4 Ways Not to Sink Your Start-up With a Bad Hire
If you have a great idea for a start-up, odds are good you can’t do all the work yourself. And that means that you’ll have to hire people to help you. Make the right decisions about whom to hire, and you boost your odds of success. But just one bad hire could bring your start-up to the brink of failure.
That’s what was on the mind of Christine Marcus, a 2012 graduate of MIT’s Sloan School of Management, who co-founded Phoodeez, a Cambridge-based start-up that she claimed in a recent interview is "reinventing catering to make event eating easy on diners and the environment.
When an event planner places an order, Phoodeez contacts a local restaurant to make sure it can fill the order and deliver it at the requested time. Neither the event planner nor the restaurant uses a phone during the entire transaction.
Marcus' co-founder, Sal Lupoli, is an MIT classmate from a Boston restaurant family -- it operates Salvatore's Italian restaurants that cater MIT events -- serving "awesome pizzas." In 2011, Marcus and Lupoli developed Phoodeez working with MIT event planners and Salvatore's to assemble "a basic web site that offered simple packages and the right amounts. It worked and took on a life of its own -- word spread across MIT," said Marcus.
Based on her experience, Marcus is building her start-up’s team based on “culture, values, and the kind of company we are building. And we look for team members who fit those elements in addition to the technical skills.”
Here are Marcus’s four principles for building a winning start-up team:
1. Identify your start-up’s mission and core values.
The first step to building a team is to know why your start-up exists and what it stands for.
Marcus wants Phoodeez to make a difference for employees and local businesses. Here’s what she means by that: “Our Company is about building a successful venture that disrupts a very lucrative industry to level the playing field and give the best local businesses a larger piece of that pie. For us it is about essentially changing people's lives by driving more business to local restaurants than they ever thought possible. This creates jobs that support families, and the local communities in a way that improves numerous lives.”
To build your start-up’s team, you have to start with a statement with that kind of clarity so you can make sure the people you hire will fit with its mission and core values.
2. Know how your start-up outpaces the herd.
Start-ups have a nasty habit of failing most of the time. If you want yours to have a chance of beating the odds, you have to know what will make it better than everyone else in your market.
Marcus decided that Phoodeez would compete by delivering better customer service. Even though the start-up is in e-commerce, she hopes “customers come to us is because of our customer service that takes the stress of event planning and catering off their plate. Many people start such a company with the first hire being a technical cofounder/web developer. Our first hire was a customer service concierge.”
Before you decide whom to hire, make sure you know what skills your start-up needs to win and how well the people you hire can perform those critical activities.
3. Only hire people who are willing to work long hours.
One of the most remarkable skills of a successful entrepreneur is the ability to attract and motivate people who will work killer hours and do lots of different jobs for very little pay. And since start-ups don’t have the cash flow to pay loafers, one bad hire can sink the entire team.
Marcus is very careful to make sure everyone she hires has the right work ethic. To do that, says Marcus, “We look for team members who are willing and have demonstrated a track record that they are willing to do what it takes in terms of supporting the rest of the team.”
Given the cost of a bad start-up hire, I urge you to follow her example on this.
4. Fill your team with people who believe in your start-up’s mission.
The reason it’s possible for winning start-up CEOs to hire people willing to work so hard is that its mission and values are a form of valuable emotional currency. They’re also a great way to screen people who will fit well with the rest of your team.
As Marcus noted, “We look for team members that understand at our core what we are trying to accomplish, and that are not merely looking for a quick return from a future exit or IPO. While of course those monetary returns are desirable, team members must be able to see beyond that and must be motivated by the more fundamental values of making a difference first.”
This is a key principle of Hungry Start-up Strategy, and I urge you to apply it.
Strategy consultant, start-up investor, teacher, corporate speaker, pundit and author of 11 books, Peter Cohan has invested in six start-ups, three of which were sold for a total of $2 billion. Before founding Peter S. Cohan & Associates in 1994, he worked with HBS strategy guru, Michael E. Porter.