11 Things to Consider Before Making the First Hire

I once sat in a meeting where a leader was making a case to hire another 50 people on their team in the coming year. It’s the only way we’ll hit our targets, achieve our goals they exclaimed. I remember sitting there thinking – “wow, wonder what they’re all going to do.” A year later the goals weren’t hit, but everyone was hired. Turns out it was never really about the people.

When you’re first getting started the most precious thing you have is “focus” and hiring is the anti-focus.

You should hire slow, I am talking sloth slow. I am not talking about interviewing slow, I am talking about even considering to hire.

Feel the pain that comes from wearing multiple hats, performing multiple duties, and not getting enough done. Your business will thank you in the long run.

If you fall into any of these categories, this advise does not apply:

  • You have raised capital (whatever stage you’re in, you have already made a commitment to exit at some point whether you know it or not);
  • You want to be a unicorn;
  • The “opportunity” is finite, limited;

If you fall into these categories, it does apply:

  • You are bootstrapping;
  • Not interested in raising capital;

More People != More Production or Value

One of the biggest mistakes I made in my past-life was hiring, hiring way too many people unnecessarily way too early. What I learned is that people beget more people and it’s really easy to succumb to the hiring death spiral.

Here are some ugly truths about hiring:

1 – The toughest part of your job when you hire people will be the people. No one will ever care about your brand the way you might want them to, regardless of what they might allude to when you interview, and when push comes to shove a decision will be made that benefits the person 8 out of 10 times. People management is an art in it of itself, and it’s often something many founders have no experience or interest in.

2 – Your hires will not all be good hires. Resumes lie, people lie, and people can turn into cancers really quickly. Firing can be especially difficult, and is further complicated by the various jurisdictions you might operate in.

3 – The economics don’t always make sense. Your biggest line item, regardless of business type, will almost always be people. No matter what you do, it will rarely be enough. For every dollar you spend on a person, expect to spend anywhere between $.25 – 1 just in overhead (e.g., insurances, benefits, etc…).

4 – It’s about what you will do for them, not what they will do for themselves. Perhaps the biggest frustration you will encounter is this continuous “what are you doing for me?” mentality. Very few will do for themselves, but almost everyone will expect something given to them – I want you to invest in me, I want tuition reimbursement, I want training, I want this tool, I want… when you ask them what they have done for themselves, it’s often a blank stare.

5 – One individual will almost never produce what you expect. An individual will only produce so much before they realize they can’t maintain the pace, and will ask for, demand, a bigger team.

6 – More people will require more processes. Everyone thinks they are ok with having no processes, until someone needs to get reimbursed, or someone is looking for insight into how to onboard a new customer, or someone is trying to figure out the company systems.

7 – More people will require more structure. With more people comes the need for more structure, more tiers, more leadership. With the introduction of these layers comes more separation and more roadblocks.

8 – More people is not mutually exclusive with more, good, work. More often than not you’re going to make bad hires, and those bad hires are not going to yield a net-positive outcome. They will actually likely yield a net-negative outcome.

9 – Must account for progression. People don’t want to be paid the same for ever. They don’t want the same title for ever. This will creep up faster than you might think (< 1 year) if there is a lot of work to be done.

10 – Systems will never be good enough. More people, more opinions, more ideas, more feedback. That is the cycle, and you will never satisfy that cycle. It can be your HR system, your Admin system, whatever you have, people’s demands will grow as the business grows and those systems will become critical parts of your company requiring their own maintenance and support operations.

11 – We live in a socially awkward time.

It’s Ok to Wait on Hiring

These 11 things are the things I look at and think about when I consider hiring. They are lessons I have learned, and things I don’t often hear discussed openly but are real things that every founder should be aware of.

I don’t hate hiring. The opposite actually.

I think it can be especially critical for companies. Where I differ, however, is in the timing. Things today are so dramatically different than they were a decade ago. Platforms like Upwork are changing the game when it comes to finding talent to solve specific problems, while reducing the overhead, and associated risk, of having “employees”.

I believe when you think you need to hire, you usually don’t need to, and when you think you need 5 people you probably need 1. This is especially true for bootstrapped companies. For every positive thing that comes from hiring, and there are many, there are also a number of negative things that you should be aware of.

Waiting to hire until you feel the burn gives you one really great advantage – you quickly learn what matters, and what doesn’t…

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