Hiring (and Firing)

Over the course of the last year or so, I have met with, spoken to or been to talks featuring many different CEOs and start-up founders.  I like to ask them about some of the biggest mistakes that they’ve made (in the futile hope that I can learn from them) or what advice they would give to an aspiring/early-stage entrepreneur.  What is interesting is that the answer they all give is almost always the same.

Hire well, fire quickly.

When I talked through the The Ingredients of a Successful Start-Up, I mentioned that “every business is different” and that there is no “one formula for success.”  What I did not mention, however, is that there are several formulae for failure, and hiring incorrectly is one of them.

When you are in the early stages of your business, there is no room for anyone to be carried.  Your margins are either too thin, or your funding is always running out – you need to be sure that every penny counts.  In fact, general advice from many entrepreneurs is to hire as late as physically possible.  Brian Chesky of Airbnb has mentioned that they took 5 months to hire their very first engineer after thousands of applicants and hundreds of interviews.

But what were they looking for?

Values & Culture Fit

You can look at your first ten or so hires as effectively dictating your entire [company] culture

The first hires that you bring into your start-up become the life-blood of the company – they effectively dictate how your business will behave and grow.  Your first engineer may end up being your future VP of Engineering, so it is important that his or her values are aligned with yours.

This is because, as your start-up grows, the workload intensifies.  As a founder, in an ideal world, you would be able to do every single thing yourself.  The reality is that this is completely impossible, so you end up hiring people and the organisation gets larger.

During the early stages of this growth, you should still be able to oversee and approve every single important decision.  However, there will come a point where your organisation grows to the stage where you are unable to oversee each of these choices.  It is then up to your employees to begin to make the decisions for you.

If you have gotten the values of the company and culture fit right, they will make the decisions that you yourself would have made (which will hopefully be the correct ones).  If you haven’t gotten these characteristics right, you won’t have made it far enough in business that this becomes an issue they probably won’t make the right choices.

In fact, you can look at your first ten or so hires as effectively dictating your entire culture – they will end up being the guys who hire the next hundred, who then hire the next hundred, and so on and so forth.  You can see why hiring is such a big deal for a founder.

Brian Chesky (I keep quoting him because I think Airbnb have nailed it) used to ask his first hires: “If you had a year left to live, would you take this job?”  He wanted to make sure that his hires really cared about what Airbnb were trying to achieve (he later adjusted this to 10 years because most would answer they would spend the last year with their families).  The reasoning was that you should use whatever time you have left to live.  You should do whatever you want to do if you only have ten years left – if you want to travel, you should travel; if you want to build your own company, you should build your own company.

There’s a famous tale (which may or not be true) of President Kennedy’s visit to NASA, where he asks a janitor sweeping in one of the buildings: “What’s your job here?”  The response from the janitor was, “Well Mr President, I’m helping to put a man on the moon.”  You want to hire people who are not just looking for a job – you want to hire people who are also looking for a calling.

Technical Ability

[Your employees] need to be f**king rockstars at their job

Having the right culture fit and values is one thing; your employees also need to be good great at their job.  In fact, they need to be f**king rockstars at their job.  Getting that one good engineer or visionary can literally be the difference between your start-up making it versus your competitors grinding you into dust.

A top engineer will write excellent code or deliver great products that will stand the test of time (and scaling), while a strong visionary will understand business and be able to guide work in the right direction.  You will thank yourself when, a few years down the line, your product is still holding up while your competitors are doing code re-writes/patching over poor programming.

What Makes a Great Employee?

The difference that sets a great employee from the rest is that, say once or twice a year, they will do something that is awesome

My co-founder and I have worked with, hired and fired (admittedly I’ve done a lot less firing) several employees over the years and we often discuss what makes a great employee, and whether we were ever great employees (answer: we hope so!).  The conclusion that we both come to (and this really resounds with me) is that there isn’t that much on a day-to-day basis that sets apart a great employee and a good one.

Both employees will be reliable and will deliver when you need them to.  The difference that sets a great employee from the rest is that, say once or twice a year, they will do something that is awesome.  Whether it’s coming up with a solution when a solution seemed impossible, or delivering something so creative/left-field that you are just left completely star-struck.

We have an example of this in my start-up.  Our business is built on a belief in ourselves that we can grow any business online and so, a few weeks in, we really tested this out.  We had our test e-commerce websites built and plans in place to set up PPC campaigns and SEO hacks.  However, we soon realised that:

1. We lacked the money to fund the PPC campaigns, and
2. We lacked the time to wait for the SEO hacks to come to fruition if we were to stay on track

It was my co-founder’s time to shine – he came up with this great plan to use social media to “growth-hack” our first sales (based on his experience consulting in social media, and my chance encounter with serial “growth-hacker” Vincent Dignan near Silicon Roundabout).  We soon realised, however, that the tools that were typically used for growth-hacking either weren’t good enough, or didn’t fit our requirements.

As the resident engineer, it was thus my turn to wow.  So, I promptly spent the weekend adding libraries and APIs to my coding repertoire (I never said I was a good engineer to start with) and, not long after, we had some custom tools running off my laptop that enabled us to target and advertise to specific users on Twitter (in a similar manner to Twitter Advertising), but without costing a thing.  Before we knew it, we were getting thousands of hits to the website and our first customers!  Consequently, Twitter would spend the next couple of months shutting down our tools and accounts, only for us to come up with new, inventive hacks and loopholes, but that’s a story for another day.

The Hiring Litmus Test

“I will only hire someone to work directly for me if I would work for that person.  It’s a pretty good test and I think this rule has served me well.”

Mark Zuckerberg has a simple (yet effective) indicator when it comes to recruiting.  After hiring Sheryl Sandberg as Chief Operating Officer (COO) of Facebook, Zuckerberg revealed his one rule at the Mobile World Congress (MWC) technology conference held in Barcelona:

“I will only hire someone to work directly for me if I would work for that person.  It’s a pretty good test and I think this rule has served me well.”

It is not always easy to spot a great employee, though.  Many start-ups are now reverting to trial periods for potential employees (we actually have also done this) because you can’t always get the feel for someone after a couple of interviews.  In fact, I mentioned earlier that getting hiring right can make or break your business – many founders aren’t 100% comfortable (arguably) balancing the fate of their start-up on a couple of interviews.

In a different article, I mentioned how important it is to get your co-founder right.  Ideally you should have known or worked with them for at least 6 months.  This is not too different with your first employees – you can normally get a good feel for someone over this period of time.  Mark Zuckerberg met Sheryl Sandberg at a Christmas party in in 2007 before spending more time together at the World Economic Forum in Davos, Switzerland, in 2008.  Only after these experiences did he hire her.

What About HR?

As a founder, you are responsible for your company culture

If hiring is so important, many of you will be wondering when you should hire a HR person.  This is one of the most contentious points among founders.  Services such as CharlieHR are beginning to automate many of the administrative tasks that HR professionals do, so I will be exploring the bit that you can’t automate for now at least – I’m sure AI or machine learning will eventually make it possible in the future – culture.

I remember going to a NEF speaker event where Lopo Champalimaud (CEO of Treatwell, formerly known as Wahanda), when asked when you should hire a HR person, jokingly responded: “Never!”  Equally, I have heard from entrepreneurs who recommend that a HR person be hired relatively early on (in some cases as soon as employee #10) to help instill and maintain your company culture.

I personally disagree with both opinions.

I feel that, as a founder, you are responsible for your company culture.  You should be the North Star of your organisation.  During the early days, it is up to you to hire well, lead & motivate your employees by setting the vision, and get them excited about what you are doing.  Saying that you’ll be “too busy to hire” early on is a poor excuse for hiring a HR person – as mentioned above, hiring is one of the most important aspects that you need to get right.

Equally, as your business grows, you will have less visibility over the decisions being made and it may begin to get harder to instill your culture, especially if you open multiple offices.  If you choose to hire a HR person too late, your company culture could inevitably suffer as your employees may not have the necessary experience to hire correctly.

I can’t say exactly when the right time to hire a HR person is because it varies by startup. However, I’m confident that you will know when that time hits.  Your business will have grown to the stage where you are surrounded by amazing employees who believe in what you believe in, and you have started to delegate out important decisions.  You will have gotten less involved in interviewing applicants as your role will have changed.  This is probably the right time to hire a HR person – someone who understands the importance of hiring well, but shares your vision and culture.

If I had to put an employee number for a HR person, I would peg it somewhere between #30 and #50.  This varies by office sizes and business types, but I can imagine it getting pretty hard to interview all new hires once you reach this stage.  According to Rob O’Donovan (ironically CEO of Charlie HR and co-founder of The Eleven), you tend to stop interviewing everyone after about 50 employees.

Our Hiring Method

If they are smart, I’ll notice in person – I won’t need a piece of paper to tell me.

My personal preference is to not read a CV before the first time I interview someone.  This is because I focus a lot on culture and “outside-the-box” thinking (especially important for start-ups) and want to see then and there if they fit the mould.  Seeing that someone went to Cambridge, Harvard or Stanford before I meet them gives me a pre-conception that clouds my judgement during an interview, and may make me see someone as a culture fit when really they aren’t.

This is something that I realised could be done from my time working as an engineer.  I would sometimes go into a meeting with an unfamiliar face who would impress me with his/her emotional and intellectual knowledge.  If they are smart, I’ll notice in person – I won’t need a piece of paper to tell me.  I have also been interviewed and hired for start-ups this way.

If I think someone would fit the culture, I’ll then read their CV before the next round of interviews and grill them on some of the specifics.  Then, where possible, we’ll trial them to make sure that they really do click with the team and can work independently.  A happy team is a productive team.

There are, of course, some difficulties with this.  Firstly, you need to find other people to screen CVs – you can’t interview everyone.  Secondly, you have to explain exactly why you haven’t read an applicant’s CV the first time you meet them – if not, they can easily get offended.  This is a slightly unusual interview technique, after all.  Finally, it makes it harder to interview “for people” (finding good employees and creating roles for them) rather than for a position (finding good employees to fit a pre-defined role).

Firing

Hiring great people is insanely difficult.  Firing people is even harder.  It is one of the worst parts of running a company and even the toughest founders struggle with the emotions of it.

All first-time founders wait way too long in the hope that an employee will change their attitude or behaviour and pull through.  From what I’ve heard, this almost always never happens.

So, I’m going to keep it short and sweet.  If things aren’t working, fire fast.  It’s for the good of the company, and for the good of the employee.