solution, particularly as he was creating a brand new software category.
- The importance of hiring the right employees based on the startup’s growth phase. That is, the attributes needed in the first ten employees differ from the next 90 employees, and the others following that.
It’s obvious that all hires need to be great at what they do. But it’s easy to overlook the extra traits which are critical for the first few hires, and less important later. Here’s a few examples.
Brian Chesky looked for AirBnB’s first employee for “four or five months” and “interviewed hundreds of people”. He recognised that employee #1 would be hugely influential on the next 100 hires and needed to be fully committed to the company’s values. This meant someone who wasn’t simply looking for an experience to put on their resume. He considered them as a “DNA chip”, serving as a role model for future employees. They needed to be “world class and fit the culture”.
Patrick and John Collison agree that you “aren’t just hiring those first ten people, you are actually hiring a hundred people because you think each one of those people are going to bring along another ten people with them”. Stripe looked for people that were trustworthy, intellectually honest, like to get things finished and care greatly about their work.
For the first ten hires they recommend to “work with them as much as you can before committing to hire them… In the majority, the first ten people, we worked with them to some capacity for a week in advance. It’s pretty hard to fake it for a week, it tends to be quite clear quickly”.
“No batch of ten people will have as big of an influence on the company as those first ten people.”
Ben Silberman also focused on values. “I looked for people who worked hard, had high integrity, low ego. I looked for people who were creative, super curious.” They’re people who you really want to work with, and whom you see huge potential in.
He recognised that “really good people, generally are doing something else so you have to go seek them out instead of expecting that they are going to seek you out”. Triple when no one has ever heard of or is using the product that you work on.”
Mark Suster (Upfront Ventures)
Mark emphasises that you don’t compromise on “only hiring A+ team members”. But also, that it’s “far better to hire somebody who’s shit hot but stepping up a role than to hire somebody who has already held a bigger role and is taking a step back because they’re after an equity play in a start-up.”
“I believe that you should always hire people [who] are looking to ‘punch above their weight class’ which means to hire people who want to be one league above where they are today”.
They’re versatile. They’re problem solvers. And they’re not precious about just doing the ‘one thing’ you hired them for.
What else to consider?
In my experience advising startups, there are some mistakes made while hiring which don’t become apparent until it’s too late. It’s worth thinking about these upfront:
- It may be necessary to cast the net wide. Standard recruitment channels may locate people with the right technical fit, but not necessarily the right motivation, commitment and cultural fit. While it’s not always possible to hire someone you’ve worked with before, it is certainly possible to leverage your network, thoroughly check references and run a trial period (such as a small project) to see how things go.
- Don’t underestimate how much an early employee can impact culture, both positive and negative. If they’re undermining the founders in any way, this can permeate its way through and destabilise the business. This is one of the reasons it’s recommended to fire fast.
- People need to be willing to get their hands dirty. While a senior hire may have plenty of experience, they may be more inclined to delegate than do. In the early stages its usually preferable to have people who will chip in and do whatever is needed.
- It’s really difficult if you don’t collocate. To some extent this can be overcome by a high level of ongoing communication and collaboration through other channels. But there’s a lot to be said for the motivation, resilience and often productivity boost that comes from being collocated.
- It’s not necessary to emulate the hiring practices of big firms. An overemphasis on academic results, extracurricular activities and aptitude tests can lead you to miss out on emotional intelligence and cultural fit.
- Think about whether each hire is intended to complement or supplement the founders. Founders sometimes say, ‘I need someone just like me’. That might be appropriate if a founder is just seeking to split their workload. Other times it’s necessary to complement the founders’ skill set – providing the skills they don’t have.
So how is employee #100 different?
Later stage employees still need to be great operators. And they still need to commit to the mission and values, but there can be more flexibility in who you hire:
- People who join for the experience, rather than being part of the mission for the long term.
- People who just want to do their ‘one’ thing. In a larger organisation, there are more places to deploy people with specialist skills.
- Managers – in the sense that you can accommodate people who oversee and direct others, rather than do themselves.
- Followers – in the sense that you don’t want or need everyone to be setting the company’s direction.
What advice do you have for other founders taking on their first employees?