When a founder starts a venture the company is comprised of the founder/co-founders, their laptops, and often a lot of coffee. After putting in time and energy on their own, it's a beautiful day when they finally raise their first round of funding. They can finally go out and build what they want to and gain traction.
Of course at that point, it's time to hire. And, at some point most founders find themselves hiring their friends.
And why wouldn't' they hire their friends? Founders are talented, driven people who are often surrounded by talented driven friends. These friends have all built trust and loyalty over the years - there's nothing like pulling an all-nighter with someone to get an A on that paper to test drive and work ethic.
Founders are often young and don't have extensive work experience. Their networks are in many ways limited to the people they went to school with and perhaps met at their first jobs. It makes sense that founders will draw from that network of friends to build their startup.
And trust and rapport goes both ways. When founders start companies initially they are scrambling for resources and people. Friends of founders are the ones who will trust them, who will work for less than market value, and who will dive into the work with a high degree of intensity and loyalty.
When this works, it really works. One founder I coach hired one of his best friends from college as the first engineer. This individual - let's call him Sam - was and still is one of the best, high performing, hard-working employees in the company. Sam built the first version of the product more or less on his own. He mentored and indoctrinated new engineers into the company and then formally took over as head of engineering.
When the company got bigger and landed it's Series B funding, it was Sam who first realized he was not equipped to scale the engineering team. He brought that up to his friend, the CEO, and played an active role in recruiting and hiring the company's first VP of Engineering. Now Sam is happily working for that executive.
That is a happy ending story. More often than not, though, hiring friends brings some problems and difficult moments. I have been called upon many times to coach founders through difficult conversations with their employee-friends and, hardest of all, coaching them in how to fire their friends.
So how can founders try to mitigate these risks before they happen?
1. Only hire friends if you would hire them anyway.
This sounds obvious but as founders vigorously look for talent they tend to lean towards people they feel most comfortable with. In the early stage especially there is a dearth of people and a lot of work to do. Sometimes founders feel frantic - almost desperate - to get people on board.
This is a lot of pressure. Founders want to move quickly. And founders are often not experienced hirers. This is a perfect storm to hire friends quickly into roles they aren't suited for and assume they will figure it out.
Before you hire anyone create a written job description. Get specific about what you want this person to do and how you will measure her. Interview all candidates - including and especially your friend - using this job description. You'll get a better outcome all around if you are structured about hiring.
2. Talk frankly with your friends when you hire them.
Make sure you are clear the scope of the role and talk through performance metrics. If your start up is really early stage you may not know how you will look at performance. That's OK, perhaps you and your employee-friend will figure that out as you move forward; if so that's the right discussion to have.
Talk about values and purpose and your expectations of them. Discuss the risks and each of your concerns about your friendship versus work. Have a "worst case scenario" discussion at least once and maybe more than once if you can stomach it.
If you have these conversations early on and approach the topic directly, you are much more likely to be able to have tough conversations with your friends-employees when you need to. Ultimately this will save a lot of time and energy.
3. Manage using performance metrics.
CEOs should measure their employees using performance metrics - that's a statement that is almost too obvious to write. When you're in the trenches of a startup, however, it's very normal for CEOs to lose sight of the need to establish clear performance metrics for all of their executives. Then it is hard to hold them accountable when you didn't have an initial agreement on what to hold them accountable to.