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.