One of the most difficult steps for founders is hiring the first non-founder executive. I’ve started three companies: one on my own; one with four co-founders; and my latest with one co-founder and a pair of founding employees. From this experience I’ve learned that the best “founding team” has no more —and no less— than a few key people. Naturally, as your company grows, this means your team will be incomplete. Yet before your company scales to include ranks of Vice Presidents and Chiefs-of-Something, you’ll need to hire that first executive from outside your founders’ circle.
This can be especially scary, because if you’ve been successful enough to get to this “first hire” stage (usually meaning you need a marketing guru, a COO, or your first pro-sales guy) your initial team has already been through some growing pains. You and your co-founders probably developed a high level of comfort with one another, fueled by the urgency of sharing the start-up workload. Tolerating imperfections in one another becomes de rigueur as each founder is required step out of his or her comfort zone as the need arises, and it always does. This is good in that it softens the founders’ criticism of each other, but the coziness it fosters also reduces the founders’ willingness to bring “outsiders” into their group.
This is the principal reason why picking the first outside executive is so hard on founders – at least it hasn’t gotten easier for me in three tries! But don’t worry. It should be hard: You’re puncturing your inner circle; adopting a new child into your family. So don’t feel bad, but do press on. Here are my tips for avoiding some common traps in this crucial hiring process:
1) Avoid hiring from your founders’ “back-up list”—you know, this is the list of friends and former colleagues whom you all like, but who did not quite make the cut at your founding stage — and often for valid reasons. Start a new list.
2) Avoid pressure from your investors to hire a pet candidate. Take names, but don’t make this hiring decision based on a VC’s nod – your investor won’t have to work with the person!
3) Avoid agreeing to a compensation package that is completely out of line with what your founding team is getting just to “be competitive in the market.” Even the most competent candidate must, ultimately, integrate into your start-up’s culture, not the other way around.
Now, an even more important step comes after you’ve found your “Missing Link”: evaluating your new recruit a few months into the job. Not immediately getting rid of someone who isn’t working out is a very costly mistake—I know, I made it twice when picking COOs for my wireless messaging start-up, Mobileway. Because I had invested incredible amounts of time on consensus-building and gone to innumerable pre-hire dinners with the founding team, I didn’t have the guts to ask either COO to go, even when each showed shortcomings after just a few months. Later, the departures where extra painful for them, and for Mobileway.
Firing your first outside hire is especially difficult if your company is at a stage where a process of formal evaluation and review is not yet in place. If the executive was hired with the consensus of founding team, the mistake might be especially difficult to acknowledge. Founders’ fear of a perceived set-back in the progress of their company often obscures the potential consequences of keeping on someone who is not quite working. But firing well is just as vital as hiring well when it comes to your company’s successful growth. I would advise founders to be particularly wary of procrastinating, letting someone go always feels like a low point, but it is a low point worth navigating in order to build a solid company.
10 thoughts on “The Missing Link”
This is great}
Another thing to do is to hold back titles. Never give out VP, E, or C level titles until you are absolutely sure that the person you hired can definitely fill that role. Give them “Head of…” or “Director of…” or even “Manager” for now and set their expectations that they are leading their team, but you are evaluating them to see whether they can really fill the larger role or not.
You can always promote, but removing someone from a title is generally a painful thing no matter what the circumstance.}
Good points you’re making there, we (me, my two co-founders and investors) may have to start hiring people in a few months or so. This was pretty helpful.}
One point to make sure of also – when bringing someone one, make sure they can be in a startup. For instance, you may hire the person with all the industry knowledge in the world and you may think “wow he is our saving grace, he is THE GUY (or girl)” but what you may come to find out is that he is the guy when there is a $2 million sales budget behind him not the guy you need to scrape, call and pound the pavement to get a job done. I think that in many cases when there is advice to “add some people with experience” you immediately think “industry knowledge” not startup experience.}
To address the title thing also, it is so important to set expectations, especially in the case of raising funding. Director of…. is the best title around because that sets everyone’s expectations and you can say “when we go to fill a VP type of roll we can sit down and discuss together if you think you are the right person for this or not. You will have every opportunity to be considered”. I think this is especially important in sales. Your best sales person most likely isn’t your best candidate for VP of Sales but in many cases those first few sales people want the title.}
I think there are two major traits which are desireable in staffing a startup…but which are difficult to find. One trait is that the person is hungry…meaning they are willing to do most anything in the company to make sure that things run smoothly as possible…including sweeping the floor and making coffee. The other trait would be that this person has some sort of track record running a company, however small…or maybe just captaining a sailboat…in order to have the understanding of responsibility. That they have failed before is not so important…and may be a good thing. As a startup, you do not have time to be a personel manager…motivator maybe…but managing 9-to-five thinkers obviously is not in the cards.}
I think half the battle is realizing when you and your partners are in over your head and acknowledging that if you want your business to succeed, you simply have to bite the bullet and bring in other executives. This is particularly crucial if you want to keep your own love of the project alive.
Our company is at the stage where we’re bringing in more talented people from our personal circle. I don’t think we’re quite ready to bring in a true “outsider” but I think your advice works well even for our current level of hiring.}
salaries were brought up here… any suggestions on how to determine what to pay?}
I completely agree with David’s point, above, regarding job titles. It’s always a bad sign when you come across an early stage company that already has “VP soup”; creates the impression that it’s full of opportunists who may very well be talented but aren’t necessarily willing to do the hard work themselves.}
I agree with his point as well.}