There is No "I" in Entrepreneur: Hiring in Today's Startup World
Working at Goldman Sachs, building a startup, and investing in companies has taught us to follow a hiring process that works. Learn our shortcuts for finding a team that fits.
You have a new idea. It's in your head. It's rotating around. You're planning your next startup or ICO or the next big thing that you feel is going to revolutionize the world.
Then you ask yourself, "Wait. I can't do it all alone... or can I?"
Let us help answer that question for you -- the answer is a resounding, no. You can't. You can't do it alone.
You need a team.
But how do you find the right people for your team?
Start with what you do best.
There's a huge difference between good, better, and best in every aspect of business, and being best in class gives you a significant competitive advantage. What are you the best at? What's the one thing you could keep doing forever? The thing that makes everyone else say, "Wow, I can't believe you're so good at this!"
- Are you an inventor and creator of a brand-new product no one has ever thought about before?
- Are you the tech guy who can see where technology is headed and knows how to lead the effort?
- Are you a social media guru, drawing up a following that hangs on your every word?
- Are you a talented storyteller gifted with the ability to turn passions into buy-ins?
Whatever it is, what you are best at is your key differentiator. Identify it, and it becomes your unfair advantage. For instance, if your strength as a scientist is discovering revolutionary product formulas, that's your unfair advantage and the part of the business you should be focusing on.
Form your team around what you do best.
Once you reflect on what you are best at, think about the team you need to support all the other aspects of your business. What skills do your team members need to have? What previous experiences are likely to cultivate those skills? What are the strengths and unfair advantages that you need on your team?
Here are nine ways that we shortcut the process to find and hire the right team.
1. Hiring for the right mindset
Hiring based on fit is incredibly important and often overlooked by founders. We like to think about this in terms of former basketball coach Phil Jackson's "triangle offense." Using that strategy, Jackson found that some of the best athletes were not necessarily the right players to fit into the system. It didn't mean that they weren't great players; they just weren't right for the job. Think of your startup as a basketball team. What kind of offense do you want to run, and what kinds of players fit into the plan?
2. Find people who want to co-elevate
In addition to hiring people who fit the company, it's important to find great people. What do we mean by "great" people? One thing we like to avoid are employees who have an "employee" mindset, rather than an "ownership-building" mindset. They're there to collect a paycheck, as opposed to being interested in building the organization with you.
Today, leadership within companies is changing rapidly. The top-down management systems create gaps in motivation and inefficiencies. We feel Keith Ferrazzi sums it up best in his newest push for a cultural shift towards what he calls co-elevation. The concept is that true growth in employee training and morale happen in an environment when people co-elevate each other, by pushing each other higher so each can rise to become the very best.
Mediocre employees won't raise the bar of co-elevation in your organization. But great employees will help you to create a culture that will build a formula for success that drives positive change and growth. And that's what you really want. The ability to have your team not only want to grow themselves, but want to help others on the team grow too.
3. Okay is not good enough
More than the cost of time and money involved in hiring the wrong person, the true cost to a startup comes from mediocre team members. If someone is really unsuccessful in their position, it's easy to let him or her go. But if he or she is mediocre, founders tend to keep him or her around too long. But in a small startup, you simply can't afford a 5-out-of-10 performer.
Startups are what we call a "weak-link sport" -- a game in which the progress of a team is limited by its weakest performer. Therefore, you must understand that weak performers will not only show you down, but will hold you back your team's ability to win. If you notice that a new hire is not achieving the benchmarks you need them hit, you need to be a strong willed startup coach and get them off the team sooner than later.
4. Build a flexible team
In the early days of your business, there will be a lot of uncertainty. You have to identify which candidates have what we call a "high-ambiguity tolerance." If the personalities around your table are all ones that need concrete answers in order to function properly, this will cause constraints on your ability to operate as a leader. Seek to have a balanced team in terms of tolerance for confusion, so you don't have to worry about additional headaches that will distract you from building your business.
5. Ask talented people for referrals
To find great people, ask the most talented people you know for referrals. As your company grows, build a referral culture by rewarding those who refer a successful candidate. A rule of thumb we've used is $2,000 to $5,000 after the new employee has remained with the company for 90 days.
6. Use hiring platforms
If your referral pool is small, take a look at ZipRecruiter, AngelList, LinkedIn, GitHub, and other platforms to access a massive pool of talented people. We like GitHub because you can see not only people's profiles, but also projects they've worked on.
7. Check references and dig deep
Most people use references as a "check the box" activity at the end of the process. That's not our approach. Dad taught us to use references as guides and informants during our hiring process. There's no tool more powerful in evaluating candidates than the reference check. It begins when you ask the candidate for references. How many do they provide, and how readily? Are they peers, superiors, or personal references?
When you speak with the reference, seek to understand how successful the person was in the context the reference knows about. Ask the following questions:
- How would you describe this person in two words?
- What caused him or her to be successful?
- What behaviors, habits, or tendencies limited his or her success?
- What would you surround this person with to help make him or her successful?
Pay close attention to the answers. Tone, hesitations, pauses, and enthusiasm are as important as content. For managerial hires, we recommend doing reference checks in person, so as not to miss any indicators. By digging deep with people who have worked with, for, above, and around a candidate, we get a clearer picture of a person. This is key to our hiring process.
8. Utilize personality assessment tools and software
At M13, we ask every serious candidate to participate in a Predictive Index (PI) test. The PI is one of many personality tests that can help you understand what drives a candidate and how he or she will work with others.
We believe that PIs are important and useful because they can help evaluate how individuals will function in your work environment and fit into your system. This is particularly useful for small companies that don't have an HR team and cannot afford to hire the wrong person. Mistakes are expensive -- according to Geoff Smart, a co-author of Who: The A Method for Hiring, a single hiring mistake costs 15 times base salary in hard costs and productivity loss.
Different states have laws regarding what kind of testing you can use as a hiring tool. Typically, hiring tests need to be validated, so make sure you understand the applicable laws in your state.
9. Use a try-before-you-buy period
In addition to the formal interview process, we believe in out-of-the-office "interview" activities. This helps us observe how a candidate interacts in a variety of social settings. Sometimes we take a possible hire out to a crowded restaurant to see how he or she behaves.
Once a candidate is hired, 90 days is typically enough time to see if he or she is a good fit for your team and company. In many roles, it takes time to acclimate, but if people have not proven themselves highly valuable to you within the first 90 days, it's worth seriously questioning if they're right for the role.
To set the person up for success, make sure you provide clear expectations and make agreements around those expectations. Additionally, set up 30, 60, and 90-day goals with frequent check-ins.
Many entrepreneurs struggle with the question "Do I need this role in my company?" We find that the best way to test this is with a contractor. After 30, 60, or 90 days, you will likely know the answer to your question and can take action from there.
In building your startup team, there are many things to consider. We have learned that it is well worth the time up front to make sure you have the right team. The right idea with the wrong team has a low chance of success. Leverage our experience when it comes time to hire your startup team. Focus on what you do best and build the right team around to you to the rest.
Do you have any shortcuts to your hiring process? We would love to hear as comments.