Tuesday, February 9, 2010

Hiring Techniques for Early Stage Startups: How to Get Your First 3 Employees

So you just raised $1 million in seed funding and need to hire the first ~3 engineers for your team. You have gotten a bunch of high level advice from your investors e.g. "only hire A players" and other truisms that don't actually help you hire anybody.

What are some tactical steps you can take to bring on your first 3-5 employees?

  • Work Your (Engineering) Network (In Person If Possible): Go after the smartest developers you went to school with or worked with. If they are not available, ask them who their smartest/strongest friends are. (note, smarts alone are not enough as I wrote in a blog post here.). Constantly and consistently hit up people you know for leads via email, IM, phone calls, walks. I have found that typically engineering people and product managers provide the best leads. BD/sales people and VCs provide the worst ones (more on this in a minute). Typically asking someone in person for help (E.g. over coffee) will lead to more leads/intros then a phone call or email.
  • Investor Intros (Will not be helpful for hires 1-5): People who network with VCs are typically not the 'low in the organization, straight out of school, scrappy, badass engineering hire' you are looking for for your first 2-3 hires. Usually investors know people later in their careers who have worked in their portfolio (or who network a lot). These types of people typically want to manage a bunch of people but not really get their hands dirty with all night coding. This is often the worst possible first hire for you on the engineering side - they will be expensive (cash and equity), not do a lot of work themselves, and potentially bring in a lot of habits from their enterprise software (or whatever) experience. There are always exception to the rule, but I have found this to be true more often than not. (One venture firm that is actively trying to buck this trend is Andressen Horowitz. I have been pretty impressed by how they think about helping their portfolios with early stage hiring. There are other counter examples - e.g. Rajeev Motwani had an amazing group of engineers he would refer).
  • Investor's Closing Candidates (Superhelpful). Where investors can help out is in closing a candidate. Once you get to the point where someone is debating your offer versus another one - that is the time to pull your investors in to close the deal. The investor will help give a 3rd party, "Officious" view of why your company is so amazing. Candidates will think "wow, if investor X who funded all these great companies is also funding this one (and taking the time to talk with me) I sure as heck better join this startup!"
  • How to Use LinkedIn: (i) See who everyone you know on LinkedIn is connected to. (ii) Ask each person you know who is connected to someone who looks like a good engineer for an email intro. (iii) Do *not* use LinkedIn messaging to make this request. Send the email directly to the person's personal email address. They will then forward it to the candidate's email. (iv) The candidate will see the email in their inbox and think "Wow, my friend Sameer passed this on personally - I should really talk to this startup founder". Anything passed directly on LinkedIn via their messaging system will largely be ignored. (v) Make sure to personalize the email to the candidiate and use social proof that your startup is badass (e.g. mention investors if they are well known, link to a TechCrunch/GigaOm/Venturebeat article etc.)
  • Don't Take No For An Answer. Often the first reply to an email introduction by your friend to a candidate will have the candidiate reply "Sorry, I am not looking now". At this point you should not say thank you and move on. Instead, ask for 5 minutes of their time e.g. "I understand you are not looking. Nonetheless, I have heard great things about you. Can we talk for 5 minutes just in case you are interested in the future or know someone else who might be interested in the role". Many of the best people are not looking. You need to convince people why even though they are not looking, yours is an opportunity they can not miss. Furthermore, even if they are not looking now, they may suddenly have a new boss they hate 3 months from now and they will follow up with you then (this has happened to me over and over - people follow up a few months later and want to talk again).
  • If Someone Does Say No, Ask For Other Leads They Know.
  • Talk With Manager/Director Level People Even if You Wont Hire Them. Some people avoid reaching out to manager or director level hires as they may be "too senior" for the role you are hiring for. This may be true, but they have managed a large number of people in the past. Ask them to refer the top 2 people who no longer work for them to you.
  • Its a Numbers Game. Fundamentally, hiring a great early team is a numbers game. Hiring may become your full time job for a few weeks. Just like any other sales job, you will need to generate a pipeline and keep the pipeline full of candidates as you churn through people looking for a great fit. Do not compromise! It is much easier to hire then to let someone go, and the cost of an early mistake may be high. Be smart about it - throw ou bad candidates early and focus your energy on the good ones. You will be under pressure to get your product built, or get interview fatigue. No matter what - keep cranking on hiring! This stuff is important! Don't give in!
  • Employee #1 Is Going to Be The Hardest. Finally, you need to keep in mind that of all employees to bring on, the very first hire is going to be the toughest one to get on board. Equity expectations may be out of whack with reality, and people may in general have a hard time taking the leap to be the very first employee to believe in you. Two tips on this one (a) stick with it. You will find that first hire eventually. (b) look for people from startups that are not doing so great, as long as the candidate has not been there for many years. If they have been at a failing/not good startup too long, it often means they either have bad judgement or that they will be burnt out when they show up on their first day. However, if they are at a startup, it shows their willingness to take risk. Alternatively, look for people who used to work at a startup who are now at a larger company (e.g. one that bought their startup). This is not a hard and fast rule, but rather another criteria you may use when asking who in your network may be most willing to take the plunge.
What do you think? Any techniques you have used to hire in the past that were especially effective for the first 1-5 employees?