Hiring The Right Team
Hard-Won Wisdom from First-Time Founders
It is an absolute privilege of my job to work closely with passionate, talented founders every single day. In helping our companies address some of their unique challenges, I find myself getting or sharing foundational advice that CEOs tell me they had learned earlier. Instead of keeping these struggles secret, we’d like to reflect with transparency on the most important lessons learned the hard way by LaunchCapital’s first time founders when building products, acquiring customers, and successfully scaling early-stage companies!
As Tolstoy wrote, “Happy [startup] families are all alike; every unhappy [startup] family is unhappy in its own way.” Not all advice will apply to your company, nor should this post be taken as exhaustive. Rather, this crash course is to present actionable techniques combined with founders’ examples to guide you towards the beginnings of a gameplan. Let’s dive right into one of the most consistently time-consuming, frustrating, but singularly important steps of every founder’s journey: Hiring the Right Team.
May The Best Team Win!
“When starting a company, you are also hiring yourself. You need to treat yourself as an employee, with your own strengths and weaknesses to manage, and build a team around them.” — Albert Nichols (Hall)
The first thing no one tells first-time founders and CEOs is just how much of their days (and nights) — often upwards of 50% or 60% — will be spent on finding the ideal hire to address specific needs at any point in time. If you’re going to spend the majority of your time doing a thing, it’s prudent to establish a system not only for yourself but also for the future VPs and managers who will one day be hiring in your stead. Codifying their system is especially important for younger first-time founders who (may) have less experience hiring and managing teams in previous roles, and thus have fewer battle-tested instincts to trust.
Every employee of a company goes through four states during their time with a company. Building the best team means the CEO must optimize each stage of the process for their company:
- Recruit: Fill the funnel with as many relevant candidates as possible.
- Hire: Develop efficient evaluation processes to make successful hires.
- Develop: Onboard, upskill, and promote to encourage retention.
- Exit: Improve declining performance and cut underperformers.
Note: While this post focuses heavily on hiring, our founders have shared lessons that will touch on all four interconnected stages.
Lesson #1: HOW You Hire Can Be As Important As WHO You Hire.
Establishing a system for hiring starts with an accounting of your own skillsets and deficiencies. The more detailed and honest you can be with yourself and early team members, the better you can identify gaps and correct for them. Krystle Mobayeni, CEO of BentoBox, stressed this in our 1:1 interview with her last year:
“Understand your limitations. At the beginning, I was not an expert on every topic. If I had pretended that I was, I think it would have led to a lot of problems.”
The single most consistent advice from our founders? Hire. Slower. Modumate’s CEO Richman Neuman was kind enough to share his own hard-learned lesson on this:
“As a domain founder (I’m a licensed architect), I thought I knew exactly what needed to be built. Once we’d closed our round I was hungry to staff up Modumate ASAP and go fulfill that dream. But after hiring 3 engineers and a designer, in a span of just 4 weeks, two things quickly dawned on me.
First, Modumate had no immediate time constraints on our success. Second, Modumate’s core value prop had several tough technical nuts to crack, which needed to be cracked consistently by the same brains (my CTO and I), before the rest of the product could take its specific form. This encouraged us to slow down and downsize back to 3 people about two months later. As long as these two constraints remain true, hiring up is a reckless use of limited funds.”
Early in a company’s life, I’ve watched founders quickly fill for roles in the near term that they could do themselves but don’t have the time or inclination to do. While tempting, this leads to a weaker team, higher attrition, or at the very least, more work for CEOs in employee upskilling and development. To fight this impulse, after you establish your baseline needs for a role, optimize for candidates who are clearly better than you. Yumble’s CEO David Parker has ideas on this:
“Assuming you’re able to do so yourself, perform the job you’re hiring for as long as possible. This is meant to help you (a) know what to look for in the right hire, and (b) appreciate how to better manage someone in that position. You may also find that you won’t actually need to hire someone in that position for a while.”
Performing in this role yourself will also lead you to the creation of your “must-haves” checklist which you’ll (a) craft into requirements as part of a job posting and (b) later use to form the basis for your screening/interview questions. Remember that this job posting is likely your company’s first impression on the candidate. Especially for more generalist roles, providing specificity on how each function or job requirement directly impacts a core goal or strategy of your business can help a candidate self-select whether your company is really right for them.
Albert Nichols offers a corollary to Hire Slow:
“Don’t just hire slowly. Make sure you hire slowly while still meeting and reviewing a lot of candidates. Just because you’re hiring slow doesn’t mean you should consider candidates slowly.”
Managing a steady flow of candidates within a hiring pipeline is another facet where first-time founders struggle. Just as first impressions are important, last impressions will be critical. Most candidates you will meet through this hiring process will not work for you. The more dogmatically you track candidates in the hiring funnel (incl. dates, referral sources, interests, skillsets, interviewer feedback, etc.), the easier it will be for you to communicate passes and build positive rapport. The positive impressions you leave on candidates and referrers through your company’s hiring practices will only improve your chances of future hires and increases the odds that they won’t dissuade the next qualified person from applying.
Lesson #2: It’s Worth Waiting (& Paying Up) for the Ideal Person.
Any of our founders will tell you that the perfect hire doesn’t just materialize and the evaluation process takes a tremendous amount of time for the CEO to get right. For CEOs building an interviewing framework, Elaine Wherry’s STAR-1 assessment is a great place to start:
- Skills: Test a candidates ability to actually do the work whether it’s a code review, case study, whiteboarding exercise or other “take-home” assignment.
- Team: Focus on past roles, performance, culture, and collaboration. Ask about constructive feedback they’ve received and how they’ve internalized it, as well as decisions made that they disagreed with at their past companies and how they reacted.
- Adaptability: Evaluate ability/willingness to step outside of their comfort zone or the role for which they were hired to pitch in and support teams on immediate, ad hoc needs.
- Results: Key in on past ability to identify, measure, and achieve goals and how they could replicate that process in this current role.
- 110%: Ask about their greatest achievement and drill down on the ways that they went above and beyond (110%!) what they were asked to do for the organization.
Note the importance here of primarily backward-looking “behavioral” interviewing vs. forward-looking questioning. I especially love this approach because it helps identify the more introspective and self-aware candidates, who understand their own weak spots and how to balance for them.
In BentoBox’s early days, Krystle notes that Adaptability mattered way more in candidates while today Skills specialization has become more valuable: “At the start, everyone was a bit of a generalist, including our leadership team. You need to be able to jump on the phone if it’s ringing and no one is there to answer it — even if you’re the CTO. These jobs have really changed, and now our leaders are running more specialized functions.”
Many founders re-iterated that willingness and ability to learn is more important than almost anything, but MindMate CEO Susanne Mitchke urges that some things like Team, are where you should never compromise:
“Hire for culture! You can always train people! As a first-time founder running a hiring process, I felt like I needed to hire the “best candidate” which I defined as (1) relevant previous work experience (2) industry expertise and (3) in my budget. I did not really care if s/he was a cultural fit. However, people who don’t fit into your organization culturally will inevitably slow down your full operation. And if a person becomes toxic to the team, you need to let this person go even if they are, individually, a high performer.”
And when you are sure that you have the right person? One of our founders (who I chose to anonymize so their next hire doesn’t break the bank) stressed that you need to do whatever must be done to close the hire.
“For roles that will be crucial for developing your competitive advantage: pay what it takes — in equity and/or in salary — to get truly top-tier talent. The difference between the best and very good may be worth many, many multiples of that person’s salary.”
Lesson #3: When it’s Time to Make a Change, Don’t Hesitate.
On my first week ever at Techstars, I introduced myself to a founder and asked her if there was anything I could do to help. She considered for a moment and said: “My marketing coordinator is not working out and I need to let this person go. Have you ever fired anyone?” Despite being in manager positions, at that time, I never actually had to let someone go. I’ve since come to personally appreciate just how stressful and distressing it can be for our founders to fire people from their teams. With rare exception, those decisions have turned out to be the best ones for the overall growth and health of the startup.
MindMate CEO Susanne Mitschke: “You will make hiring mistakes! And when you do, don’t wait too long until you fire… For the first employee that did not work out, I waited way too long. Even if it is a very unpleasant feeling, better do it fast than drag people along for too long because that will also slow down your company.”
Hall CEO Albert Nichols: “I learned that when the business changes, you have to change your team too. Some founding team members may no longer be a good fit and it’s up to you as CEO to course correct and ensure the team is best positioned to help the company succeed. If something is not working, address it head-on, create an action plan, and if that’s not met, it’s time to part ways.”
Modumate CEO Richman Neumann: “When deciding whether to downsize, I asked 4 advisors who had collectively run 10 companies whether it was the right idea. They all said, “In every rough patch at every company, the only regret I had was not restructuring sooner. It’s the difference between a healthy and floundering company in 12–36 months.”
Given its importance, we’ll save learnings on measuring underperformers, developing performance improvement plans, and the art of having tough conversations for a future deep dive. In the meantime, I shared these anecdotes above to help first-time founders understand that while transitioning people out of your organization should be a moment for sober reflection, it is an unavoidable and entirely normal part of the process of building an early stage company.
The Investor’s Introspective
Just as founders ought to spend time developing consistent processes for hiring teams, as an investor, I want to make testing a founder’s ability to effectively hire and manage, a bigger part of my diligence process. While I don’t expect every founder to come in with a fully formed hiring playbook, it's important and more than fair to probe how deeply they have thought about their own weak spots and how they plan to hire around these.
Best practices around recruiting, hiring, developing and exiting that are established early will come to shape the very culture of a young company and thus, good decision making will compound over time. Unfortunately, a lack of thought and haphazard planning towards these same critical processes will compound even more quickly in the wrong direction.
“Your startup is your baby, and your first employees are its other parents…. If you succeed, you will enjoy spending long hours together and marvel at how well they are spent. It’s a magical feeling. If you don’t, be prepared for your personal productivity to be cut by +40% and those long hours to become added stress, not added magic.” — Richman Neumann (Modumate)
If you liked this story and found any of the advice useful or actionable, please hit that 👏 button 10+ times and share it with your favorite first-time founders!
Finally, I cannot express enough gratitude to our stellar founders for their time and feedback on this piece. Thanks again to Albert Nichols (CEO of Hall), Susanne Mitschke (CEO of Mindmate), David Parker (CEO of Yumble), Krystle Mobayeni (CEO of BentoBox) and Richman Neumann (CEO of Modumate) for their honesty, transparency, and willingness to share these lessons for our readers. Look forward to doing more of these deep-dives for you all soon!
