5 temptations to hire at your startup — and why you shouldn’t

When you’re the founder of an early-stage startup, you know your top job (perhaps second only to finding a product-market fit) is to build a winning team.

Investors will ask you who your cofounders are, press will want to know how many employees you have, customers will be leery of taking a chance on a new product from five underpaid employees in a low-rent office. Even your friends and family will ask the loaded question, “How big is your team now?”

So it’s not surprising that a founder’s inclination is to hire. And for sure, hiring outstanding people is crucial to success. It also comes naturally to many founders, given we’re so excited about our idea and want to tell everyone we can about it.

That’s why one of the things Ben Huh, CEO of the Cheezburger Network, told me a few years ago really struck me. To paraphrase him, in the early days before you’ve really found a product-market fit, don’t hire people unless it’s excruciatingly painful to leave that role unfilled.

Don’t hire people? That sounds weird coming from me, the founder of a job matchmaking startup. But oftentimes, making it work with a smaller team and not hiring is the right call.

For an early stage startup in particular, the cash cost of adding another permanent member to your team, the risk of the person not being the right fit, and the potential for that hire to prevent you from making a more crucial hire in the near term are huge. It’s not just making a “bad” hire; even making a non-crucial, so-so hire could make or break your company. At the earliest stages, every hire has to be a game changer. Otherwise, you’re spending your time and money on the wrong things.

Based on my experience matching prospects to the right roles, along with mistakes I’ve made as a founder in hiring, here are five scenarios that may tempt you to hire — but you should generally resist them unless this person is going to move your key performance indicators (KPIs) 30 percent or more in their first month.

1. She or He is a Rock Star

They’re a MIT computer science undergrad with an MBA from Stanford, who also happens to be one of the early engineers at Palantir. This person probably exists somewhere and if you crossed paths with her or him, you’d probably be crazy not to try and add them to your team.

The notion of a “trophy hire” is very tempting. The key question to ask yourself in this scenario is this: “Are they talking to us for the right reasons?” Furthermore, is there real alignment on worldview, are they ready to join a pre-scaling startup now, and most of all, is adding this engineer the most crucial thing for the company right now?

2. Your Team Makes the Introduction

This one is hard because you’re always asking your team to make referrals — and finally one of your top employees does so and vouches for the person big time. So you know there’s a good chance the person will be a fit.

But beware of putting on your closing hat too soon. It’s natural to size someone up and if they seem legit, to start scheming about how to get them to join your team. These “opportunistic” hires can be dangerous. Maybe the referral isn’t that jazzed about your company. Moreover, maybe you only have budget for one hire this quarter. Is this the role you want to use one of your few precious seed stage hiring bullets on?

3. They See the Vision

We spend all day trying to help people understand why our company is special, and most of the time people either don’t get it or don’t really feel the calling in their bones. This person, often a power user of your service, totally gets it.

As awesome as this is, hiring them and finding a spot for them is something for when you’re a much more mature and stable company. If you’re really early stage, you don’t have bandwidth or budget to make “opportunistic” hires. Get the four wheels onto the car and get it rolling before thinking about how to integrate a tablet computer into the dashboard.

4. He or She is the Missing Link

There are common roles at startups, which aren’t present on your team, and people you respect are blogging or tweeting about how crucial they are to the winning startup formula. Do you have a growth hacker? A “Sheryl?” A mobile developer? Data scientist? I could go on and on.

It could be tempting to hire someone that fills one of these roles just because you know you’ll need them eventually and you want to feel like you’re not missing out. When that time comes, hire them. Until then, stop trying to collect baseball cards. Instead, form the smallest team that enables you to build a real business. If you really need a data scientist, it will be painfully obvious.

To find more exclusive insights from tech industry insiders,
explore VentureBeat’s selection of recent guest posts.

5. You Have New Money to Spend

You just raised some money. Don’t feel like you have to spend it right away — even if you told your investors you needed the money to grow the team. Only you know what you really need right now. If it’s more people, then have at it. If it isn’t, then don’t just hire to go through the motions of what you think a growing startup ought to look like or in an effort to hit some implied valuation.

At the end of the day, that latest financing round could be your last, so don’t hire anyone who isn’t moving the needle in a crucial way for your business. After all, hiring this person will probably make you more dependent on future capital raises. Are you ready to hit Sand Hill road earlier and raise more money with a higher expectation on metrics and traction in order to make this hire work?

These five scenarios make me sound like a un-recruiter; but the truth is, finding the “talent / need fit” can be as difficult as finding product-market fit.

Tom Leung is the CEO and founder of Poachable, an anonymous career matchmaking service.