After startups raise money, their next biggest problem becomes
hiring. It turns out it’s both really
hard and really important to hire good people; in fact, it’s probably the most
important thing a founder does.

If you don’t hire very well, you will not be successful—companies are
a product of the team the founders build.
There is no way you can build an important company by yourself. It’s easy to delude yourself into thinking
that you can manage a mediocre hire into doing good work.

Here is some advice about hiring:

*Spend more time on it.

The vast majority of founders don’t spend nearly enough time
hiring. After you figure out your vision
and get product-market fit, you should probably be spending between a third and
a half of your time hiring. It sounds
crazy, and there will always be a ton of other work, but it’s the
highest-leverage thing you can do, and great companies always, always have
great people.

You can’t outsource this—you need to be spending time identifying
people, getting potential candidates to want to work at your company, and
meeting every person that comes to interview.
Keith Rabois believes the CEO/founders should interview every candidate
until the company is at least 500 employees.

*In the beginning, get your hands dirty.

Speaking of spending time, you should spend the time to learn a role
before you hire for it. If you don’t
understand it, it’s very hard to get the right person. The classic example of this is a hacker-CEO
deciding to hire a VP of Sales because he doesn’t want to get his hands dirty. This does not work. He needs to do it himself first and learn it
in detail. Then after that, he should
lean on his board or investors to give him opinions on his final few
candidates.

*Look for smart, effective people.

There are always specifics of what you need in a particular role, but
smart and effective have got to be table stakes. It’s amazing how often people are willing to
forgo these requirements; predictably, those hires don’t work out in the early
days of a startup (they may never work).

Fortunately, these are easy to look for.

Talk to the candidates about what they’ve done. Ask them about their most impressive projects
and biggest wins. Specifically, ask them
about how they spend their time during an average day, and what they got done
in the last month. Go deep in a specific
area and ask about what the candidate actually did—it’s easy to take credit for
a successful project. Ask them how they
would solve a problem you are having related to the role they are interviewing
for.

That, combined with the right questions when you check references,
will usually give you a good feel about effectiveness. And usually you can gauge intelligence by the
end of an hour-long conversation. If you
don’t learn anything in the interview, that’s bad. If you are bored in the interview, that’s
really bad. A good interview should feel
like a conversation, not questions and responses.

Remember that in a startup, anyone you hire is likely to be doing a
new job in three to six months. Smart
and effective people are adaptable.

*Have people audition for roles instead of interviewing for them.

This is the most important tactical piece of advice I have. It is difficult to know what it’s like
working with someone after a few interviews; it is quite easy to know what it’s
like after working with them

Whenever possible (and it’s almost always possible), have someone do a
day or two of work with you before you hire her; you can do this at night or on
the weekends. If you’re interviewing a
developer, have her write code for a real but non-critical project. For a PR person, have her write a press
release and identify reporters to pitch it to.
Just have the person sign a contractor agreement and pay them for this
work like a normal contractor.

You’ll get a much, much better sense of what it’s like working with
this person and how good she is at the role than you can ever get in just an
interview. And she’ll get a feel for
what working at your company is like.

*Focus on the right ways to source candidates.

Basically, this boils down to “use your personal networks more”. By at least a 10x margin, the best candidate
sources I’ve ever seen are friends and friends of friends. Even if you don’t think you can get these
people, go after the best ones relentlessly.
If it works out 5% of the time, it’s still well worth it.

All the best startups I know manage to hire like this for much longer
than one would think possible. Most bad
startups make excuses for not doing this.

When you hire someone, as soon as you’re sure she’s a star you should
sit her down and wring out of her the names of everyone that you should try to
hire. You may have to work pretty hard
at this.

Often, to get great people, you have to poach. They’re never looking for jobs, so don’t
limit your recruiting to people that are looking for jobs. A difficult question is what you should do
about poaching from acquaintances—I don’t have a great answer for this. A friend says, “Poaching is the titty twister
of Silicon Valley relationships”.

Technical recruiters are pretty bad.
The job boards are generally worse.
Conferences can be good. Hosting
interesting tech talks can be good for technical hiring. University recruiting works well once you’re
reasonably established.

Don’t limit your search to candidates in your area. This is especially true if you’re in the bay
area; lots of people want to move here.

View candidate sourcing as a long-term investment—you may spend time
now with someone that you don’t even talk to about a job for a year or more.

Use you investors and their networks to find candidates. In your investor update emails, let them know
what kind of people you need to hire.

As a side note, if I were going to jump into the mosh pit of people
starting recruiting startups, I would try to make it look as much like personal
network hiring as possible, since that’s what seems to work. I’d love a service that would let me see how
everyone in my company was connected to a candidate, and be able to search
personal networks of people in the company (LinkedIn is probably good at this
for hiring sales people but not very good at this for developers).

*Have a mission, and don’t be surprised at how much selling you’ll
have to do.

You need a mission in order to hire well. In addition to wanting to work with a great
team, candidates need to believe in your mission—i.e., why is this job more
important than any of the others they could take? Having a mission that gets people excited is
probably the best thing you can do to get a great team on board before you have
runaway traction.

As a founder, you’ll assume that everyone will be as excited about
your company as you are. In reality, no
one will. You need to spend a lot of
time getting candidates excited about your mission.

If you have a good mission and you’re good at selling it, you’ll be
able to get slightly overqualified people—although, in a fast-growing startup,
they’ll end up in a role that they feel not quite ready for quickly anyway.

You should use your board and your investors to help you close
candidates.

Once you decide you want someone, switch into closing mode. The person that the new hire will report to
(and ideally also the CEO) should be doing everything possible to close the
candidate, and talking to her about once a day.

*Hire people you like.

At Stripe, I believe they call this the Sunday test—would you be
likely to come into the office on a Sunday because you want to hang out with
this person? Liking the people you work
with is pretty important to the right kind of company culture. Only a few times have I ever seen a scenario
where I didn’t like an otherwise very good candidate. I only made the hire once, and it was a
mistake.

That being said, remember you want at least some diversity of
thought. There are some attributes where
you want uniformity—integrity, intelligence, etc.—and there are some where you
want coverage of the entire range.

*Have a set of cultural values you hire for.

Spend a lot of time figuring out what you want your cultural values to
be (there are some good examples on the Internet). Make sure the whole company knows what they
are and buys into them. Anyone you hire
should be a cultural fit.

Andrew Mason says “Values are a decision making framework that empower
individuals to make the decision that you, the founder, would make, in
situations where there are conflicting interests (e.g. growth vs. customer
satisfaction)”.

Treat your values as articles of faith. Screen candidates for these values and be
willing to let an otherwise good candidate go if he is not a cultural fit. Diversity of opinions and certain
characteristics (e.g. you want nerds and athletes both on the team) is good;
diversity of values in a startup is bad.

There are some people that are so set in their ways they will never
get behind your values; you will probably end up firing them.

As a side note, avoid remote employees in the early days. As a culture is still gelling, it’s important
to have everyone in the same building.

*Don’t compromise.

In the grind of a startup, you’ll always need someone yesterday and
it’s easy to hire someone that is not quite smart enough or a good enough
culture fit because you really need a specific job done. Especially in the early days, never
compromise. A single bad hire left
unfixed for long can kill a company.
It’s better to lose a deal or be late on a product or whatever than to
hire someone mediocre.

Great people attract other great people; as soon as you get a mediocre
person in the building, this entire phenomenon can unwind.

*Be generous with compensation packages, but mostly with equity.

You should be very frugal with nearly everything in a startup. Compensation for great people is an
exception.

Where you want to be generous, though, is with equity. Ideally, you end up paying people slightly
below to roughly market salaries but with a very generous equity package. “Experienced” people often have higher
personal burn rates and sometimes you’ll need to pay them more, but remember
that great companies are not usually created by experienced people (with the
exception of a few roles where it really matters a lot.)

I am sure I will get flamed for saying this, but it’s the right
strategy—if you want an above-market salary, go work at a big company with no
equity upside.

Ideally, you want to pay people just enough they don’t stress about
cash flow. Equity is harder, but a good
rule for the first 20 hires seems to be about double what your investors
suggest. For a company on a good but not
absolute breakout trajectory, some rough numbers I’ve seen are about 1.5% for
the first engineer and about 0.25% for the twentieth. But the variance is huge.

Incidentally, a very successful
YC company has a flat salary for effectively all of their engineers, and it
seems to work well. It’s lower than what these people could get
elsewhere, but clearly they enjoy the work and believe the stock is going to be
worth a lot. The sorts of people that
will take this deal are the kind of people you want in a startup. And unless something goes really wrong, at
this point, these engineers are going to make way more money than that would
have taking higher salaries elsewhere—not to mention how much better their work
environment has been.

You will likely have to negotiate a
little bit. Learn how to do this. In general, materially breaking your
compensation structure to get someone is a bad idea—word gets out and everyone
will be upset.

*Watch out for red flags and trust your gut.

There are a few things in the interviewing/negotiating process that
you should watch out for because they usually mean that person will not be
successful in a startup. A focus on
title is an example; a focus on things like “how many reports will be in my
organization” is an even worse example.
You’ll develop a feel for these sorts of issues very quickly; don’t
brush them off.

If you have a difficult-to-articulate desire to pass, pass.

*Always be recruiting.

Unfortunately, recruiting usually doesn’t work as a transactional
activity. You have to view it as
something you always do, not something you start when you need to fill a role immediately. There’s a fair amount of unpredictability in
the process; if you find someone great for a role you won’t need for two
months, you should still hire her now.

*Fire fast.

I have never met a newbie founder that fires fast enough; I have also
never met a founder who doesn’t learn this lesson after a few years.

You will not get 100% of your hires right. When it’s obviously not working, it’s
unlikely to start working. It’s better
for everyone involved to part ways quickly, instead of hanging on to
unrealistic dreams that it’s going to get better. This is especially true for the person you
have to let go—if they’re just at your company for a couple of months, it’s a
non-issue in future interviews. And
everyone else at the company is probably aware that the person is not working
out before you are.

Having to fire people is one of the worst things a founder has to do,
but you have to just get it over with and trust that it will work out better
than dragging things out.

*Put a little bit of rigor around the hiring process.

Make everyone on your team commit to a hire/no hire decision for
everyone they meet, and write up their thoughts. If you get it wrong, this is useful to look
back at later. It’s good to have a brief
in-person discussion with the entire interviewing team after a candidate
leaves.

Have someone take the candidate out to lunch or dinner. Insist that everyone is on time and prepared
for interviews/auditions. Make sure
every candidate leaves with a positive impression of your company.

Be organized—one person should coordinate the entire interview
process, make sure every topic you want to cover gets covered, convene people
for the discussion after all interviews are done, etc. Also, have a consistent framework for how you
decide whether or not to hire—do you need unanimous consent?

Remember that despite being great at what they do your team may not be
great interviewers. It’s important to
teach people how to interview.

*Don’t hire.

Many founders hire just because it seems like a cool thing to do, and
people always ask how many employees you have.
Companies generally work better when they are smaller. It’s always worth spending time to think
about the least amount of projects/work you can feasibly do, and then having as
small a team as possible to do it.

Don’t hire for the sake of hiring.
Hire because there is no other way to do what you want to do.

Good luck. Hiring is very hard
but very important work. And don’t
forget that after you hire people, you need to keep them. Remember to check in with people, be a good
manager, have regular all hands meetings, make sure people are happy and
challenged, etc. Always keep a sense of
momentum at your company—that’s important to retaining talent. Give people new roles every six months or so. And of course, continue to focus on bringing
talented people into the company—that alone will make other good people want to
stay.

Always be identifying and promoting new talent. This is not as sexy as thinking about new
problems to solve, but it will make you successful.

Thanks to Patrick Collison, Andrew Mason, Keith Rabois, Geoff Ralston,
and Nick Sivo for reading drafts of this.