The third most common reason why startups fail is due to the team. That’s why hiring and building the right can be life-or-death decisions for your business. In this article, I’ll go over some of the most common mistakes founders make in hiring their first employees as well as some great hacks and best practices to get it right.
Most Common Startup Hiring Mistakes
Most people focus on things like cultural fit and tactical faux pas like failing to check a candidate’s work authorization as important hiring mistakes, but there are other, more pernicious errors that you should avoid.
Hiring the Wrong Skill Set
Hiring team members with the wrong skill set is probably the most common hiring mistake I see when evaluating startups. To be fair, it very easy to fall into this trap at a very early-stage startup because things are changing rapidly, and your needs are too.
A classic example is B2B startups hiring marketers as one of their first hires without having a well-defined and tested positioning, ideal customer profile (ICP), or sales process. Founders hire a marketer expecting that they will bring more customers, but they are setting the marketer up for failure because the startup doesn’t yet know who to sell to, how to reach them, and how to sell to them.
Without fail, the marketer tries all sorts of campaigns and messaging, but sales and revenue don’t budge. Then, the founder fires the marketer because they did not improve the bottom line. The marketer might have been very skilled, however. It’s just that the startup didn’t have its sales figured out to even attempt marketing.
This happens across various roles. Hiring a visual designer when the product features are completely wrong. Hiring a sales account executive when the founders haven’t even figured out who to sell to or how to sell. Hiring a social media manager when that is your worst marketing channel. The list goes on.
Hiring a Full-Time Employee for a Part-Time Need
Once again, the needs at a pre-seed or seed startup change almost daily. One day, you might think that you need a full-time marketer because you’re ready to scale, only to figure out that your ICP is completely wrong. Another day, you might think that you need a full-time user experience (UX) designer only to realize that you only need a 3-week overhaul. Still another day, you think you need a customer success manager to help onboard all the new customers you’re anticipating only to find out that you are onboarding just a couple of new customers.
Just as the required skill sets change constantly at an early-stage startup, so too priorities and workloads fluctuate. One day you might think that you need to kick off five marketing projects, the next day you realize that you need to allocate budget to engineering to fix bugs instead.
Hiring Someone “Good Enough”
Another very common hiring mistake that founders make is settling for team members who are “good enough.” Sometimes good enough will work for a short while, but more often than not it will ruin your company. This happens for a variety of reasons.
First, entrepreneurship is a competition where only the very best win and everyone else goes bankrupt. You cannot afford to build a product that works well enough or has a good enough user experience. Your customer service can’t be good enough. Your marketing and sales can’t be good enough.
Good enough might work in most professions where mediocrity is accepted, but entrepreneurship is most definitely not one of those professions. You don’t believe me? Most investors invest in 1 in 100 startups they see. They don’t invest in startups that are good enough. At our fund, Beta Boom, we invest in about 1 in 350 startups that reach out to us.
Second, as one of our portfolio founders pointed out, the other high-performers on the team will grow frustrated and disenchanted by B-players. The A-players will feel like they have to pull more than their weight because others are doing just enough or are not doing their job very effectively. Soon, this toxicity will grow, and you’ll start losing your top talent.
Hiring Someone Who Doesn’t Care
This one is very tricky, and I’ve fallen into this trap many times. You find someone who has a stellar resume. Perhaps they also have amazing references. You start working together and quickly realize that they always do just what is expected of them and never go above and beyond.
Just like poor performers, team members who don’t care are a black hole on the team, sucking up all positivity, energy, and passion. Despite their glowing resume, they will rarely go above and beyond or be world-class team members. Morale will be eroded, and your top performers will likely leave because they will tire of the apathetic teammates sucking the inspiration out of their day.
Hiring Too Quickly
Most of the hiring mistakes mentioned above can be avoided if you just take your time to hire the right team member. Few people like to recruit and interview candidates, and founders have a million other things screaming for their attention. However, taking the time to hire world-class, committed team members is one of the best investments that you will likely make.
Take Brian Chesky, co-founder of Airbnb, for example. Brian reviewed over 1,000 candidates for their first hire, and the entire process took five months. In fact, Airbnb only made two hires in their first year.
You might not need to take five months to hire every team member, but the point is to look at and speak with as many candidates as it takes to find one that exceeds your expectations.
Tips for Hiring the Perfect First Employees at Your Startup
As I have discussed, there are many ways that hiring can go wrong. Below are some great tactics that our portfolio founders have used to hire world-class teams.
Take Your Time, Hire Slowly!
Founders usually make hiring mistakes because they rush the process, either because they don’t have time or just don’t put in the requisite work.
If you only speak to four candidates for a given role, it’s exceedingly unlikely that you will find the perfect match. Therefore, you should really make sure that you review and speak with enough candidates to give yourself a big enough pool of talent and to give yourself an opportunity to refine your understanding of what to look for and how to assess it.
Beyond surveying a large enough talent pool, it’s never a good idea to rush hiring for a role about which you have questions or doubts. For example, one of Beta Boom’s portfolio founders wanted to get help selling their solution to businesses. The founder was not sure if he should bring on board an account executive (AE, a senior role), a business development representative (BDR, a junior role), or some kind of hybrid role. He first interviewed a number of account executives and found, after a couple of months of searching, that account executives wouldn’t bring the skills the company needed right away. Over time, the founder realized that his company first needed SDRs to better fill the top of his sales funnel before it would make sense to hire an account executive to close and onboard new customers.
Having said all that, it is possible and sometimes desirable to hire quickly. For example, another Beta Boom founder needed to replace her lead machine learning (ML) engineer. In two days, she reached out to 300 of the best ML engineers she could find. She connected with about 100, interviewed a dozen over the weekend, and hired her new ML engineer on Monday. The lead engineer turned out to be world-class, and the entire process took less than a week. However, the founder put in the work to identify and reach out to a large pool of candidates, and she was certain about the role and skills she needed to fill.
Aim for World-Class Team Members
Once again, entrepreneurship is fundamentally different from standard careers. In a regular job, you just have to be good enough to stay employed. Sometimes, that bar might be very high, but as long as you jump over it, you’re safe. However, in entrepreneurship, your company has to be the best (or at least one of the best). And since your company is the sum total of your team, your team has to be truly world-class. Imagine if only the top 1% of Google employees were able to keep their job at the end of each year. Well, that’s how entrepreneurship works.
Only the top 10% of startups achieve a meaningful exit, only 1% of VC-backed startups reach unicorn status, and if you factor in startups that never go on to raise VC money, that number drops to 1 in 10,000. That means that your startup has to be better than 9,999 other startups for it to become a billion-dollar company. Hiring world-class team members becomes a necessity in light of this vicious competition.
It might not always be possible to hire world-class team members right from the start, but that should be your aim.
Look for Ambition and Passion
I already mentioned how an apathetic team member can bring toxicity into the company and destroy it from within. This is why it is so important to find people that either have a strong internal drive or passion for your mission, so they will go above and beyond.
One way to gauge a candidate’s ambition is to ask for instances when they have done so. Do they have a history of going above and beyond or are they struggling to come up with examples? You can also ask about their personal ambition. Are they working toward a lofty goal or vision or just going through the motions?
Similarly, you should also try to identify the candidate’s passion for your company’s mission. Not all industries are exciting or glamorous, but there do exist people that are up for the challenge even in seemingly “boring” industries; you just have to keep looking until you find them.
Start with a Contract, if Possible
Throughout my own career, I have worked with teammates that I thought were slam-dunks when they first joined my teams. However, many of them turned out to be the wrong fit for one reason or another. In some cases, the person’s goals and expectations did not align with those of the company. In other cases, their interest and passion disappeared after the initial honeymoon period. Oftentimes, I discovered that while they were exceptional at some things, they were subpar in other critical aspects of the role.
Starting with a contract, if possible, is a great way for you and the candidate to get to know each other. The candidate can gain a realistic insight into how your startup works–the good, the bad, and the ugly, and you can get a better sense of their motivation, their skill sets, and anything that you might have missed in the vetting period. The contract can be as small or as big as makes sense for both parties.
Sometimes it is impossible to start with a contract, and that’s fine; you’ll just have to make a hiring decision with less data.
Do a Project Together
One of my favorite startup thought-leaders, Sean Byrnes, taught me a really great trick for assessing new team members: do a project together. Similar to working with the candidate on a contract basis, you can also do a really brief project together. For example, you could do a brainstorming or strategic session with them around a specific problem that your team is working on. Compensation is not mandatory, but it might be a good idea to show the candidate that you value their time.
The key things to pay close attention to are how they work with you and your team, think, deal with uncertainty, and ask questions.
Ask the Candidate to do a 30-60-90 Plan
Another trick that I devised for one of our portfolio companies is asking the candidates to create a 30, 60, 90-day plan before extending an offer. In other words, what do they plan to get accomplished in 30 days, 60 days, and 90 days. This is an awesome way to judge the candidate’s ambition, understanding of the job and your company, and their true skill set. It’s easy to claim to be able to do a bunch of things than to actually commit to doing them.
This method has helped to weed out many candidates who didn’t have a startup mindset, took liberties on their resume, lacked passion and ambition, or didn’t understand what they were signing up for.
Set an Expectation of World-Class Excellence
When you do decide to bring on a new team member, be clear that you expect world-class effort and execution before you send the offer letter. This way, they will know exactly what they are committing to and won’t feel blind-sided if you have to let them go for falling short of that expectation.
Be Prepared to Fire Quickly
Often, despite your best efforts, you will make a mistake and hire the wrong person. The person who first seemed perfect will turn out otherwise, or your company’s needs will simply change.
That’s okay. Even the best founders hire the wrong candidates, and it happens more often than you’d think. It’s not uncommon for a pre-seed or seed-stage startup to switch out more than half of their employees in the first two years.
Final Words of Wisdom
Recruiting and building a world-class team for your startup is the hardest thing that you’ll do as the founder of an early-stage startup. So give yourself grace when you don’t get it right, time to get it right, and push yourself to let go of team members that are not the right fit.
Remember, you are competing on the world stage against the best teams in the world, so if your team isn’t world-class, you will have practically zero chance of winning.
Get on our radar for an investment.
Beta Boom invests in founders who don’t fit the traditional Silicon Valley mold.