OnStartups

Startup Hiring: Why You Should Date Before Getting Married

Posted by Dharmesh Shah on April 24, 2006 66 Comments

Most entrepreneurs, when asked, will tell you that hiring the “right people” is one of the most important things they do for their companies.  However, what many entrepreneurs won’t tell you is that despite their best efforts, they suck at picking the best people during the recruitment process.  I definitely fall into this camp.

 

This doesn’t just apply to hiring in the management ranks and technical staff, it applies to everyone.  During most of the years I’ve run startups, I’ve always considered myself pretty good at detecting startup talent.  But, the empirical data suggests that I’m almost as likely to screw it up completely as I am to get it right.  Over time, as a startup founder, you learn not to rely on all the conventional proxies for trying to predict the probability of success of any given hire.  Things like interviews (however intense), tests, grades, top universities, etc. are all only somewhat effective in raising your odds of making the right decision.  After all is said and done, you’re likely to screw it up more often than you realize – or are likely willing to admit.  And, the problem is not just limited to you – others on the team are not that much better at it.

 

That is why I think you should make it a practice to have people work for the company before you hire them.  Though hiring an employee you don’t know is not quite as big a commitment as getting married, it can often be almost as risky from a startup’s perspective.  (Apologies for the metaphor, it is almost 2:00 a.m. here in Boston and I can’t think of anything better).

 

In this model, potential employees (especially those in the technical ranks) are considered to be in a “probationary” period (what I would call the “dating” period) for some length of time.  During this period (which was usually 60-90 days in my case), either party has the ability to declare that the relationship is just not working out and move on – with no misgivings on either side.  This is made clear very early in the process.  The potential recruit is paid “fair market value” during the trial period (but generally as a consultant and not a full-time employee).  We’re not trying to take advantage of the employee or get free work – far from it.  Other than the fact that they’re not on payroll, they pretty much are treated as a new hire.  They learn real things, do real work and (hopefully) create real value.

 

At the end of the period (from the company’s perspective), here’s what you should look for:  One or more people on your existing team should be passionate about keeping the recruit on board.  They should be storming into your office making a desperate plea for you to make an employment offer to the recruit.  If in 2-3 months this has not happened, then the recruit is likely not a good fit.  To be clear on this, the “default” decision is to pass on the hire unless someone on the team provides compelling evidence and/or testimony of why the new recruit should be brought on board. 

 

Though this may sound a bit draconian, it has worked out well for me (I did it in the last several years of my first startup after I had screwed up enough times).

 

I expect there to be some resistance to this model.  The common arguments are the following:

 

  1. It is a really tight labor market, can you really expect the best people to join under these conditions?  In short, yes.  In fact, the best people often like having the ability to test out the company (as much as you want to test them out).  This gives them a way to do that without locking themselves in after hearing what amounts to the CEO/founder’s sales pitch on why the company is such a great place to work.  They get a chance to find out for themselves.  As an added advantage, the more astute candidates will also recognize that this process works to their advantage too (if they do end up joining the company).  It keeps a higher percentage of bozos out.  Nobody wants to work with bozos.

 

  1. Is this really legal?  Though I’m not a lawyer, and this is not legal advice -- yes.  In fact, it is much simpler to do this than try to hire a person full-time, be added to the payroll (and insurance, and 401k, etc.) and then fire them later if things don’t work out.  

 

  1. How about people that already have a job?  In this case, I’d advise that the new recruit work with you off-hours (chances are, your startup is working nights and weekends anyway).  This still gives you the opportunity to see if they “fit” without them having to risk their existing job.  Even in this case, you should still compensate the employee for their time.

 

  1. Doesn’t this really limit the number of people you can hire?  Absolutely.  However, just about everyone I’ve ever talked to and every book I’ve ever read suggests that you are much, much better off not hiring a person at all than getting someone on board that’s not a good fit.  It is often very difficult (emotionally and otherwise) to let people go if they are just “slightly below expectations” .  This is particularly true if you are concerned that part of the reason the employee didn’t work out is the company’s fault (it usually always is).  This still doesn’t change the fact that things are not working out.

 

  1. What about recruits that are “referred” by existing employees?  Same rules apply.  Though I would still allow the person that referred the recruit to be the “passionate advocate” after the probationary period.  (Interestingly, there are cases where the same person that refers a potential candidate will learn enough about the candidate during the trial period that they can’t bring themselves to be a passionate advocate at the end of it).

 

Moral of the story:  Whenever possible, when it comes to hiring people for your startup, you should “try before you buy”.

 

If you’ve been running a startup (or even worked for one), ask yourself how many bad hiring decisions could have been avoided if you had the opportunity to “walk away” in the first 2-3 months?  I’m guessing quite a few.  If on the other hand, you’ve got this whole process down cold, please share your secrets.