Until a company gets to Product Market Fit (PMF), I’m a big fan of very small teams, two pizza or less. That gives you the maximum runway to find PMF and the most agility in switching directions as you discover your market.
For the subset of companies that do find PMF, then slamming on the gas of hiring is crucial. Otherwise, inevitably, there will be five Y Combinator companies with exactly your focus in the next batch and someone will beat you. It’s a very efficient market.
For many new founders, hiring is scary. You’ve never managed or led, many have never even hired another person. Now you are expected to match your growth rate with your hiring rate. That can be frightening if you are growing at 20% month over month. If you have 10 employees now, you will have 70 a year from now.
In a new company, I think of the first hundred hires as the most important cultural statement you can make about your company. Those people will replicate themselves many times over, often hiring people who act just like them, since we naturally bias towards people like us in hiring. So you can look at that first year as a Darwinian explosion, but you need to manage it as well as possible.
Here is the way I look at hiring and firing in that first year post-PMF. The two variables to optimize for is how well someone fits and how well they do their job. A good culture fit does no harm, an amazing person embodies the company culture. A good person gets lots done, an amazing person is someone you can’t imagine living without.
I’m a big fan of the founder being involved in hiring of every one of those first fifty to hundred hires, because it’s your highest leverage in creating a great company after finding PMF. Most founders agonize about each hire, and that is fine. These are very important people. Just don’t equate your agonizing with your ability to hire well. I have hired more than a thousand people and my hit rate of finding people who are amazing in at least one dimension is about 50%. So put as good a hiring process in place as you can, get the best recruiters you can, but don’t treat every hire as a one way door decision. You will be shocked at how many of the people you thought would be good not amazing turn out to be amazing and ones you thought would be amazing turn out to be good or worse. Hiring is very difficult.
There are three cheats to hiring that I recommend. First is you treat it as your top priority post-PMF. That gets everyone else to treat it that way too and a lot of smart people with one priority makes it get done as well as possible. Second, you’ve heard the phrase, ‘always be selling’, but now it is ‘always be hiring.’ What I mean by that is that you should always have your open roles posted, but if someone comes to you through a warm referral that doesn’t fit, interview them anyway and find a job for them. Roles are completely fluid the first few years of a startup, so getting someone good who is excited about your company is far more important than their skill set. Third, hire every single one of your amazing friends. I think this was one of my great advantages in starting my first company, because I had worked for two of the best companies of the time, Oracle and Silicon Graphics, and a ton of our first hundred employees were the amazing people I knew from there. If you aren’t getting multiple ‘cease and desist’ letters from your former employers (totally unenforceable and you should frame and celebrate each one), you aren’t trying hard enough.
Within three months, you will know if someone is on the right side of the 2x2 and within 6 you will know if they are in the upper right and need to be immediately promoted. You need to fire the left side within three months. If you do, you will be left with amazing people in at least one dimension and be building your company around people who are amazing in both dimensions. You are also strongly biased towards culture fit, because people that don’t fit suck energy from your organization. Almost every founder who reads this will be filled with a sense of dread. You have never fired anyone and so you want to treat hiring as a one way door. Don’t make this mistake. You are going to need to get as good at firing as you are at hiring. Read this.
Often when I’m talking to founders, they will say things like ‘no one has ever left our company in 2 years’. This makes me cringe. That basically means the left side of the 2x2 has never been drained and you are accruing mediocre people.
So why do so few founders hire fast and fire fast? Mostly, it requires you to get much better at hiring and firing than you are. Being good at hiring is a lot less difficult than you think, but it takes focus. You have to allocate a big chunk of your time to doing it (like 50%) and you have to be a student of hiring to figure out how to do it well. Within six months, you will be good at it. Getting good at firing is far easier, but requires you to be very empathetic, so you will have to train yourself. My opinion is that you need to do all of the firing yourself. You are going to be firing about 50 people in that first year to get to 70 amazing ones.
People talk a lot about culture. You can stop writing pithy culture statements for people to memorize and just focus on hiring and firing. If you are focused, your cultural values will naturally fall out from who you hire and fire.