Why Startups Should ALWAYS Compromise When Hiring

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Why Startups Should ALWAYS Compromise When Hiring

 

There’s a non-zero chance that you’re reading this because you were thinking:  “What the heck is he talking about?  Shouldn't startups be hiring the best people possible?  What's this about comprimising?”

And, if you were thinking that, you’d be right.  Startups should hire the best people possible.  But, if you re-read the title, you’ll notice that I’m saying you should always compromise.  Why?  Because there’s no such thing as the absolutely perfect hire along every possible dimension.  If you recruit people that you think were a “no-compromise” hire, you’re deluding yourself with unrealistic expectations.  Nobody’s perfect (and if they are, you probably couldn’t recruit or afford them anyways).diamond startup hiring

Everyone you bring on is a compromise.  The trick is to compromise on the right things.

Let me explain.  Here are several different attributes or “dimensions of awesomeness” you might seek for your startup recruit:

1.  Passion:  Are they fired-up?

2.  Experience:  Have they done this particular job before?  Did they succeed at it?

3.  Intelligence:  Are they smart?

4.  Academics:  Do they have the right degree?  From the right place?

5.  Hunger:  Are they motivated?  Are they ambitious?

6.  Risk-Tolerance:  Can they share the risk?  Or, are they looking to make fair market value?

7.  Scrappiness:  Can they get by with little?  Are they resourceful?

8.  Loyalty:  Can you get them to commit to your cause?  Will they be fiercely loyal?

Those are just a few I thought of off the top of my head.  It’s by no means a complete list.  I intentionally left out things like “integrity”, because it’s hard to argue in favor of compromising on integrity.  That’s just plain stupid.

But just about all of the attributes listed above could be compromised a little in exchange for something else.  For example, if you were somehow able to grade a recruit along all these dimensions, you might find that someone scores “average” in the academics dimension — but is off-the-charts smart (happens all the time).  So, you might decide that it’s OK for them not to have an ivy league degree.  Or, someone might be so smart, passionate and entrepreneurial — but lacking in experience.  Perhaps that’s OK too.  Or, maybe you really do have to have the absolutely perfect person along every possible dimension, but they’re so good, you’re just not sure you’re going to be able to keep them engaged.  Perhaps you’ll have to compromise on the loyalty front.

The point is, like with just about everything related to startups (and lots of things in life), there are tradeoffs.  You need to figure out which dimensions are absolutely critical (where you will not give), and which ones you’re willing to compromise a little on.  There’s no right answer — it depends on your business, your culture, your values and your instincts. 

What do you think?  Which attributes of people do you value the most?  What would you be willing to compromise on, if you could get almost everything else?  What things do you hold inviolate — that you would never compromise on?  Please leave a comment.

Or, if you'd prefer, you can take the conversation to twitter.  You can find me @dharmesh on twitter.

Posted by Dharmesh Shah on Thu, Apr 23, 2009

COMMENTS

Great post, and a non-intuitive point since we often think of compromising in pejorative terms rather than a conscientious optimization. 
 
I think the vectors on which startups should be willing to compromise vary by stage. First 10 FTEs is slightly different than hires #11-25, 26-50, 51-100, so on. 
 
But in general for early-stage companies (<50 FTEs) I think all startup hires should be optimized (i.e. can't compromise much on these) for Passion, Intelligence, Risk-Tolerance, and Scrappiness. I think VP or C-level hires also need to factor Hunger and Experience in, but less critical for other members of team. I personally would always optimize for Loyalty, but I think willingness to compromise on this vector is highly specific to individual personalities of the existing entrepreneurs. I personally would probably never prioritize Academics over other areas, though places like Google have arguably been successful at hiring by adhering to pretty strict standards in this dimension.

posted on Thursday, April 23, 2009 at 12:43 PM by Lee Hower


"Experience", as you define it, is definitely a vector that more startups SHOULD be compromising on.  
 
How often do you really need someone who has done *this particular job* before? A smart, passionate, action-oriented, scrappy person who has been effective before - will be effective again.

posted on Thursday, April 23, 2009 at 12:49 PM by Cindy Alvarez


So true. That's life. And if you hire someone, thinking you didn't compromise, it probably means you didn't dig deep enough. 
It's best to keep in mind that the hired employee probably thinks the same way about his new employer. 
A compromise isn't always a bad thing provided you know it in advance and plan accordingly to cover the drawbacks.

posted on Thursday, April 23, 2009 at 12:49 PM by eitan


Love the post. This is so true. Different companies expect different things out of their employees. Some may sacrifice academics for passion, intelligence for loyalty.....it all depends on the company and their values.  
You can't fit a square peg into a round hole.

posted on Thursday, April 23, 2009 at 12:50 PM by Mike Pascucci


A couple of points... 
 
First of all, I don't think Academics matters at all for most start-ups, so you can almost remove that from the list. There's very little correlation between degrees and one's ability to function well in a start-up, so any start-up that cares about those at all is probably not smart enough to read articles about start-ups! 
 
Secondly, I've just been to a conference where Andy McLoughlin of Huddle.net argued, in his talk, exactly the opposite. He suggested that hiring the perfect people is really hard, but is precisely what you should aim to do, because you'll be spending all day every day with them, and the wrong hire will really, really hurt you. 
 
His slides and a brief coverage are available at: http://uk.techcrunch.com/2009/04/21/geeknrolla-building-strong-teams-means-falling-in-love-and-treating-each-other-like-family-says-andy-from-huddle/ 
 
I'll grant you that both points of view can make sense, but Andy described his own experiences to support his thesis, and I'm not sure how tested your assertions are. (perhaps I don't know enough about you) 
 
Perhaps you could give some specific examples where you compromised on an important dimension (like intelligence or passion) and yet it worked out well..?

posted on Thursday, April 23, 2009 at 12:51 PM by Daniel Tenner


This is a great list of “dimensions of awesomeness” that all start-ups should base their hires on.  
 
From my own experience starting my own company as a sophomore in college and trying to find the right people is that experience is hard to come by. Everything else is easy; students love to take risks and scrappiness is a no brainer. 
 
For us, we try to base any hire on passion or their hunger to succeed because that is what separates the winners from the losers.

posted on Thursday, April 23, 2009 at 12:52 PM by Trace Cohen


Really good article around talent. I suppose there should also be an internal check list about when would be a good time to "let go" the comfort of doing things your self and handing it over to others. Another thought would be around the structure of a startup. Should there be a structure of some sort in the initial phases of a start-up that acts as the company DNA to attract good talent, or would that backfire in to group think?  
Example: I have a good technical idea and I am working on my prototype. The next phase is to attract a management team to push the product out. Should I hire and recruit folks for the long run or should I work with market intermediaries (middlemen that know rich folks and have a list of all rent-a-CxO, and Gov. Grant resources) to have a pay as you go play?

posted on Thursday, April 23, 2009 at 12:57 PM by sameh Darwish


I totally agree that you have to compromise in certain areas, but I think that it depends on what stage the startup is in. The book entitled: 
 
The Beermat Entrepreneur: What You Really Need to Know to Turn a Good Idea into a Great Business
 
 
has a good chapter on this topic. 
 
I also think that you have to keep in mind who the potential employee will be working with. That is, if you're forming a group to work on a project, you have to keep in mind all of the team members and compromise accordingly. You don't want to have too many strong minded controlling employees in a group or on the other hand, too many "yes" people in the group either. There should be a good balance of personalities.

posted on Thursday, April 23, 2009 at 1:06 PM by Benjamin Bazso


@Dharmesh - Liked the invite to twitter my article comment: twitter is a compromise-friendly medium. 140 char limit = practice conciseness.

posted on Thursday, April 23, 2009 at 1:22 PM by Tariq Nisar Ahmed


@Beermat Ben -- lol, did you leave out an < / b>

posted on Thursday, April 23, 2009 at 1:24 PM by Tariq Nisar Ahmed


Agreed, it's definitely a compromise. Just what you are compromising on varies. I am bootstrapping my startup right now. So, I had to compromise on the experience, anybody with good experience comes at a price. But what I could not compromise on was communication skills. I am in Mumbai and my hire is in Pune, so it was important for me to hire someone who can communicate well on the phone/email. I had a couple of options with better experience, but I went in for the one who could communicate her idea's better.

posted on Thursday, April 23, 2009 at 1:39 PM by chica


Great post Dharmesh. You are right, if you are not comprimising at least a little, your standards are way too low. 
 
Can you share some examples of folks you've hired where you had to make a meaningful compromise, and it really paid off? Or an example of when you hired someone that seemed "fine" across all dimensions and then regretted it? 

posted on Thursday, April 23, 2009 at 1:58 PM by Rob Go


In my recent experience most startups never compromise on "experience", which I think is probably the 2nd factor behind academics. If someone is smart, scrappy and hungry then they will get the job done (outside of VP level). And if they aren't, then let them go, it's a high growth/high risk venture, if you can't pull your wait you should leave. Unfortunately I don't think startups do a very good job of trimming unless business dictates. 

posted on Thursday, April 23, 2009 at 2:05 PM by Adam


Top "feature" I would compromise on is specialization. From my experience, it is the top thing best startups I worked for compromised on. That compromise had to be offset with exceptional ability to learn new things. Those kind of employees were our most valuable and they did well in good and bad times. 
I have an article on the subject in my blog: Want your company to survive? Just say NO to hiring specialists!

posted on Thursday, April 23, 2009 at 2:26 PM by Apolinaras "Apollo" Sinkevicius | LeanStartups.com


Before I actually built and fired for a startup, I had this idea that you would never want to compromise on passion or hunger. However in my experience compromising on these things can allow you to get people who are utterly unique in their abilities, and occasionally can provide certain things that a half-dozen scrappy MIT geniuses living in tents might never be able to accomplish.

posted on Thursday, April 23, 2009 at 3:26 PM by Gabe da Silveira


Hi Dharmesh, 
 
Sorry to take a contrarian view, but I think a compromise is implicit in any match making and more often than not, one are doing it inadvertently.  
 
Sorry, I did not get much food for thought from this post. (It's of course very well written :)). 
 
-Kedar 

posted on Thursday, April 23, 2009 at 5:05 PM by Kedar Mhaswade


Passion is the most important thing to search for in a recruit for a startup. There is lesser money in a startup but people still work when they love the challenge beyond anything.  
 
 
 
As far as compromise is concerned, never have that in mind - I would term it as 'prioritising' - you prefer something 'in spite' of some deficiencies in the recruit (and these defeciencies are not in your priority list as of now).  
 
 
 
Similar stuff is also there for regular hirings (not just for startups) but the parameters are different. And as you said, there is never a perfect hire!

posted on Thursday, April 23, 2009 at 10:07 PM by Jeev


When I think back on all the hires that I've been involved with they were all compromises of some degree. The best people I've worked with have been "risky" on at least one of your areas. The tough part is finding the right balance. Great article.

posted on Friday, April 24, 2009 at 7:51 AM by Dan Abdinoor


Passion is a "dimension of awesomeness" that should not be compromised on, and is critical to the success of a startup. 
 
Passion doesn't necessarily have to be all "150% GO STARTUP!", but candidates need to have passion. Passion as a entrepreneur, developer, salesperson, etc. 
 
I'll take the passionate and hungry guy (or gal), over the indifferent genius any day.

posted on Friday, April 24, 2009 at 8:23 AM by Michael Bungartz


Super article and so well put! 
 
 
 
As a new startup myself, selling website photo gallery software, I have aways to go before I hire. However, I have worked for small companies and been the only IT person, and expected by the CEO or owners to live up to super-human standards, including all the things you describe. Not everyone is cut out to be that type of developer, but I found it fit my personality. I always brought those things - never-ending passion, loyalty, training, experience, smarts (I guess), project successes - to the table and so have found some success. However, Ive seen many business fail to live up to their employees, in rewards, compensation, and now this broad based offshoring trend. Nothing wrong with cutting costs and trying to commoditize an industry. But the last few years, I think has proven, that the most important qualities of a new hire (the ones you mention) are getting rarer and rare in IT simply because so much talent is leaving the field, based on abuses by corporation. They have clearly taken advantage and underestimated the value of "good people" and innovators and talent in IT, and traded that for cheap third rate labor in the hopes they can duplicate what local talent brought to the table. This has failed according to some studies Ive read, but worse, US corproations and possibly startups still do not have a way to measure ROI on a high paid innovator in IT versus a cheap outsourced group. I think you might consider an article that discusses the huge value in having onshore talent and loyal innovation people in your business, and the differntiation it brings to business and competitive advantage. I know personally, having helped bring a company out of the red myself, how loyalty and creative people make a difference, but then how low quality cheap IT people can then spell loss of innovation and ultimately problems for a business. In this global environment, the qualities of creativeness and talent cannot be replaced, and once a business loses that due to cost cutting and abuses of its people, they will find problems. I just hope that as we move forward, we can reestablish what we used to have in startups and all businesses - placing a high value and high cost on innovation and talent in IT. Only then, can we return to better innovation, especially in the United States, which we have lost the last few years.

posted on Saturday, April 25, 2009 at 11:37 PM by Website Photo Gallery Guy


I don't agree with the idea of compromise. Ask anyone who's worked with me at a company I founded. 
 
I've taken a lot of heat from VC's over the years for taking too long to hire the "right person". But being really, really picky has always been the right choice for me. 
 
I guess it depends on your goal. If you just want to make a quick buck, then compromise away. But if you want to maximize your enjoyment of your brief time on on this planet, then be really picky and don't compromise when you hire. 

posted on Sunday, April 26, 2009 at 7:42 AM by Brad Parker


Brad: I'm not suggesting that you shouldn't spend a lot of time picking the best possible person and be really, really picky (in fact, I believe in that very strongly). 
 
What the article is suggesting is that some attributes are more important than others. And, you should compromise on the attributes that are not that important to you. If 10+ years of experience in your industry is not important, then you should compromise on that front.

posted on Sunday, April 26, 2009 at 9:14 AM by Dharmesh Shah


Every decision in life is a compromise - even the best ones. Nice job getting attention for the article with a controversial headline. It definitely pulled me in. :)  
 
 
 
Last year I wrote an article on startup hiring and firing after reading some of your disagreements with an Entrepreneur Magazing article.  
 
 
 
As you say, there are no hard and fast rules all startups must follow but, personally, I look for amazing people who have an drive to learn and try new things and who can execute (get things done).  
 
 
 
Each hire that you bring on is likely to have a different set of criteria that you want to compromise on -- a lead engineer, for example, is very different from your top sales guy. But, if you can build a culture around the passion for your company and effectively communicate within your organization, you are a step above the next startup.

posted on Monday, April 27, 2009 at 9:20 AM by JC Cameron


People are always talking about startups backed by VC money. But when you think about bootstrapped startup different criteria come to mind. It is impossible to convince best of the breed people and you have to work with those who believe in what you do and who can make do with what you can offer them.

posted on Thursday, April 30, 2009 at 5:55 AM by Nico


One must do this with babysitters too.

posted on Thursday, April 30, 2009 at 11:38 PM by S.Smith


Hi. I LOVE THE WAY YOU PUT ACROSS THINGS. THE PRESENTATION PART IS USER FRIENDLY AND YOUR SITE IS A GREAT TOOL FOR PEOPLE LIKE ME WHO ARE INTERESTED IN KNOWING MORE ABOUT HR SECTORS. HAVE FUN. . CHEERS 
 
http://www.message.blog.co.in

posted on Saturday, May 02, 2009 at 7:32 AM by HS SANDESH


I don't really get the idea of looking for loyalty in a new hire. What are their reasons to be loyal to you after such a short period of time? Are you going to be as loyal to them as you're expecting them to be to you? Again, if so, what Are the reasons?  
 
Loyalty is something you nurture over time in a relationship. Rather than look for someone who is blindly loyal from the start, I would think encouraging growth and success for that individual (whether that success is within your company or not) is the way to achieve the type of loyalty you really want.

posted on Saturday, May 02, 2009 at 10:28 PM by Mrbgty


We have definitely had to compromise when it comes to hiring for our startup. Not every person we hire is experienced, gets good grades, or is risk-averse. What we do look for are people who are willing to work for FREE because they value the experience above all else. 
 
I think that is the key feature because we pride ourselves in being fun to work with. If we offer people a great experience and the ability to learn about startups, then we have found that they are more than happy to work with us for free. 
 
- Jun Loayza

posted on Tuesday, May 05, 2009 at 2:36 PM by Jun Loayza


This is very helpful post to those of us who are too busy working to know "best practices" for startups. If I'm not following you on twitter already, I will now! 
 
Thanks!

posted on Thursday, May 07, 2009 at 3:06 PM by Laurie Hall


Often start-ups have to work in adverse conditions - like a shabby basement with one common table for your laptop and microwave or a beanbag instead of a ergonomic chair. In today's world where at one hand there are companies like Google who provide environment that Sheiks from middle east will feel jealous about, factors like passion/hunger are very critical than academics/experience.

posted on Saturday, May 09, 2009 at 12:11 PM by RahulC


So true. I agree with the general consensus that end of the spectrum with passion & scrappyness are more important than that where experience and academics fit in.  
 
More often then not, if you're trying to fill the checklist, you're going to end up with someone who's built a career of fulfilling such checklists, and that's not really something you can afford as a startup.  
 
Sure, as an established business, you want people who want to maintain the status quo, and loyalty is probably more important than hunger. If your startup succeeds, real loyalty will come from the success, because everyone likes a winner, but if the early employees bail, you can save on their stock options. (Oh wait, that's an old paradigm)

posted on Thursday, May 28, 2009 at 8:14 PM by Aaron Evans


How about self awareness? of course, if startups only hired people who were self aware, people like me wouldn't have work. But I have so many startups hurt by a leader who either discourages feedback or refuses to hear it (or seeks retribution on people who have the courage to tell the truth) because he or she can't or doesn't want to accept that they are not perfect

posted on Wednesday, June 03, 2009 at 6:29 PM by Nancy Raulston


This article hit home. It's hard enough to get good employees if you do have corporations behind you. I will definitely keep this list in mind when hiring is possible. I'm hoping that won't be too much longer. Until then, I'm still the Jack of All Trades! 
 
Thanks!

posted on Friday, June 12, 2009 at 4:51 PM by Laurie Hall


Great post. Too often, start ups are looking to hire what I call "unicorns" that perfect mythical beast that doesn't really exist into a job. No hire is perfect ... hiring is always a matter of finding the right skills and experience for today and hoping that what you hire for today will be able to stretch and grow as your company changes in ways you can't even imagine in the future.

posted on Thursday, July 16, 2009 at 3:30 PM by Marcia Kadanoff


I don't really get the idea of looking for loyalty in a new hire. What are their reasons to be loyal to you after such a short period of time? Are you going to be as loyal to them as you're expecting them to be to you? Again, if so, what Are the reasons?  
 
 
 

posted on Tuesday, July 21, 2009 at 3:53 PM by sohbet


Each hire that you bring on is likely to have a different set of criteria that you want to compromise on -- a lead engineer, for example, is very different from your top sales guy. But, if you can build a culture around the passion for your company and effectively communicate within your organization, you are a step above the next startup.

posted on Tuesday, July 21, 2009 at 3:53 PM by yonja


Startups should never compromise, if their human capital is as important as their financial statements.  
 
Most organizations are continually challenged to hire the right fit, manage their success, and maintain their motivation [known in some circles as recruit, train, retain]. The "x" factor in all organizations is how to manage talent. 
 
Technical ability and motivation are mutually exclusive. It takes talent to implement a strategy, it takes talent to leverage technology, it takes talent to follow processes. If your talent is not motivated none of the above will happen.  
 
Passion, hunger, risk-tolerance, scrappiness, loyalty can all be managed with human capital assessments. Experience, intelligence, academics are all technical accomplishments that rely on motivation. For an organization or a leader, hunger is less important than knowing when people will be hungry and what they feed on. No matter the knowledge, ability, or skill, if you are not motivated you will not contribute.  
 
Last week I posted a blog on how to build a human capital discount factor. I would welcome comments on the above as well as any insight to valuations you have used to assess human capital. 
 
The link to the blog on human capital valuation is:  
http://bit.ly/taCMR  
 
 
 
Most organizations are continually challenged to hire the right fit, manage their success, and maintain their motivation [known in some circles as recruit, train, retain]. The "x" factor in all organizations is how to manage talent. 
 
Technical ability and motivation are mutually exclusive. It takes talent to implement a strategy, it takes talent to leverage technology, it takes talent to follow processes. If your talent is not motivated none of the above will happen.  
 
I have come to analyze likely executive, operational, or functional success with talent-related research such as emotional intelligence for team and relationship predictors; cultural assessments to match talent to corporate culture; and a group of communication strategies to align an organization's talent to expectations and goals.  
 
The ability to manage an organization through rapid growth relies on bringing the right talent in, identifying the characteristics of risk in current- and future-state talent needs, and being aware that managing a $1 - $5 million a year company relies on a different work force than managing a $100 million company. The CFO of your start-up may have little ability or comfort to take you on the road to an IPO.  
 
Many post-merger culture assessments don't provide a road map for that growth, don't account for the human capital [talent management] role to realize synergies, and don't focus on talent strategies that can manage towards strategic needs. It is a stock market fact that acquiring company stocks drop when an acquisition is announced. If your acquisition's top talent leaves, you are left with hard assets, but perhaps little motivation of those who stay on. The cultural fit is the most overlooked in an assessment of synergy.  
 
Passion, hunger, risk-tolerance, scrappiness, loyalty can all be managed with human capital assessments. Experience, intelligence, academics are all technical accomplishments that rely on motivation. For an organization or a leader, hunger is less important than knowing when people will be hungry and what they feed on. No matter the knowledge, ability, or skill, if you are not motivated you will not contribute.  
 
Last week I posted a blog on how to build a human capital discount factor. I would welcome comments on the above as well as any insight to valuations you have used to assess human capital. 
 
I believe VCs and private equity firms can realize a greater portfolio return when they build human capital into their risk beta.  
 
The link to the blog on human capital valuation is:  
http://bit.ly/taCMR  
 

posted on Tuesday, August 11, 2009 at 2:15 PM by Toby Elwin


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