startup team

startup team

Building, Managing & Growing An Effective Team For Your Startup

Vinod Khosla is the former founder of Sun Microsystems and the founder of Khosla Ventures, and has said that a company “becomes the people it hires and not the plan it makes”.  There is zero doubt that the people that a company hires helps to determine the direction in which it eventually goes.  The first ten people that you hire can initially affect the company much more than the starting plans and ideas of the company, and this is because these ten people will go on to hire the next fifty people, who will then go on to hire the next wave of hundreds of employees.  At this point, even if the first ten people involved in the company, their “DNA” in terms of attitude and ethos still remain at the company, even if their physical presence is long gone.

The truth is that there is an obviously finite pool of talent, despite the fact that there are many brilliant minds across the globe.  The most talented people who may interview for your startup may be sizing up your startup, the same way that you are trying to determine whether this particular candidate would be a good fit for your startup culture.  The new hire might cost a lot more money, and it will be up to the startup to determine if they are worth it, or if their name or reputation is “overrated” in any way.  Another concern is who exactly will interview these certain candidates.  There might be the wrong people to pair in terms of personality.  A startup has to make sure that whoever is interviewing big potential hires has to sell them on the vision of the company, and explain how the long-term prospects at this particular startup can be beneficial to them.  Of course, a problem can arise if a startup is attempting to hire ten people, and have already decided on five.  This now means that every new candidate has less of a chance of getting hired, and a startup should take the time and energy in making sure that those first five hires were absolutely the right choice, because these hiring decisions have so many lasting effects on the company.

Many people don’t take the right measures to prevent failure.  Instead, they have a myopic vision about inevitable success.  While ambition is important for any startup, many companies do not hire for the potential risks in their sector.  Vinod Khosla brings up an interesting point: that companies should think about all the ways in which they could potentially fail, and then hire in a way to prevent those risks.  This may not seem like the most “attractive” strategy to a startup who is trying to lure in the most well-known talent, but can go a long way in terms of saving money and time later on.

The truth is that, by definition, nobody BELIEVES that they are hiring the wrong people.  There are people that get very attractive packages to join a startup, but it is only later that one might realize that the startup was spending much-needed money on the wrong hires.  A smart startup should be hiring based on the adapting market, and constantly be flexible about the kind of problems they should be working hard to prevent.  Many people think of hiring as a way to gather the most brilliant and talented people together to have the most progressive ideas to penetrate the market – and of course, those are all great things.  However, many people need to look at the other side of the coin, and start think of hiring as another risk management process.  Every startup needs to be concerned with the money that they are spending on hiring, and whether these people are truly worth the money that you are spending to hire them.

There is something to be said for innovation.  If you are focused on a particular sector, say, health, for example, you may go out of your way to make a huge hire on an expert in the field.  This particular person can tell you about all of the potential problems in the space, and his wealth of knowledge can prove extremely valuable.  However, does he have any new revolutionary ideas?  How does this hire compare to new blood that may have new concepts that could disrupt the market?  Can he or she rattle off every problem in the sector, but gets hesitant when it comes to offering solutions?  This can prove to be the kind of hire that you grow to regret, when you chase after a “big name”, only to find that they are more familiar with past knowledge of the sector, rather than embracing the possible future that you startup is trying to help create.

You should be hiring a diverse set of people, in terms of work background, as well.  It’s important to find people that have worked at all sorts of companies, and who have approached company problems very differently.  This way, you have more perspectives to debate on the potential and possibilities of a certain idea.  Tradition can be a great thing, but it can also prevent fresh attitudes when it comes to searching for ways to solve problems.  There are many academic PHD types that can write novels about your sector, but if you are trying to disrupt the entire market – how important is keeping them onboard?  It may prove useful only for a time.

Hire People with Self Management Skills & Experience

One issue when it comes to hiring new people is equity.  In particular, Vinod Khosla believes that founders get too hung up on equity.  Equity is, of course, important to an individual’s financial future, but he points out that exceptional people end up starting their own companies.  There has to be “skin in the game” or incentive for these remarkable minds to stick with a startup.  The founder needs to assemble an all-star team of people that truly have the kind of skills that you simply do not want to leave your company.  It is this attitude and belief system that can lead to success more than any original “company plan”, Vinod argues. 

The bottom line is that hiring is MUCH more important than people realize.  While every startup needs to focus on their product or service, they should realize that the kind of people that create the company culture will affect the company, even long after they (potentially) leave.  Your direction may shift, your product may change – but one thing is for certain: a company essentially “is” the first people that they hire.  We see it time and time again, with some of the most important companies in the world – where the first hires go on to do amazing things.  It certainly isn’t by mistake: it Is because the founder had the foresight to see the potential, and sell the company to that person, who in turn, saw the vision.  It’s important to go after the people that your startup deserves, with all of the resources you can, within reason.

Key Takeaways:

  • Who you hire, is more important than your plan.  This is because one of them can change (your plan).  Even if your first hires leave after a year, their “ghosts” remain in the DNA and culture of your company.  Choose very carefully.
  • The “big names” don’t often deliver – in fact, it can be the opposite.  This isn’t to say that they should be passed over.  This is to say that you shouldn’t spend too much money hiring the “names”.  You might regret it.
  • Experience and tradition will always have its place, but as we all know, so much of Silicon Valley is based on disruption.  A fresh mind means fresh solutions.  Don’t dismiss someone just because they may not have decades in the sector.
  • Hire people with diverse backgrounds when it comes to where they have worked.  This will allow you to compile their unique approaches to a problem into a cohesive strategy.