What hiring 50 people a month taught me about scaling a startup

Nov 26, 2018 · 5 min read

At my first startup, our onboarding was a well-oiled machine. It was basically zero to hero in six weeks. Two weeks to pass the test, two weeks in the classroom, two weeks on the phones and then new hires would be on the sales floor.

But just because we could get 50 people onboard each month, it didn’t mean everything went smoothly.

A period of rapid growth is an exciting time for any startup, but it’s also full of potential for things to get off track.

As an early team member at three different insurance startups (I’m now VP of Operations & Sales at Cover), I’ve witnessed first hand some of the challenges of extremely rapid headcount growth at startup.

Here’s what I’ve learned about how to overcome them.

1. Hire on top of a sustainable strategy

The key is to not get hooked on rapid growth and instead to pay a little bit more attention to total profitability.

Look at a company like Zenefits. They hired 1,800 people or thereabout in a twelve month period of time. Obviously there were other missteps there, but more often than not, when you get that funding money, there is a lot of the pressure from venture capitalists to grow, grow, grow.

You have to run a fine line between being able to keep your investors happy from a growth perspective and scale in a way that will be sustainable. Making sure your fundamentals are sound before you scale is crucial.

2. Build a hiring funnel

If you want to grow your team fast then you essentially need to set up a recruiting funnel.

When I’ve been part of companies that were hiring rapidly, we would leave no stone unturned. In one case we used almost every single agency in Boston, along with an in-house team of seven recruiters to deal with potential candidates.

From there, it was actually very similar to sales in terms of making sure the process was highly structured and highly repeatable. How many resumes they were reviewing each day, how many phone calls they had, etc.

3. Divide and conquer

One of the biggest things you see is companies trying to to do too much at one location and saturating that market. One of approaches we took was opening an office in another part of the state, so it wasn’t just trying to hire fifty people a month in one location.

We could go ahead and hire two classes of 10–15 people a month in each location. This helped break it down in to more manageable hiring groups.

4. Don’t assume a hiring manager will solve everything

At previous companies, we hired what was essentially a hiring manager that had a lot of recruiting experience on the sales side that really understood what we did and what we were looking for.

That freed up a lot of time and helped from an operational efficiency standpoint where that hiring manager did the majority of the interviewing. It took some time to grow into that system and for everyone to sync up, but we were eventually able to get more people through the door this way.

There are benefits to a hiring manager but from my experience, it’s a role you have to grow into as an organization and it takes a lot of effort to get there.

5. Do more than throw bodies at the problem

The biggest issue is people become overly-reliant on human capital. This is particularly true if you are growing your sales team.

Basically, if you are just keeping in mind that to grow you need more salespeople, then your unit economics are not necessarily going to improve. If they’re not positive to begin with, it’s only going to get worse with continued growth.

Don’t just throw bodies at the problem for growth. You need to find ways to become more efficient as well. If you grow from a technological perspective, meaning you can do more with the people you already have, then you’re a lot better off.

6. Have a marketing budget to support the team

A common misstep I see is the misunderstanding that the big cost isn’t on the actual people that you’re putting in the building — it’s the spending to generate the level of business you’ll need to grow.

If you hire 100 sales people, you’re going to need to make sure that your marketing budget aligns with that to keep those people well fed.

You’re going to need to make sure they have enough leads to be able to generate those sales.

The majority of expenditure is going to be on the marketing side, not paying salaries. It can be pretty expensive to market for that size of a sales force.

7. Foster a culture for retention

When you hire that many people a month, you want to make sure the new hires are happy, that everyone is fully engaged, so you keep the people you hire.

There’s multiple layers to good onboarding. We’ve done things like a pizza night before new recruits started so they could get to know the team; having different leaders come in and introduce themselves on Day One and arranging lunches with different leaders to make them feel welcomed and part of the company.

Of course, that’s really hard when you’re hiring that many people. We really did everything we could to make sure our employees felt valued and comfortable coming to work.

The other thing I’ve seen prove the most durable for keeping employees is setting clear expectations and being honest. I wouldn’t want to come to the office if I didn’t know what people thought about my work. Having that kind of transparency helps.

Ultimately, growing rapidly without any disruption is hard to do. It’s a lot of change to manage at once.

By building on solid foundations, implementing robust scalable processes and remaining focused on staying efficient, you can steer clear of some of the pitfalls of growth and scale your startup sustainably.

David Gagnier, VP of Operations and Sales @ Cover

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