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Hiring Insights from Some of the Most Promising Start-ups

By November 3, 2020Consulting, Recruitment

Hiring the right people can make or break startups and propel them towards an amazing journey. It is a fact that 9 out of 10 startups fail and hiring the wrong people is one of the top reasons. A recent study published by CB Insight indicates 23% of startups fail because of an inadequate team. We looked at some of the most famous startups to understand their successes and failures related to recruitment and share lessons learned from those examples.

We see many startups who have developed hiring processes that allow them to get the best talent in the market. Conversely, some startups struggle to fill in important positions, which burdens co-founders and existing team members.

Gal Amog, the CEO & Co-founder of Talenya says some companies fail to hire people for months or even a year and on the other hand some companies can hire the right people quickly and grow a lot. He says that the standard argument that “there are no good candidates in the market” does not hold and it is a lot more about bringing accountability to hiring.

All of us have witnessed startup founders focusing on their products & customers. Most of them build very interesting products but when it comes to scaling up their business, they have to trust others. This is where hiring a great team can make a difference and help founders focus on the strategic issues instead of day to day operations.

Therefore, here are some examples of startups we could learn from:

Stripe
Stripe, a leading payment solution, has developed one of the best engineering teams in Silicon Valley. According to Patrick Collison CEO of Stripe “With a lot of our products, if we hadn’t done it at that moment, hopefully, by being customer-centric, a year later we would have realised we should do it. I think the things that counter-factually really mattered are hires.”

One of the key things that helped Stripe was referrals. The company relied on the network of their early hires and was able to develop and hire the best talent in the market. Another strategy the company employed was to continuously organise various community events, which allowed them to attract the best talent. Lastly, Stripe hired people instead of roles and trusted their instincts instead of circumstantial evidence like work experience at Google.

LinkedIn
LinkedIn is a leading online professional networking platform, which is widely used by recruiters and job seekers across the globe. The Cofounder of the company, Reid Hoffman is a leading internet entrepreneur, venture capitalist, and author. Hoffman says that hiring the wrong people who had experience working in large companies was one of his key mistakes while launching his first startup SocialNet. He admits that he should have hired learners who could twist, turn, and pivot instead of experienced “knowers”.

He hired many people with over 10 years of experience but they were not willing to learn and were too certain of their abilities even when they should not have been. He suggests avoiding bad hires as much as possible as those bad hires can multiply and damage your company. Another thing Mr. Hoffman suggests is to think of early hires as cultural co-founders as they set the tone for the company culture. Lastly, he suggests creating a diverse team is equally important for creating a successful company that can make an impact.

Slack
Co-founder & CEO of Slack Stewart Butterfield is a huge champion of empathy. He believes hiring people who have humility, empathy, and respect for everyone is the key to building great products and great companies.

Slack is very well known for being a champion for Diversity & Inclusion and CEO Mr.  Butterfield believes hiring diverse employees is the key to building a great company. According to a company press release, Slack has the highest proportion of female and black engineers of any technology company. Some other factors that helped Slack hire great people were removing biases and stereotyping from the hiring process.

Deliveroo
Deliveroo as the name suggests is a leading food delivery platform in the U.K with a valuation of more than $2 Billion. William Shu founded the startup when he moved from New York to London and could not get food delivered to his office.

Having a flexible expansion plan that can be adapted on the fly as well as getting the right mix of local knowledge and ‘central office’ culture is essential to success when scaling up, according to Founder of Deliveroo, William Shu. When you build a team, the most important thing is people who share the hunger you have to achieve the same vision. This can mean people of different backgrounds. “I consciously hired people that have been through scale before because I’m a first-time entrepreneur,” he says.

Zenefits
Parker Conrad founded Zenefits in 2013 focused on delivering HR Cloud services to businesses. The company was valued at around a whopping $4.5 Billion, which is quite an achievement, and it grew very fast during the first two years however, it started to crumble due to the founder’s mistakes. The founder of the company failed to hire people for important positions and he did not trust other people enough. This led to a lot of problems and mismanagement, which ultimately led to the resignation of the Founder however, the company is still operating.

TinyOwl
TinyOwl was a Mumbai based startup, which managed to get an investment of more than $27 million. TinyOwl was an online application, which allowed people to order food from nearby restaurants. The failure of the startup resulted from Over hiring which led to a ballooning of running overheads and when the management realised it, they fired more than 300 people in 2015. This led to a hostage situation where the founder of the company was held for more than two days by ex-employees. In addition to this, the company had inexperienced leadership and the gap between management and employees grew a lot.

Fruitcast
We all know Neil Patel as an Internet Entrepreneur, Digital Marketing Guru & Angel Investor. He shares the story of one of his startups Fruitcast, where he failed to hire loyal and passionate employees. He says that usually startups have tight budgets and they sometimes forego promising individuals to hire someone who can work with the pay they can afford. However, this proved to be a disaster and lots of missed business opportunities and finally, the startup had to be shut down. Neil Patel says hiring badly is one of the top reasons startups fail and founders don’t pay attention as much as they should.

Lessons

Now that we have gone through the stories of quite a few startups and looked at their hiring failures and successes, here is what you should keep in mind while starting your business:

Focus & Accountability in Hiring:
The hiring process should be one of the key focus areas of the founders if they want to grow their startup. While Product Development & Customer Experience is important, many founders think what really matters is hiring the right people to do the job.

Many startups do not bring accountability to their hiring process, which leads to problems. Every step of the hiring process should be carefully crafted to remove bias and hire people that align with your vision and culture.

Focus on Early Hires:
Early hires set the tone for the future of the company and Reid Hoffman stresses on meticulously hiring first few employees. He sees them as cultural co-founders and rightly so, as these few individuals can literally make or break your startup.

Bring Diversity To Your Team:
Hiring a diverse group of people can significantly elevate your startup performance. When people from different backgrounds work differently with different ideas and work towards a shared vision, magic happens. Ensuring diversity and inclusion can also elevate the profile of your startup and you can attract better talent from the market.

Technology companies have been traditionally white male-dominated in terms of workforce and ever since diversity has become the focus of people, many startups try to use diversity as a buzzword. Founders should focus more on the action and creating opportunities for females and other minority backgrounds instead of creating buzz around diversity.

Hiring Too Fast or Too Slow:
When experiencing growth, many founders are susceptible to hiring too fast and they end up over hiring people thus costs end up shooting up. This is especially true when a startup has raised funding and is ambitiously targeting growth, however, hiring should not be done for the sake of hiring. Conversely, some startups hire too slowly which means they fail to grow quickly and their lack of trust and risk appetite leads to problems.

Hire Loyal & Passionate People:
Hiring people who are loyal and passionate towards your vision can go a long way. We believe hiring for loyalty is the best way to create a prosperous future for your startup and create a community of people who work hard, and stand with each other in difficult times.