Five Pitfalls of Seed Round Hiring

Most companies don't get to do more than a handful of hires during their seed round--so the idea of a "recruiting process" might seem a little bit heavy handed.  However, these early employees will not only have a lasting impact on the DNA of the company, but hopefully they'll be some of the most important hires you'll ever make.  (If they turn out not to be, you probably hired poorly.)

Startups that don't create a process tend to fall into the following traps:

1) They never identify values and therefore fail to use them in the screening process.  Are there things that you want every last employee to care about?  Did you ever bother writing them down, telling interested hires about them, or using them as any kind of meaningful filter?  There's a saying that goes "If you don't stand for something, you'll fall for anything."  As keepers of the brand, what your employees believe in will ultimately be reflected in how people think about your company as these values make their way into your products and marketing.

2) They hire a guy they know.  Most venture backed startups are started by men, and one's network tends to look a lot like them--so when guys start companies (and often when women do, too, especially on the tech side), they tend to make the first few hires from their network.  Every single time you add someone who looks like the person hired before, the chances that the next person will look and think differently decreases.  How excited will a female engineer or a marketing professional of color be to be the first non-white male hired when the team is already ten or fifteen people?  If you don't go out of your way to not only create an outbound recruiting process, but track its metrics, you'll be fishing in only half the lake, or less.  

3) They run out of leads.  You might know a lot of very talented people, but once you put them through your hiring funnel, you probably don't know as many as you think.  Some just took a new job and others aren't quite the right fit.  Even if you do know a lot, if your company is successful, you'll need to know a lot plus more tomorrow, and even more the day after that.  Maybe you can hire your first five employees from your network, and maybe even ten or twenty, but then what.  What happens when you start making ten new hires per month?  When do you think that lead generation process should start?  Answer: As early as possible.  Not only are you going to need to sift through great numbers of people if you're ever going to build a company of any kind of size--but to make sure you get the *best* people, you'll want as many people in the top of the funnel as possible.  Just like in sales, if you don't put in lead generation tools for talent as early as possible, and start tracking it, that well is going to run dry very quickly.

4) They underhire.  Startups don't have much money in their seed round, and so they tend to be very cost conscious around salaries--even though they say that talent is the most important thing in their company.  They'll even tell themselves a narrative that unless you're willing to accept below market wages, then you're not the right fit for a startup.  First off, how many founders are taking below market wages?  If you're 25 and you're making 80k, plus, you own 75% of the company, that's a pretty sweet package compared to your peers who teach kindergarten or work in book publishing.  Maybe you should raise a little more money, take a little more dilution, and get out there with fair offers to the people you've identified as the people most able to make your disproportionate ownership of the company worth millions (especially since their share isn't likely to be worth millions).  The area I see the worst underhiring is in marketing--where the first hire has likely not done more than pitch for PR or worked a few years at an agency.  They've never built a brand or thought strategically about what a marketing team should look like or that it's their job to generate enough customers to build one.  

5) They hire for the wrong set of needs.  I encourage all startups to build out at least two or three years of an org chart, identifying which hires should come in when.  What I should also encourage is for someone to line that hiring plan up against a product plan and a sales plan.  When seemingly great hires churn out quickly at companies, the complaint I most often hear is that "They didn't need me" or "I could have helped them earlier, but now it's too little too late."  Identifying what you need when is one of the biggest startup challenges, which is why founders should spend a lot of time networking with other founders who have built similar products.  That's how you learn when a COO should come in, or that you need a release engineer when you're managing a suite of apps, or when a second PM can be helpful.