How to Recruit and Evaluate Talent for Your Early-Stage Startup
When no one knows about you or your business, recruiting for a startup is more art than science. How do you make the right hiring decisions as you grow your organization and business?
Securing great hires is one of a CEO's top priorities, and for early-stage startups, the odds can be stacked against you.
I came across a comprehensive guide to startup hiring 101 written by Steve Bartel, the co-founder and CEO of Gem. If you haven't already, I highly recommend reading it. He provides step-by-step instructions on how to go about the hiring process. But, based on my experience I feel startup founders must first fulfill the prerequisites to hiring before diving into the process. The prerequisite addresses questions such as when should you hire, who should you hire and where should you find those people.
Art or science?
Recruiting in the early days is more art than science. You find people who are ready to help out in any way possible and scale until you max out individual capabilities. As soon as you get to scaling upwards of 10 people you need to start thinking of having a process, being creative and honing the craft of recruiting.
When should you hire?
There's always more work than what you can tackle. There is an eternal sense of resource deficit. "We don't have enough people" is a sentiment shared by nearly everyone involved. But, if you are going to bring in people on your payroll, you need to clarify the following things first.
Generating revenue or raised money: Expand only if you find success or have money. Find out how much runway you have, in other words, how long can you pay for your office rent, utilities, equipment, infrastructure hosting fees, employee salaries and other operational costs. Be conservative and plan for the worst case scenario. We have all witnessed a lot of startups who oversubscribed themselves and had to go through massive layoffs when uncertainties like Covid-19 hit, while other companies proved their maturity by planning for the rainy day.
Just in time vs just in case: Sports teams or contracting agencies hire reserves, just in case they need them. But a startup does not have such luxury to hire extras and keep them on the bench. Hire when the position has clearly defined roles, responsibilities and metrics for success. This helps the candidate hit the ground running as soon as they are onboarded. Sitting on the bench waiting for work to show up can be extremely frustrating and demotivating.
Generalist or specialist
First and foremost, hire people who are independent and hustlers, people who don't need to be managed. You likely need generalists who are jacks-of-all-trades. Generalists adapt to chaotic situations more easily and are comfortable with heavy context switching. They are trained to spend time across multiple tasks. You can hire specialists when you prefer isolation and deep focus.
If you have a clearly defined problem that needs deep focus such as inventing the next fastest wifi chip, you probably need a specialist.
Trained or trainable
A startup is constrained in terms of resources, time and money. When you have the money to hire beyond the first few employees, when you start thinking of building small teams, I prefer hiring one lead senior engineer — a trained candidate, and others who are trainable individuals. It then becomes the responsibility of the senior engineer to help bring junior members up to speed by active coaching and mentorship and for the junior members to model best practices of the senior member.
Short-term or long-term
A lot of startups hire contractors in the initial phase to find a product market fit. I suggest hiring people who have little more skin in the game and this can be achieved by hiring either contract-to-hire or full-time employees right off the bat. Sure, it depends on your finances but it pays dividends to hire someone with a long term prospect in mind.
I have found amazing talent throughout the world, even the non-believers in contract work become believers and then fight for the contractors to be converted to full time.
Candidates are more vested in your product when they know that they don't have to start looking for another job as soon as the current assignment is over. The uncertainty and stresses of a temporary job consume a lot of energy and could keep people on the edge.
Whether you build a local or a distributed team depends much more on what you are trying to achieve. For example, if you are building a service that requires local cultural and behavioral understanding, it's best to look for someone who has experienced the local challenges.
Flat-ish or hierarchical organization
A startup is never really a flat structure. You have the CEO who is at the top, either with regards to her ownership share in the company, authority, responsibilities and final say in decision making. Rest of the founding members tend to create the next layer of the structure. Initially there is a high chance that the founding members work together closely. Think of highschool project partners.
- At this stage any special process or policy is an overkill and can drag down efficiency, speed and team intimacy.
- Fewer levels of management encourage an easier decision-making process among employees.
- Every member is expected to elevate his/her level of responsibility and not need supervision.
There is usually a sweet spot around 5 employees. Beyond that point such a structure could create tension and confusion between employees around ownership and accountability. A healthy organization is a hybrid approach, not too hierarchical and not too flat. It determines the extent and nature of how leadership is disseminated throughout the organization as well as the method by which information flows.
Where do you find talent?
Technological progress is accelerating at a speed that is difficult for today's local labor market to keep up with. Another challenge in major Tech hubs like Silicon Valley, New York or Texas, is that it is very difficult for startups to compete for talent with the behemoths like the Apples and the Googles of the industry.
Skills over degrees: There used to be a time when graduating from good name schools with computer science degrees was the only ticket into tech based jobs. That's not the case anymore. Companies like Google, Apple etc no longer require employees to have a degree. Schools, bootcamps, specialized courses, and self taught candidates with relevant experience are equally talented.
Global teams: Thanks to the internet, global talent has become easily accessible. I have found great success in hiring remote talent across the globe. I remember at one point, there were people from 18 different countries working in my organization at the same time.
Pivoting talent: Businesses from manufacturing to sales to customer service must come to terms with the ever changing technology to sustain in today's fast paced, highly digital market and require a wide array of skill building and disciplines under one roof. People pivoting from various disciplines into technology are promising candidates because of their thought cross pollination, flexibility and breadth of knowledge. In the past I have worked with people who were lawyers or english teachers in their past lives and successfully migrated into developing software.
Look where no one is looking: Don't wait for candidates to search for you to be discoverable. Proactively reach out to passive candidates who aren't looking to move. Similarly, do not disregard the power of referrals, personal network & social network. Provided the referrer is ready to put his reputation on the line for the referral. Having additional information about people's behaviors, attitudes, working styles, values etc. are invaluable soft skill signals.
Hiring talent remains a top concern of CEOs. Employers also spend an enormous amount of money on hiring. As an entrepreneur do your homework first, define your prerequisites clearly. Be intentional, the cost of employee turnover could get to two times the salary of one. Once you are ready to recruit, share your strengths. Be transparent, let the candidate know the level of processes and structure available in your company.
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