One of the startup founders in our incubator, 1871, recently asked me an interesting question about hiring. He had heard me talking about the "Hotel California" syndrome here at 1871. As The Eagles song goes, "You can check out any time you like, but you can never leave." At 1871, it seems no one ever really leaves, even if their particular business idea doesn't work out.

Instead, many of the smartest founders whose businesses have gone sideways--or who ran out of cash before they found the right market fit--have an interesting reaction. They don't sulk. They don't make excuses. They don't expect the world to owe them a living. Instead, they get busy. They do their research, and then they try to attach themselves to another company at 1871 with a more viable business idea and more traction. It's very Darwinian, and it works.

I think that this may be one of 1871's greatest accomplishments--to have built an organic community that's so supportive of everyone here that it's almost as if there's a safety net, assuring a soft landing and a new start for the serious and committed folks who want to get right back in the saddle. 

That said, the decision of whether to hire an entrepreneur whose startup has failed is a difficult one. You risk hiring someone who isn't fully ready or willing to give your company his or her all--or possibly can't handle not being in charge. And that's why one of the startup founders in our incubator came to me for advice.

His query went something like this: "How do I figure out if it makes sense for me (and for my company) to hire someone whose business just blew up? Especially if it's someone I feel like I know pretty well, who I think is smart and committed, and someone who's been working three desks away from me for the last year--head down, 24/7, balls to the wall? In fact, I have to admit, that there were plenty of weeks when--just watching from the sidelines--I felt like a slacker compared to this guy. So really, what more about him do I need to know, and what are the right questions that I need to ask in order to find out whether this is a smart hire?" 

Here are the five basic questions I'd recommend asking someone like this--and make sure to get clear and convincing answers before moving forward. Don't expect this to be an easy or comfortable conversation. It should be hard, and it should be honest. Because it's important to get this right at the outset--or you'll regret it for a long time to come. 

1. Are you done with your dream? It's never easy for an entrepreneur to give up on a dream. But it's essential for you to make sure you aren't paying someone to work for you whose head really isn't in the game. Especially if this person is going to be spending the bulk of his or her time and energy trying to figure out how to resuscitate his or her old business, instead of focusing on your business. There's no lie detector test for this kind of question--you've just got to look each other in the eye and decide whether there's a real commitment to leave the past behind. And whether you can count on getting the full attention and energy that are required directed toward the success of your business.

2. Are you down with my dream? Needing a job isn't enough of a commitment to make things work in the start-up world. It's never just a job. It's signing up to give this dream everything you've got. You really have to care about the vision, about making a difference (not just a paycheck), and your heart needs to be in the game just as fully as your head. This is an essential part of the down-and-dirty conversation that needs to take place before you hire the founder of a failed startup. The best candidates will tell you upfront what they like about your idea and your product as well as what they think could be changed or could be better. But they can't be signing on with the idea that--once they're in the clubhouse--they'll have a chance to start rearranging the furniture and changing things. They need to buy into your dream and then help make it better--not try to turn it into their dream. And they need to sign on 100 percent from Day One. If these founders have serious reservations, they need to work someplace else.

3. Are you really ready to move forward? A dying dream is a debilitating thing. Sometimes founders may not even realize just how hard a hit they took or the extent of the damage done. It takes a while for the reality to sink in. And for all those conversations to take place: a hundred random people asking you how your business is doing, forcing you to break the news to them. Every one of those "chats" is just more salt in the wound that you thought was healing. I understand the urge to pick yourself up and move forward, but founders need to catch their breath before starting off on the next adventure. Catching someone too soon on the rebound isn't any better an idea in your business affairs than it is in your love life. Make sure this person is really ready and knows what he or she is signing up for. 

4. Are you sure you can be second chair? There's only one captain of the ship, and you need to make sure that everyone understands this from the get-go. And this isn't just something to get straight between you and the new hire--it's important that it's clear to the whole team, so that everyone knows what to expect and how to proceed. It's easy to fall into a trap and start talking (while you're still in the "selling" mode of convincing this person to come on board) about being "partners" and working closely together. While that's a good ultimate goal, it's a bad way to start the new relationship. You're the boss of your business. He or she used to be the boss in a prior business. The new relationship needs to be clearly understood from Day One. 

5. Are you in this for the long haul? You don't want to waste your time and money training this person if he or she simply regards your company as a stop-over on the way to launching another start-up. Although there are no guarantees that anything will last forever--or that everyone will ever work out perfectly--you can't afford to have someone coming into the business who already has one foot out the door. Make sure this person is there for the long term or don't make the hire. 

Published on: Dec 16, 2014
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