It’s imperative that startups take the time to look beyond their own friends and social networks to hire the best possible candidates who can bring with them diverse experiences and ideas.
Don’t get me wrong, Co-Founders should still be close-knit and it’s even okay for them to be friends. As long as each of the Co-Founders is a net positive to the team and company, then the more familiarity they have with each other the better. But when it comes to hiring and filling out the team, a startup should avoid taking the easy route and hiring a bunch of friends and/or family members.
A startup team is like a team of Navy Seals, highly skilled and versatile. Navy Seals come from all backgrounds and circumstances, and they go through rigorous testing and training to earn the right to call themselves Navy Seals. As a team, they become extremely close during their time of service together, brothers in every sense of the word. They push themselves through the most rigorous training to earn their reputation as the best of the best. They start out as strangers and become brothers through their service, and startup teams should work the same way.
So what’s so bad about a startup hiring people they already know? A lot, actually. First, let me qualify by saying that not every hire of a familiar person is a bad hire. There are certainly occasions when the Founders of a startup know someone who would be an excellent addition to the team. With that said, I too often see Founders hiring people they already know and doing so because it’s easy, fast, and convenient. Hiring, especially for a startup, should be about a team member's very important and targeted role to evolve the company to the next level. Hiring someone already familiar with the founder/startup often equates to a hire out of convenience and expediency as compared to the person’s ability to be a high performer.
Because there are a million different things for startups to focus on at any given time, hiring can often be pushed to the back burner. Once there, founders are susceptible to taking a shortcut by hiring people familiar to them. Not only do Founders risk not building the best, most capable team, but they also risk surrounding themselves with a team of “Yes” people. Getting the best team in place is so important for a startup because the team is the product and ultimately, the company.
I don’t believe a problem can be solved until it is understood at an expert level and understanding a problem at an expert level and then coming up with a solution for it as simply and elegantly as possible requires a highly skilled and capable team, not a group of friends.
It is very rare for a startup to be successful and to have long-term viability when it’s made up of a team of friends and family. Sure, there are some exceptions like the Collison brothers who founded Stripe, but even in their case, as the team began to grow beyond Patrick and John they hired the best people they could find, not the familiar ones.
Another downside of hiring familiar people is the complication it brings if the person doesn’t work out. Now there aren’t just professional connotations, but likely personal ones as well. The familiarity can be an asset, but it can also cloud a Founder’s judgment about a person’s real capabilities and fit. Every Founder who is thinking about hiring someone who they know should have a trusted board member or adviser interview the person.
Hiring strangers is an important evolution for a startup. It signifies the startup has evolved beyond the Founders, the familiar, and is becoming a real company by hiring the unfamiliar. The sooner a startup can make this transition points to a faster ramp and trajectory for the company. A startup that doesn’t evolve or that takes a long time to evolve beyond hiring familiar people, will have longer and more gradual growth.
Hiring strangers is also an important evolution for Founders because it means they have to up their game around telling the company’s story to be able to persuade highly desirable candidates to commit to joining the team. In fact, one of the primary reasons Founders have to be great storytellers is to facilitate recruiting the best team. Founders who get great at storytelling and recruiting new team members also get better at telling the company’s story to investors, customers, partners, and advisers. Founders that don’t excel at assembling the best possible team will likely also struggle to persuade investors to invest and for customers to buy the company’s product. Founders that take the easy way out by mostly hiring people they already know are not sharpening the skills around effectively telling the company’s story.
It is important to mention that investors invest in teams more than any other factor. Yes, the problem and the space matter, but if investors can’t connect the dots on why and how the team is capable of solving the problem and capitalizing on the opportunity then they won’t invest.
Founders need to resist the temptation to hit the easy button by hiring people familiar to them. They must put in the time, effort, and energy to bring in the best people for the team. The best people might be in a Founder’s network, but it’s unlikely that a Founder’s network is deep and robust enough to support all of the hires a company will need to make.