Every great entrepreneur will tell you that building an incredible startup means building an incredible team. It’s a cliché because it’s true.
But when you tell a young entrepreneur that if they’re successful, they’ll end up spending half their day on hiring, they don’t believe you. You have to live it to really understand.
So let’s look at the frictions you encounter when scaling a company and how you can make scaling your team feel natural.
But first, remember one thing: No team in the world has died because they hired too slowly; a lot of teams have died because they hired too fast.
Hiring too fast is the kiss of death. If you hire the wrong people, they’ll attract even worse people. All of a sudden, you have a sabotage group inside your company with the ability to burn it all down.
There is very little correlation between the quality of each team member and their concrete skill level. Skills and attitude aren’t connected. But there is a lot of correlation between how homogeneously good your team is and how successful your startup will be.
When you’re hiring, understand that each new person is going to be a little boss who’s running things when you aren’t around. And by definition, there will be a lot of situations when you aren’t around.
Hiring slowly doesn’t have a cost. You won’t die from a missed opportunity. People sometimes think they need to hire fast so that they don’t miss out on a market, that never happens.
After all, no startup dies from competition. Or at least, there are so few that if it happens to you, you’re just unlucky. It’s kind of like getting killed while walking down the street because a meteor comes crashing out of the sky and hits you. It could happen — but the likelihood is so low that there’s no need to really think about it.
Instead of worrying about competition, make sure that you hire right. Don’t worry about being too slow, just do it as quickly as you feel comfortable with.
Comfort’s important — as an entrepreneur you need to get very comfortable listening to your instincts about people. There are a lot of areas in business where you shouldn’t listen to your instincts, because you can make very big mistakes that way. But listening to your instincts on the people around you is super important.
It’s not as easy as it sounds. As a society, we’re trained not to do that, we’re trained to avoid saying what we really think about people.
That’s why the only people who will meet me and tell me that I’m fat are kids. It’s just a fact, and yet no adult has ever come right out and said it. Why? Because we’re taught that we shouldn’t say things about people that might hurt them, even if they’re true. A few weeks ago, though, I was eating dinner, and Nicolas Colin’s six-year-old said to me, “Oussama, you’re too fat, you should take better care of yourself or you’re going to die young.” All the adults were just horrified, but I said, “Thank you! Keep that, I like your entrepreneurial mindset.”
But in that kind of situation, everyone is so shocked that the kid understands they shouldn’t have said it. Over time you learn to avoid those reactions, you don’t say what you think so that people won’t freak out. And you grow up to be an adult, where a good part of living in a society is not hurting people for no reason.
When you’re hiring though, you can’t suppress those thoughts. Put yourself in “kid on” mode. Of course, you don’t necessarily let those reactions out, you definitely don’t write anything down that could land you in court. But you need to listen to your instincts about people, they tell you more than anything else can.
This is a process. You need to build up confidence in your entrepreneurial instincts. Don’t fall into the trap of believing you have some superpower that lets you predict exactly how someone will do their job. Everyone can do a good job somewhere; but not everyone is going to fit and do a good job with you.
In a lot of ways, it’s like sex — you don’t go around wanting to have sex with everyone you meet. And if you don’t want to have sex with everyone, there’s no need to think that you want to hire everyone either.
People think that entrepreneurs have a responsibility to hire, that an entrepreneur is there to be a job creator. But every entrepreneur knows that the worst part of the job is the fact that you have to rely on other people. Entrepreneurship is hard because you can’t do it alone, it’s not possible to achieve something extraordinary on your own. But every entrepreneur would still prefer that.
So accept that it’s unnatural to find other people who share your will and drive. Accept that because it’s unnatural, you have to put a lot of time and effort into finding them.
Scaling a startup team comes down to hiring well, managing well, and firing well.
This isn’t the same as in a big company. In a big company with product-market fit, you need to protect what you have. Protection means getting people who can follow orders and operate well. It’s also why a big company is so great, because it can be run by stupid people.
Startups need tons of care, which means they’re fragile, which means they need very competent people to run them. It’s the difference between spending a weekend with a three-year-old or spending a weekend with a forty-year-old. With a small child, you have to be really careful — kids will do totally random things, they want to open the window and jump out, they grab sharp objects you didn’t even know existed, you have to watch them constantly. When you’re with an adult, you don’t need that kind of vigilance (let’s assume there are no drugs involved ;)
Being an entrepreneur is like babysitting 20 3-year-olds. A big company can make lots of mistakes, and none of them will kill you. Startups can be killed by a random employee.
Believe me, employees can do so many stupid things. And the thing is, they’ll do them thinking that it’s helping you! Stupid things can happen because processes aren’t in place, chaos is all around you, nobody knows how things should go. A startup is looking for product-market fit, trying to achieve scalable growth… but before you get there, employees can think that really bad ideas seem pretty good.
So scaling your team is about really setting the tone. Entrepreneurs aren’t paranoid enough about their first 10 hires. But they should be, because those are the people who will establish your entire culture.
It happens in 3 steps.
Step 1: Culture as the natural extension of the founders
If the founders try to set up a culture, but don’t represent it themselves, it’s not their culture. There are so many startups that I’ve seen write up their manifesto, list out all their values, and then do exactly the opposite.
You have to lead by example. If you want people to come in early, come in early. If you want people to work hard, work hard. And if you as a founder do something, understand that you’re giving everyone on your team the right to do it, too.
Every gesture you make will be universally adopted in your team. Pick your battles wisely.
Step 2: You start to hire people who will take up that culture and embody it themselves.
This is the start of a very dangerous path. When you start expanding, it’s growing your cult. And anyone who joins a cult is like any convert to any religion: they’re inflexible and a little bit nuts. That inflexibility is dangerous, because a strong culture is a flexible culture.
A strong culture can accept some incoherence. If everything fits in place, is practical, makes perfect sense within the system, that means the startup is too locked in. You need a culture where people know, “Ok, this is how we do things, except when we do it this other way.”
If your startup doesn’t have that flexibility, it is rigid. What happens when a tree is too rigid and a strong wind comes along? It breaks. What happens when a company is too rigid and the market changes, or a client has a crisis? The company breaks.
Step 3: Everyone who takes part in scaling the organization has to own your culture.
This is very simple and really hard, because every person you hire has the power to dilute your culture. Fight against that. Culture is what will protect you over the long term. Culture is how your organization is defined. And culture is ultimately owned by the people you pay and the people you promote.
You can put posters up on the wall about how you’re an innovative company, but if you only promote non-innovative people, then your culture is non-innovative. Period.
Your employees will understand the hidden rules of your culture better than you can believe. You can write a manifesto saying whatever you want — if it’s not seen in the people you pay and the people you promote, it’s a lie.
I saw this in action a long time ago when I was consulting for a big company. The boss said they wanted collaboration, and couldn’t understand why everyone in the company was super competitive and wouldn’t work with each other. After 5 minutes, it was pretty clear: Everyone was paid their bonus at the end of the year based on their individual performance. So the guy had set up a system where any time you worked with someone, it brought down your individual pay. Pretty obvious why everyone was super bitchy, right? (And when I suggested changing that remuneration structure, he said, “No, we can’t do that, that’s our culture!” Ah. Well, ok.)
It’s fine if your company is built like Highlander, a giant battle where only one can survive. That’s a choice, and everyone inside the company needs to live with that choice. But be honest about it.
As you scale, you might have to decide how to deal with an office vs. remote work. Realize that it’s not at all the same thing. Culture has historically been built with people in the same room — tribes, cities, nations, they were based on a territory, everyone being physically within a certain space.
The internet gave us the idea of building cultures that completely ignore physical presence, where you can’t count on someone being in the room to help you build the culture.
That’s why you can’t really build a company where only part of the team is remote. Either everybody is remote or nobody is remote. That doesn’t mean you can’t have people who work from home sometimes, that’s fine. But it’s not a remote team.
In a remote team, everything important happens online. That can create real magic, because you can get talent wherever it is — really, wherever! But because there’s no way for information to pass in an invisible, natural way, you need to make information 100% explicit.
That’s the biggest challenge for a remote team: writing everything down, giving everyone the content they need, so that you avoid people missing information or not knowing where to find the right information. You have to build an information stack that’s much more robust than an in-person team.
Whether you’re setting up a remote team or an office, take a look at how you think about freelancers and employees. Individuals today can want different things, and the old way of thinking about it (employees = people we can give orders to; freelancers = people we can’t give orders to) isn’t true anymore.
Giving orders isn’t much use in startups, because a good startup doesn’t worry about “how” things get done. A big company needs processes, startups don’t. If you’re a startup, you need to hire very smart people who can manage fragility. Startups have a context and a goal, which can only work when the people inside are smart.
A founder needs to keep finding people who are smarter than them. That way, the people you hire tell you how to do things. If you need to keep telling employees how to do things, you hired the wrong people!
And because you can make mistakes, remember that firing people in startups is a very natural, normal thing. We’ve fired people at The Family that I consider good friends, people who I’ll invite to Christmas dinner. Firing in startups has nothing to do with your feelings about a person, it has everything to do with their ability to provide value in their job.
After all, you know it’s possible to hire someone who’s great at their job, but who you don’t want to go on vacation with. If that’s true, it means you could need to fire someone you love and who you want to keep close to you. It works both ways.
(By the way, this is why you can work with family members, friends, loved ones in a startup — as long as you know that you won’t hurt your relationship with them if you fire them. Be very sure that you aren’t in a transactional relationship with your loved ones, that you can be honest and that you won’t destroy your relationship if you have to fire them.)
So how do you structure the process to ensure you hire well?
At the beginning, and for a long time, hiring is a founders-only responsibility. A young startup doesn’t need a CFO (what are you the chief financial officer of, bankruptcy?). But you do need someone to be in charge of people. One founder should specialize in that. And even then, the CEO is going to end up spending half their time on hiring. You can’t delegate culture for a very long time — and I’m talking hundreds, even thousands of hires.
Anytime an entrepreneur tells me that hiring isn’t their focus, it’s horrible. Like, what can be more important than not bringing the wrong person into your company, a person who has the ability to burn the place down? You need to see hiring at that level of intensity, as something that can become a gigantic, fatal catastrophe.
Be in hiring mode at all times. Be fierce, be opportunistic, and as soon as you find a great person, get them on board.
Learn about who you are as an interviewer. Figure out your own weaknesses. For example, I’ve learned that when I make a mistake on hiring, it’s because I see someone who’s really driven and comes from a tough background. I start to see myself in them, and I want to help, and so I can miss other things that I should see. That can become a catastrophe. But now I know that’s my blindspot, so if I see someone like that, I send them to talk to Balthazar. If they survive that, then ok, hiring them is a good idea.
We all have those blindspots, it’s fine. There’s no need to be superhuman. And I don’t want to be the kind of person who doesn’t feel that kind of emotional reaction. But as an entrepreneur, I can’t let those feelings put my company in danger.
Don’t let your guard down. It’s much better to miss a great person than to hire the wrong one. The potential upside of any one person is always smaller than their potential downside. When people become a liability, they become crazy. You can end up covered in years of lawsuits, just because you made the mistake of bringing the wrong person into the room for a few months.
Testing skills is important. But it’s less important than understanding people psychologically, less important than understanding what kind of human being you’re dealing with. Find ways to see how people behave naturally. Maybe it’s going out for a drink, maybe it’s going for a walk, one of our entrepreneurs goes for a run with potential hires. Me, I eat with people, because I think how someone eats reveals a lot about them.
Find your way — just make sure you find it. People are good at putting on a mask when they’re in “interview mode”, it’s like going on a first date. Your job is to find the moment of truth, when you can say, “Yes, I just heard something genuine and honest.”
You can train for hiring in big companies. That’s what business school is for, they train for what average people want to say and hear. As a startup founder, you can’t look for average. You’re desperately trying to find excellence. You need to find people who are willing to share that new reality with you, searching for the gold at the end of the rainbow alongside you.
You need genuine people. Genuine people don’t say things just to look good, they say things because that’s what they think. You have to really listen to find them.
Now let’s get back to the question of how to scale that up.
Basically, the only way to really scale the team well is by having done such a good job with those first few people that they’ll help you as you bring on more people.
And don’t think it stops with hiring. Every time your team size doubles, look at everything. It’s like reinventing the company. Your communication, responsibilities, culture, hiring, everything needs to be reexamined when you get to 8 people, then 16, then 32, then 64, then 128, then 256, etc. Be ready to change things completely. It’s not about keeping every single action the same, it’s about keeping up the right energy flowing.
And please don’t fall into the trap of thinking it’s better to have a lot of people who are paid a little instead of a few people paid a lot. As soon as it’s possible, startups need to pay better than the market rate, they need to avoid interns, they need to be sure that everyone in the team is contributing to value creation.
Overpaying is insurance when it comes to hiring. If you’re overpaying someone, you’ll never keep them around if they’re not doing a good job. When things are messy and chaotic, overpaying is a great way of being sure that you’ve got the right person in the right place.
Nobody comes on board only for the mission. (If they do, then you’ve hired someone who’s crazy.) You have to find the right blend of mission, money, equity, and fulfillment to keep everyone aligned and truly invested in your startup’s success.
One last thing: when you need to fire, do it well. One good way is giving the person the opportunity to say they resigned. After all, one of the big problems with firing is that nobody wants it to look like they messed up. And in startups, they’re usually right — if you have to fire someone, they didn’t mess up, you — the founder — messed up. That’s your responsibility.
So let them tell everyone that you’re not good enough for them, that they decided to quit (and never break that trust by saying otherwise); give them a proper severance, because it was your fault and so you should pay for it (which will also make you more paranoid for the next time you hire); actively recommend them for their next job. Do all of that, and firing becomes much easier, because it takes the ego and drama out of it.
You get it: Scaling a team is easy in theory and hard in practice. Hire people you admire, put them in charge with a high level of freedom, and let them lead by example as you scale up.