I was in a board meeting where the management team was planning to hire more people. They were flush with cash, so they asked the board if they had a point of view on how aggressive they should be.
All but one person spoke. Everyone gave what seemed like reasonable advice. The CEO asked the one person who hadn’t spoken for his thoughts.
“I have no idea,” he said.
This stopped everyone. This was a person who had hired thousands of people in his life. He led a giant organization. How could he have no idea? The CEO asked him to explain.
He continued, “I have no idea how many great managers we have, so I have no idea how many people we should hire. The constraint on hiring should be how many great managers you have. Figure out how many managers you would clone and give them as many people as they can handle.”
This is the single best articulation on hiring I’ve ever heard. I’ve shared it with anyone who will listen.
I think you can even make it a touch broader. Figure out who in your startup you would clone. Give them everything they need. And work like crazy to find more of them.
Ok, so how do you do this?
- Make a list of the best people in your company. Note whether they are a manager or individual contributor. Write down what they are working on.
- Confirm that those people are working on the most essential thing in your company and are overloaded with responsibility. Don’t worry about burning them out. Worry about depriving them of the joy of working on the most important thing and the steepest possible learning slope.
- Tell these people they are your stars. Pay them like it too. These first three points help ensure you are optimizing what you are getting from the current team before you look elsewhere for the solution.
- If you decide you still need to hire and partner with internal or external recruiters, have them meet your best people. Spend real time trying to understand and articulate why you like them so much. I would bet it has something to do with their ability to get things done without a lot of direction. You might end up with a much different job spec than the one you have (the one with twenty bullet points).
- Take time to go and hunt great people. How many of us have done an executive search with a recruiting firm and lamented after the first few meetings that the candidates stink? I have. You know what I learned? It wasn’t their fault! It was mine. Recruiters often look for the best person available. But the best people are rarely available. Why would they be? They are probably superstars in their current job too. They aren’t just going to show up in your interview slate. You gotta go get them. Ask your recruiter (and everyone you know) who the best people are. Then go meet them and earn their interest in your company.
Make no mistake - this is hard. It will require persistent and purposeful hunting to identify and close great people. It will require extreme patience and a high pain tolerance to keep roles empty for a long time. It will result in your high performers being overloaded. It will also probably require you breaking comp bands3 for these folks.
It will also likely slow down your hiring pace. This is good news!
Aggressive hiring is often counterproductive. I don’t mean this on a relative basis. I mean on an absolute basis. Your company might make less progress on your most important thing after your hiring spree.
Think about it. You decide you want to hire a lot more engineers to build things. And more sales reps to sell them. This seems reasonable on the surface. But then you need more sales ops people to ensure the sales team is productive. You need more FP&A people to ensure your plan reflects the ramp time of the new sales reps. You need more HRBPs to support the growing team. You need more IT people because your investor’s talent team tells you that the proper ratio for employees to IT people is 15:1, and your new plan has you at 25:14. Hiring begets hiring.
And after all that hiring, you lose discipline on prioritization because you think you have more capacity. You have more people on PIPs and a lower percentage of good managers who know how to deal with them. Cross-functional collaboration slows down because people don’t trust each other. People lack context but not strong opinions. Some of the new people mess up the scrappy culture; they wanted to join a great company rather than help build one.
At some point, you wake up and find that you have twice the people and move half as fast. And much of the progress you have made is on the nice-to-have initiatives rather than the one or two things that will determine the ultimate success of your company.
In my experience, the issue holding back most startups is not that they don’t have enough people; it’s that they have the wrong ones.5 I frequently ask founders and leaders what percentage of their team creates 80% of the value in their business. I’ve never heard an answer greater than 20%. It’s usually closer to 10%.6
The solution is not more people. It’s more of these people. Trajectory-changing people.
I mentioned earlier that this will be hard. At first, it will be worse than that. It will be painful. But this pain has a payoff. It will force more disciplined prioritization decisions. It will force you to identify your best people. It will force you to give those people more responsibility than they ever thought they could handle.
It will force you to stop looking for people and start looking for the right person.
Someone you can add to the list of people you want to clone.
Please do this! It is shocking how often the best people in the organization are not matched up against the most important things.
And ask if they know anyone else like them.
I kind of hate comp bands. They feel like they are helping you play defense to avoid getting in trouble rather than helping you play offense by rewarding and retaining your best people.
Please don’t use this ratio. I just made it up.
See Nat Friedman’s website for a fascinating perspective on this topic. He believes many tech companies are 2-10x overstaffed. Think about that. He’s saying that many tech companies could have 50-90% fewer people and not miss a beat. Instead the vast majority of these companies are adding people every year.
It’s common to say that venture capital is a power law business. I think that people’s impact within startups might follow a similar distribution. I’m not sure about this yet - stay tuned for more on this idea