Why Nobody Is Willing To Join Your Startup

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Why Nobody Is Willing To Join Your Startup

 


As a follow-up to the popular articles, “Why Investors Aren’t Writing You Checks” and “Why Your Software Isn’t Selling”, this is third in the series of articles that uses an informal, conversational and somewhat humorous style to explore common issues that startup founders face.  

In this article, we’ll look at the issue of why startup founders may be facing challenges in getting people to join the company.  Though this is written in the context of bringing on the early members of the non-founding team, most of the ideas apply to finding founder/partners as well.

Note:  This is a fictional scenario.  Apologies for referring to myself in the third-person.  It’s a little strange, but seems to work.

Why Nobody Is Willing To Join Your Startup
 
Founder:  I’m really having a hard-time understanding why it has been difficult to hire employees to join my new startup.  

Dharmesh:  Well, this could be due to a variety of reasons.  First off, on a somewhat philosophical note, perhaps you should really consider this more of a “recruiting” exercise and not a “hiring” exercise.  You’re asking people to take a risk, and the best people, the kind of people you want joining your startup, will likely be choosing from several great opportunities.

Founder:  Sure, yeah, whatever.  I can understand it being difficult to convince people to join if all their jobs weren’t being sent offshore.  But they are.  You’d think that hiring programmers and technical people would be easier now that so much work is being done offshore.  

Dharmesh:  Well…in a software startup, you have to remember that the kinds of people you’re looking to hire are likely not finding it difficult to find opportunities.  They likely have a combination of technical skills, business instincts and an entrepreneurial passion.  As it turns out, this is a rare combination that rarely goes out of style.  Treating new recruits as a commodity rarely makes a positive impression.  

Founder:  Fine, fine.  Let’s assume that these prima donnas do have other opportunities.  That still doesn’t explain why they’re failing to see why this opportunity is so much better.  Many of these people are stuck in big companies and likely getting the life energy sucked out of them anyways.  I’d be pulling them out of the mud.

Dharmesh:  It is a common startup myth that all people that are working for big companies lead miserable existences.  This is not true.  Lots of smart, passionate people like where they work and not all big companies are bad.  In any case, perhaps you’re asking them to take on too much risk?  Perhaps you should create more “balance” in the compensation structure.

Founder:  We’re offering to pay pretty good salaries.  We’re venture-backed so we can afford to pay close to fair market value.  So, it’s not lack of compensation that is causing the problem.

Dharmesh:  Ok, even more important than compensation is that people have to believe in the vision of the company and what it is out to do.  Startup recruits recognize that they will be making huge sacrifices and investing lots of time and energy in your company.  They need to understand and value what you are trying to do.  If they don’t share your passion, it’s hard to convince people to make these kinds of sacrifices.

Founder:  Trust me, it’s not a lack of vision that is the problem either.  We have a clear vision of how our startup is going to change the world.  We’re going to be the next eBay meets Google meets Web 3.1.  We’re forward thinking revolutionaries.  Any intelligent person should jump at the opportunity to be part of something this big.

Dharmesh:  Ok, let’s stipulate that you have a clear vision and that potential recruits understand it.  Another possible obstacle is lack of trust or faith in the management team – particularly you.  If your new recruits don’t think you have what it takes to succeed, there’s little reason for them to join.

Founder:  Have you read my bio at all?  Do you know anything about me?  I was the VP of Sales at a Fortune 500 company before this startup.  I have attracted top-tier venture capitalists to fund this new company and have an MBA from Harvard.  Clearly, if the potential recruits don’t have faith in me, they’re not particularly astute.

Dharmesh:  Fine.  You have a strong background.  It could then simply be a matter of chemistry – or lack thereof.  Though I can’t imagine why, perhaps these new potential recruits just can’t see themselves working along side you.  Life is short and at some level, they have to like you in order to join your startup.

Founder:  That has got to be stupidest thing I’ve heard this week.  I’m not looking for them to work alongside me.  They’re working for me and will have a job to do.  What does liking me have to do with anything?  They’re not going to be seeing much of me anyways.  I’m going to be off working on the next round of capital, and closing the next big strategic partnership.  This is not a popularity contest.  We’re not going to be sitting around the campfire, holding hands and singing songs.  That died with the bubble bursting.  We’re here to make money.  

Dharmesh:  Well, I think the problem is you’re looking for a different kind of recruit than the ones I’m talking about.  That may be the problem.  Based on what you’ve said, perhaps you are looking for the wrong kinds of people in the wrong kinds of places.  Maybe you’d be better off tapping into your VCs and using a recruiting firm to find the talent and skills you need.  Early-stage startup recruits are hard to find.  They want to be partners and collaborators.  If you are just looking to fill positions, I’m not the guy to be talking to anyways.  

Founder:  Fine.  You’re probably right.  It shouldn’t be this hard to just hire the people I need.  If you come across any rational people that want to join a great company, have them send me their resume.  I don’t have an HR director yet, so I have to do all this crap myself.

Dharmesh:  Um, ok. 



Summary of my point:  Recruiting the early members of a startup team is critically important and very hard.  Succeeding at this takes a combination of finding the right balance of risk, ensuring you have a passion and vision for the company that others can share and that you are fundamentally likeable.  

 

Posted by Dharmesh Shah on Tue, Jul 04, 2006

COMMENTS

I think you hit the nail on the head with the need to believe in the vision and to actually like each other.

In the "bubble" I've seen too many bad startup hires where ex-corporate-types joined for the ride while the venture money lasted whether they actually shared the vision or not. Unfortunately I know of a few cases in 2006 again - I think a warning sign is when a VC funded startup outsources the hiring to a recruting firm. You only get *employees* that way, not *partners*.

posted on Tuesday, July 04, 2006 at 11:20 AM by


Also offer a real slice of the company. For example 0.01% of a startup is a joke. It had better be 1% if you want a star developer.

Remember that top talent can always make more on contract, the only way to justify the salary pay cut is to have a big payoff.

posted on Tuesday, July 04, 2006 at 12:04 PM by Rob


Rob: I totally agree. It takes more than .01% of the company to attract the right kind of talent.

I'm working through recruiting a star team member as we speak. Will blog about this experience later this week.

posted on Tuesday, July 04, 2006 at 12:08 PM by


Dharmesh,

Thats a brilliantly incisive commentary on hiring headaches for startups; I love the way you have portrayed it, for it captures both sides of the coin in the hiring game for startups.

There was some poetic discussion on my blog about the same topic some time back ; you may wish to check it out
http://www.amitranjan.com/2006/05/17/poetic-dilemma-for-indian-startups/

Amit

posted on Wednesday, July 05, 2006 at 2:59 AM by Amit Ranjan


Dharmesh,

Thats a brilliantly incisive commentary on hiring headaches for startups; I love the way you have portrayed it, for it captures both sides of the coin in the hiring game for startups.

There was some poetic discussion on my blog about the same topic some time back ; you may wish to check it out : http://www.amitranjan.com/2006/05/17/poetic-dilemma-for-indian-startups/

posted on Wednesday, July 05, 2006 at 3:02 AM by Amit Ranjan


I have a flipside to throw out for your thoughts. Perhaps I'm just too inexperienced, but as a developer looking to join a founding team, what can I expect from the interviewing end? Maybe this little anecdote (a true story) will clarify what I mean.

Maybe 9 months-ish ago, I interviewed for a developer / admin role with a small, fairly established startup. The company was a couple years old with the 3 founders as the only full-time staff. However, they already had their product created and several money-actually-changing-hands deals with some big-name customers. The interview was a lunch meeting where the interviewer (a founder) said he had a "homework assignment" for me, and until I completed it, no compensation terms would be disclosed.

This was already a surprise, but the actual project shocked me even more. I was to create a scaled down mirror image of their product, right down to the DB schema. It was to be completed and submitted -- fully documented with source code -- in one week. After reviewing my results, the founders would decide whether to continue the interviewing process and discuss compensation accordingly. Either way, all intellectual rights of my submission belonged to them.

Now my real question: is this kind of interviewing process what I can expect for a startup-joiner? Granted, I have zero entrepreneurial experience, however I thought this was rather shady and politely turned down the option. Thoughts?

- John

posted on Wednesday, July 05, 2006 at 12:29 PM by John


John: Expecting a prospective team member to invest more than a few hours in the interview process without some compensation is, in my opinion, unreasonable.

I can understand the need to determine if there is a good fit (both culturally and skillset-wise), but I don't think startups should take this too far and treat it as a way to get free work done. Seems wrong to me.

I think you did the right thing by passing on this opportunity.

posted on Wednesday, July 05, 2006 at 12:35 PM by


Here's a somewhat happier anecdote about start-up hiring:

My spouse was recruited by a start-up earlier this year. He was interested in the position, but somewhat concerned about the riskiness. The company did an interesting thing. They offered him the job as a contract employee until he felt comfortable enough with the company's future to commit as a FTE.

He appreciated that they showed understanding of his concern and offered him a creative approach to the situation. He accepted the position, has since converted to full-time employee status, and is very happy.

All of which just goes to show that not treating people like a commodity works.

posted on Wednesday, July 05, 2006 at 7:48 PM by fiat lux


Either I'm lucky or I've found the Holy Grail because, so far, I've found it very easy to recruit for startups.

For me, some of this discussion doesn't ring true; most people, even senior ones, who join startups have little idea what they are joining. But it doesn't seem to stop them. This discussion strikes me as way too rational. Deciding to join a startup is often a gut-level or emotion-based decision, not one where the person goes through a series of checklists and reference checks to decide whether the startup is any good or not.

There seem to be three types of people: people who are primed/looking for a startup to join, people who need to be romanced and skeptics.

The people who are primed and looking are easy to find; they find you. You just need to post your available jobs and they'll fill them. Startups like to label these people as "losers" because these people are easy to hire. They like a challenge, I guess. They like to moan and groan about how difficult it is to hire.

People who need to be romanced are just in between. They aren't looking but, if you pursue them, you might convince them to join. Startups often pursue these people because they like the chase. It feels good to get somebody who you didn't know if you could get.

The skeptics are desirable people who "would consider joining a startup if they found one that wasn't lame". They like to talk about joining startups, they like to do meetings and interviews but, in the end, the deal is never sweet enough for them. I know because I have been one.

From my observation, most companies have difficulty hiring because they don't have a good idea about what the job is and what a person needs to do it. So, they search (often vainly) for somebody who has an interesting personality and who is difficult to hire.

Since they base hiring decisions on subjective criteria, they get locked into a situation where they are forced to reject many candidates for each person that they hire because they need to maintain the feeling of exclusivity. The logic goes like this: "If we hire the top 10%, we've got to reject the other 90%. So, we need at least 10 candidates for every position." No wonder it's so hard.

There are other issues, like a severe lack of competent middle and senior managers in this industry. This puts severe strain on the productivity of rank-and-file engineers which causes companies to have to over-hire for every job in order to get minimal overall productivity which, of course, causes hiring difficulty. If startups deal with this issue head on, they can make hiring a lot easier than if they are ignorant of it.

The issues can be tangled but, once untangled, hiring isn't such a big deal. There are a heck of a lot of people out there who want to be in a good startup, more so than there are good startups.

posted on Monday, July 10, 2006 at 6:12 PM by Dan Howard


Just reading the conversation back and forth, it seems that the guy is most likely a grade school drop out and extremely arogant. I don't believe that he has got funding, and he has got funding he is in la la land.

posted on Monday, March 03, 2008 at 10:01 PM by Jack


 
 
So basically it comes down to the following part: 
 
 
 
1. Give them a good story, "we are next google", "we will change the world" 
 
 
 
2. Pay them well, better than big companies. Even give them equity. 
 
 
 
3. Be very very nice to them. 
 
 
 
4. Give them a great place to work in, reduce their risk 
 
 
 
Unfortunately, most startups cant pay better than big companies, most startups have ideas that are untested and so cant guarantee a billion dollar ipo, most startps need employees to work 10-14 hard hrs each day that makes the work place a bit harder than a 100 epopel firm where everything is deligated, most startups do not have the resources to provide a great place to work in. 
 
 
 
 
 
Great article, good points, but no real solution sorry. 
 

posted on Friday, July 25, 2008 at 10:56 AM by Aditya


Here's is a variation of the subject in question.  
I was offered to join a startup as a partner because I can add some competencies yet lacking in the company. The startup is self funded and is already 1 year in development. The idea seems solid and backed by a good business and marketing research. The two founders are capable so from all aspects it seems correct. However, I was offered to buy my place as partner which I agree as some effort was taken place prior to my invitation. But they would like me to pay my part of the company according to projected value of the company in the future, and not just effort (costs + time). I am tending not to agree to that as I don't feel like an investor. But I invest myself, full time, no salary until success or failure ensue. And I totally agree to pay my part of the global effort payed so far. But not more. I would like to hear your opinions. thanks

posted on Wednesday, June 24, 2009 at 12:37 PM by Phil


The major problem most often is as indicated earlier once the idea is deemed sound is the payoff. 
 
If someone takes a risk they expect a fair reward. 
 
The next point I have to make is a star worker for a big company is most of time not the star worker needed for a startup this also applies to the management team and this is where a lot of times early vc involvement destroys startups.

posted on Friday, July 17, 2009 at 10:16 PM by Ousmane


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