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:
- 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.
- 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.
- 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.
- 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.
- 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].