Introduction: Hiring after VC Funding
You have just received a funding round for your startup. You are happy and excited for 24 hours, maybe you get caught up in the euphoria of celebration, but after a few days you realize that this money has changed the rules of the game and the main dynamics at many levels of your startup.
A business idea, an MVP carried out by a small team of co-founders or at most with the help of freelance external collaborators suddenly becomes a real company, with heavy pressure on growth and results.
One of the first things that VCs will ask you to do is to spend their money and more specifically to invest in a plan to scale up the team that can result in the short term growth in business metrics. They want you to grow fast in order to get to an additional round of funding, an exit, an IPO, or reach profitability of the business.
You will feel a lot of pressure to hire staff and to do it quickly.
My personal experience leads me to warn you. I want to point out that the recruitment decisions you will make at this stage are very important and very sensitive and can determine the future success of your company.
The question is, how to recruit for a startup without making mistakes and regretting decisions next month?
Many simplify this phase by adopting the “hiring and firing” method, that is, hiring staff very quickly and then eventually getting rid of people just as quickly in the trial period if the initial decision was unlucky or generally not a good fit.
This method is good in theory but can turn into hell in practice. In this chapter I want to explain how to avoid it in favor of the more virtuous ‘hiring right’ method i.e. identifying the best fitting people right away, quickly and with very little margin for error.
The Pressure to Hire
I have experienced on my own shoulders the insane pressure to hire received from startups that have obtained funding, depending on the type of investors and the amount of money received, this “instigation” to enlarge the team can be lighter or heavier, but still present.
In such a condition it is easy to make mistakes due to:
- haste in selecting candidates
- too many open positions at once
- hiring people whose technical capabilities (hard skills) you are unable to assess
- loss of focus on startup core business to attend to recruitment activities
- hiring paralysis (i.e., the inability to choose a candidate due to stress/pressure/fear)
- over hiring (hiring people who are too senior and qualified than necessary)
- vanity hiring (hiring people just because they have a well-known company on their CV)
Let’s analyze all these mistakes individually.
Hiring with Haste
Haste describes itself; a well-known Italian saying goes “The hasty cat bore blind kittens,” which means that haste is never good advice. When you hire for your startup you have to make the right decisions and if these take a week or ten days longer than expected it doesn’t matter. Better to wait than to make mistakes.
Haste must be governed. You have to set up a recruiting plan and stick to it (start with the Recruitment Canvas), don’t get caught up in suddenly falling in love with candidates at the first interview or be swayed by a personal eagerness to close an open position and move on to the next. Patience is the virtue of the strong and wise people and always brings good advice; beware, calm and control are not synonymous with slowness, but with thoughtfulness in recruitment processes.
Too Many Concurrent Open Positions
After getting VC fundings, you probably end up with 3-5 positions to fill in the case of a seed round, or 15 to 20 in the case of a Series A. Anyway, the fact that you have to search for these openings at the same time and within a couple of months at most puts you in the position of losing sight of quality in favor of quantity.
Hiring people is tiring. It takes time and a lot of efforts, it doesn’t come down to reading resumes and doing a few interviews, it’s a science. Sometimes you have to step back and understand which positions must be prioritized and which roles and activities that can be temporarily managed by the founders and leveraging the current team’s expertise. Finally, evaluate the positions you can internally source for (because you have the skills to understand the candidates) and the ones that should be outsourced with the help of experts in a specific field.
Lack of Skills to evaluate Candidates
Indeed, there are roles that you will not be able to evaluate directly because none of us is a living encyclopedia and you cannot be competent in every specific area. For example, if you are the founder of a startup with a technical engineering background, you are unlikely to be able to make the right selections and decisions for sales or customer success roles, if you are a founder with a long career in marketing it will be difficult for you to evaluate a React native developer…
Knowing your limitations and knowing when to rely on the help of experienced third parties is important to avoid hiring people for your startup who know how to “sell themselves” well but whose skills are not adequate for the real needs of your company.
Many times startup founders ask headhunters to help them in the search for roles they are not skilled in, but this solves only half of the process, the sourcing of potentially qualified candidates. You still need to find a solution to actually test and verify the hard skills and actual competencies of the candidates the headhunter sources for you. We believe that our ExpHire technical experts are the best solution for helping you in this process.
Hiring Paralysis
I have personally seen startups frozen by selection processes. Founders, overly busy with recruitment activities for multiple roles, found themselves neglecting the business and the product at a very delicate stage in the growth. You cannot afford to lose focus on your business. Startups are like babies: You have to take constant care of them, they do not yet have the strength to walk independently on their own legs. Remember that your job and ultimate goal is not to hire staff, but to grow your startup.
I have also happened to see in some founders a paralysis brought about by too many simultaneous selections and too many options of candidates deemed on paper to be good or by the search for perfect candidates who do not materialize. These situations lead to severe stress that can result in hiring paralysis, the inability of founders to make hiring decisions out of fear of making mistakes. Obviously, this state of mind must be avoided because startups are babies with fragile legs, and yet they are always asked to run. When you are unable to make a decision you need to ask for help; stopping stuck in fear literally accomplishes nothing.
A Common Mistake: Over Hiring
The practice of over-hiring is very common in the post-funding startup world by VCs, especially in those who receive a Series A of substance. You have a lot of money and VCs pushing you to spend it, and the natural temptation is to hire VPs and C-levels to lead the various areas of the company (and to maybe delegate to those people the hiring of the teams reporting to them). I’m telling you clearly, this scenario is a mirage that doesn’t work in reality.
People with this level of experience are used to coordinating and directing and have a lower aptitude for execution, for the day-to-day work in which they must “get their hands dirty” directly. These people normally have notice periods to give their current employer ranging from two months up to six months, and so they will be late in joining your company and will not relieve you from having to hire the teams on their behalf ( if you don’t want to risk waiting as long as seven to eight months for having in place an operational team…). These senior profiles also may be very frustrated by having to work on some operational activities for a while and possibly leave the company very quickly for that reason.
Candidates with medium experience and seniority are to be judged more favorably as they are more efficient in operations and have a strong motivation to stay with the company: they want to try to grow into senior roles quickly. In other words, grow along with the startup.
Another Startup Hiring Mistake: Vanity
Tied to the problem of over-hiring is the “vanity hiring,” that is, hiring a person just because he or she is working for a large and respected multinational company with a household name (we know which companies I am referring to…).
Very often this turns out to be a serious mistake. These people, in fact, are certainly intelligent and skilled, but their attitude to work is very vertical, specialized. In these large companies they are called upon to work on a single, well-defined product, problem or part of the process and are rarely involved in projects where an overall view is needed and where they have to adapt to “wearing several hats,” frequently in the course of the same day. Startups should avoid chasing and overpaying these “vanity candidates”, or at the limit orient themselves to those candidates who have in their CV two to four years of experience working for one of these big names, but who have demonstrated in their career the willingness and ability to deal with different contexts (scale-ups, startups, founders).
Criteria to Evaluate Candidates for Startups
We have seen what are the main mistakes and problems you can make in going through a recruiting process for your startup, but now let’s identify what are the elements on which to base a successful recruiting process:
- an understanding of the real needs of your startup
- the technical skills of the candidates (hard skills)
- the behavioral skills of the candidates (soft skills)
- the candidates’ potential
- the cultural fit of the candidates
- the motivation of the candidates
Let’s explore these concepts one by one.
What Roles does Your Startup Really Need?
At the heart of a selection process for startups there must be a need, a motivation both understood as an opportunity for growth and seen as the solution to a problem. This should represent the primary motivation for opening a job search for a role.
The mere fact that the VC who invested in you tells you that you need to hire a Head of Sales or a CPO is not sufficient motivation… You have to look at your current business, where you want to be in 12 months and figure out what the gaps are, what the real opportunities are and, based on the answers, figure out what professionals you really need, at what level of seniority and with what concrete tasks to do.
Avoid becoming like the big companies that open a position just because the person who previously held it just resigned; your business is constantly evolving and can’t afford to hire just to make a bombastic press release…
We came up with the so called ExpHire Recruitment Canvas to map all the needs of a company and to decide if a position is open or not and what it will entice. it is similar to the Startup Lean Canvas in terms of approach and philosophy so you should find it quite fitting for your needs…
Evaluate Technical Skills
Having understood what the requirements and day-to-day activities associated with a role are, your search can begin, and first you need to understand whether you are able to internally assess the candidates’ technical skills, their past work history and their achievements. If the answer is positive you need to map out how you are going to extract this information during the selection process so that you are fair to all candidates and not driven by personal bias.
If you are not able to assess technical competencies internally and/or if you want to have a final level of control/judgment with an outside eye for those that you can assess internally, you need to bring in qualified and experienced external personnel who can walk you through this task. Remember that technical skills and their verification is critical for roles that require at least 2 to 3 years of experience, if you are looking for junior figures I recommend focusing on potential. Technical skills generally can be verified in interviews (if done well…), with tests and with references checks for the successful candidates’ previous employers.
Evaluate Behavioral Skills
Behavioral skills are also an important element of candidate assessment, and it is easy to dismiss them with somewhat empty questions such as “What are three positive aspects of your personality and what are 3 negative ones?” or “Tell me where you see yourself in five years.” or similar ones.
You really have to try to investigate the attitudes and personal traits of candidates that apply to the job, based on what is needed for the role, not only in general, but also in relation to the work context (the company team and culture). In fact, there are no absolute right or wrong answers or behavioral test results in this area, only suitable for your startup’s context or less suitable (at least for the time being). Trying to impersonate psychologists and subject matter experts is a temptation that is very easy to fall into (many believe they are good “character readers…”), but relying on experienced psychologists is the solution that guarantees you will not be faced with bad surprises.
Evaluate Candidate Potential
Candidate potential is a very important aspect that is very often underestimated in recruiting processes, including those of startups. Relying solely on past achievements or skills accumulated in previous experience does not determine future performance with certainty.
The past speaks of the past, it can give you insights into the mindset, processes and mental structure of candidates, but by itself it is not enough, not least because the moment you choose to offer the role to someone the context in which this person will be operating will be your own, different from all others. So providing questions or tests that actualize the candidates in the future role with real cases they will face in your startup is very helpful in highlighting the candidates’ potential.
Is this a person who adapts his or her way of thinking, acting and organizing work according to the context? Can he/she project himself/herself into novel situations without being overwhelmed by them? Can he/she reason quickly with little data at hand? Does he/she do so with rationality and a sense of judgment? If the answer is yes to all these questions then you are looking at candidates with potential for growth in your startup. Again, it can be helpful to rely on Experts who can properly assess candidates’ potential.
Startup and Cultural Fit
Cultural fit is a buzzword and concept, one of those aspects that are considered paramount these days for a proper hiring process, especially in the startup world.
The truth is a bit different. Cultural fit is important, but it cannot be the only element of judgment; it is a component. I have personally seen good candidates rejected because they were introverted and reserved and the company culture was ‘relaxed and outgoing’. These decisions were made without taking into account the fact that we are all different and that perhaps a person may take a more formal attitude during interviews or may overcome certain natural shyness over time. In short, cultural fit should be evaluated, but keep in mind that in a startup that is growing very fast, the company culture (which is made by people and not by nice phrases written on a page of your website) is constantly changing and evolving to eventually stabilize over time.
Throw out those books that spend 100 pages telling you that cultural fit is everything. You are not looking for your next best friends; you are looking for people who can help you grow your startup. Having said that, company culture remains an important element and is the aspect that you should not for any reason in the world outsource and externalize in the recruitment process. A headhunter cannot check the cultural fit of candidates, simply because he or she does not breathe and live the ever-changing culture with you on a daily basis; at most they will be able to “sell” some “cool” benefits of your company to candidates to convince them to take part in the selection process, but are you sure you want to hire someone just because they are attracted to drinks in the office on Friday afternoons?
This is the reason why at ExpHire we do not focus on assessing cultural fit and ask our clients to collaborate in evaluating this component to get a full picture of candidates.
Find the True Motivations
Understanding what candidates want from their lives in general and their professional lives in particular is not easy. People lie and to classic motivational interview questions they give ready-made answers (perhaps read in a blog post) to fill your founder ego, but not necessarily being truthful.
The only way to understand the real motivations of candidates is to get a holistic view of their career path, their skills, their potential, and their cultural fit. Having obtained this overview you have to try to understand the internal coherence among all these elements, you have to “zoom out” and widen the field to an overall view and see if there are any points of contradiction that might be a red flag.
I once had a candidate who was a finalist for a very technical position I was taking care of as a hiring manager. This person told me during the interviews that he wanted to get involved with a startup and was ready to go beyond his current role to engage with the needs of a high-growth environment. However, when I asked him questions related to potential in which I pushed him to try to identify with the role and find solutions to real problems, his answers were always and consistently centered on his prior skills and never went to explore adjacent areas. The candidate never demonstrated with his answer the ability and the real willingness to “wear different hats.” I quickly realized that this candidate was just fed up with working for a big company, but the truth is that his attitude really makes him better suited to work in a structured company with a very well-defined scope of tasks. In short, he is a good candidate, but not for a startup.
This is to say that you need to go beyond the explicitly expressed motivations and be able to read those traits that emerge implicitly along the selection path that very often turn out to be the most authentic ones.
Hiring for Startups: Conclusions
Does the Perfect Startup Candidate Exist?
The answer is no, and I would add, fortunately!
Startups are constantly evolving companies, and what is right today may be completely wrong six months from now. You need to focus on hiring people for your startup, always aware that there is no such thing as the perfect candidate, but there is the right candidate for current and near future needs. Remember that if you impartially analyze candidates from all their attributes, hard skills, soft skills, potential, cultural fit, you have a good chance of finding not only the right person for today’s needs, but also the one who has all the qualities to evolve and transform over time together with your startup.
Making mistakes (and learning from your mistakes) is part of life. Even selection processes can lead to disappointing results, but the method and solutions I mentioned are a good model for trying to minimize, as much as possible, the possibility of making errors.
What do you think? What questions and processes do you use to avoid making mistakes when hiring staff for your startup?
ExpHire: We are Here to Help Startups
At ExpHire, we help startups in their selection processes by supporting them with our innovative methodology based on Company>Role>Candidate Fit and with the help of Experts, managers in the same field as the sought-after figures, but with more experience, who are able to evaluate your candidates impartially. We also use Behavioral Expert so that you can have a full picture of your final candidates and make an informed and successful hiring decision