OnStartups

My last article titled “Startup Hiring:  Why You Should Date Before You Get Married” generated a fair amount of interest – and controversy.  It actually broke my personal record in terms of unique web visitors in a single day (in this case, 3,700+).

Given that the article also generated the most amount of comments I’ve had to any article, I thought I’d address some of the comments and criticisms and also take a step back to look at why effective startup hiring is so hard.  The idea in the last article (if you didn’t read it)  was that startups should only hire employees after some mandatory “trial period” after which the candidate must have built support within the company in order to be hired.  Admittedly, this is just one tactic (likely sub-optimal) for trying to address the challenge.  Clearly, from the prior article comments, many people don’t agree with it.

Lets first start off with some thoughts on why hiring the right people is hard, and hiring for a startup is even harder:

• In the early stages of a startup, its difficult to hire for a given role (as most of the early team will where multiple hats).  In a larger company, the recruitment process can be much more targeted and focused.  As such, in a startup it’s hard to describe the role that you’re hiring for.

• The conventional methods for finding the right candidates (resumes, interviews, skills tests, etc.) are of limited use and effectiveness.  In my experience, even diligent interviewing and deep analysis only improve the chances of success by a marginal amount.  The scarcest resource at most startups is founder bandwidth.  This is sad, but true – startup founders that can use the most help and have the most to gain from hiring great people are often the people least equipped to go through the hiring process.

• Large companies can (and often do) use “pattern matching” whereby they hire new employees that are similar to existing employees that have done really well.  The thinking goes:  “Susan was an exception developer – lets hire more people like her!”.  In my opinion, this actually works pretty well (when done correctly).  However, in a startup, there are too few employees to really “match” against, and if you do it too well, you end up cloning the founders too much.

• Startups generally have to use creative compensation (like using some form of equity) because they cannot afford, in most cases, to pay fair market value for a candidate completely in salary and bonuses (i.e. cash).  Many potential recruits don’t understand the nuances of owning equity in a startup company – and there is still a hangover effect from the dot-com bust when many would-be “options millionaires” watched their equity value go to zero (or worse).  This constraint is a major challenge for startups looking to hire.  Not only does the candidate have to be exceptional, they also have to be sold on taking less salary than they likely would have made working for a big company.

• Since startup teams are small, team chemistry becomes critically important.  In a larger company, it is possible to work-around (to a degree) personality conflicts by “strategic placement’ of personnel in specific groups and/or departments.  This is near impossible in a startup.  If you don’t all get along, you’re screwed.

• Startups usually cannot provide the mentoring and career growth that is common in established organizations.  There often is no training budget, no mentor, no career plan and no clear path to anything.  Its generally chaos.  This game is not for everyone – and certainly not for the faint of heart.  

• Startup founders tend to “oversell” their companies to new recruits.  As such, it is easy for new employees to suffer “buyer’s remorse” once they’ve been on the inside for a little while.  This can lead to low morale and high attrition – which is almost surely to damage a startup when it can least afford it.

So,  who in their right mind would join a startup given all of the above?  The answer is, you can’t be completely in your right mind to join a startup.  It takes a little bit of irrational risk tolerance to really get into this game (especially if you’re walking in with your eyes open).  The one big thing that startups provide is the ability to have an “accelerated learning” curve and clear visibility as to one’s contribution.  Its an intellectual challenge.  There’s usually enough work to do (of all kinds) that most smart, energetic and passionate people will find multiple ways to contribute value.  (This is assuming of course, that you have some faith in the founders and existing team – if not, run NOW and save yourself).  Compare this to large, established organizations and it becomes clearer why so many people work for startups.

So, lets take a look at some of the criticisms to my “try before you buy” model mentioned in the last article.  I would neatly summarize the comments into the following categories:

1. It’s Not Fair To The Employee:  There were a number of comments which argued why the “date before you marry” model might favor the startup and screw the employee.  However, much of this has little to do with my proposed tactic, and more to do with the general nature of startups (and employment law in the U.S.).  Employees here are “employees at will” (as noted in a few comments), and the startup has the right to fire anyways.  As for the “unfairness” piece, I would counter this set of arguments with my “free markets” card.  That is, if startups are being overly draconian about their hiring practices they will likely not attract the right kind of talent and will ultimately die anyway.  So, if the hiring methods of a given startup don’t appeal to you, the great news is that you likely have many, many other options.  If you don’t have other options, in all fairness, the startup probably didn’t want you anyways.

2. The Startup Can’t Afford It:  I made mention that during the trial period, the startup should pay “fair market value” (though what this is can in itself be hotly debated).  My point is that the trial period should not be used as a ruse to get “free work”.  The motivation for the dating period (as I called it), is simply so that both parties can get to know each other and see if the relationship is working.  If it’s not, then it wasn’t destined to be, and the goal should then be a clean (and efficient) separation.

3. It’s Not Necessary To Have A Trial Period:  The arguments provided here are that U.S. employment laws allow for a probationary period anyways, and it is not that hard to “fire” an employee during this period.  So, the argument goes, why go to so much effort not to hire – since it’s so easy to fire.  My counter-argument is that the “trial period” sends a clear message that we care  about the team composition and chemistry and that we are willing to be transparent about it.  Rather than hire an employee on Day 1 only to learn that it’s just not going to work out 2 months later, I’d rather be upfront about it.  How we deal with this can vary (it could be a contracting/consulting relationship for some period of time), but the motivation is the same:  Figure out early, if its going to work.  Further, if a candidate is in “dating” mode with the startup, everyone knows it and focuses on getting the right “experiences” to make a good decision.  Without this, the candidate is just treated like a regular employee and people tend to forget to figure out whether the relationship is going to work out long term.

4. It’s Only Needed Because Of Startup Cluelessness: Here, the arguments are centered around the notion that if the startup could just get its act together and figure out what it wants and assess appropriately, then this whole “date before you marry” thing shouldn’t be necessary.  This is a reasonably fair argument.  Many startups are clueless when it comes to what kind of people they need, at what times and in what roles.  This is part of the chaos that almost all startups go through.  I think its naïve to expect startups to be organized, methodical and thoughtful around the whole hiring process.  Though some certainly are, most aren’t. 

5. It Becomes  A Popularity Contest:  Several people took issue with my statement that the new candidate must build passionate support within the existing team in order to be hired.  I can see why this might be controversial, because intuition tells us that this has the danger of creating the “popularity contest” effect whereby the only people that get hired are the ones that can “win over” someone on the existing team (and as a result great candidates might get rejected).  This too, is a reasonable argument.  There is that risk, but that same risk occurs when you have team members interviewing candidates too (which you are strongly advised to do).  

Basically, I understand the arguments against the suggested tactic of “date before you marry”, and many of them are clearly cogent and reasonable.  Lets remember that this is just one way to try and address some of the startup hiring challenges.  There are likely much better ways – and I would love to hear them.  So, if you have insights into this dilemma, please share them.  You will build an immense amount of positive startup karma.

Apologies to those that commented on the original article and feel like I dodged or hedged their comment (not my intent).  Of all the things I deal with in startup-land, this is one of the toughest, so I really do appreciate that there are no easy answers.  And, remember, this is just one (humble) technology guy’s opinion – I am, by no means, an expert.  That’s the beauty of blogs, you don’t need to be an expert, you just need opinions (and I have an abundance of those).

Further, if you are a prospective startup employee, I encourage you to do your homework and know what you are getting into.  Meet the founders and the team.  Inspect and analyze the idea.  Talk to the investors, if there are any.  Tread carefully.  [Note to self:  This might be a good topic for a future article, focusing on startups from an employee’s point of view].