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hiring your first employee
16, Mar 2023
Hire Your First Employee: How To Avoid These Common Mistakes

Hire your first employee slowly, but when things don’t work out, fire them fast. History suggests that this is a sound strategy. However, the question remains, when should you hire your first employee?

When Should You Hire Your First Employee, And What Position Should You Fill First?

  • In a recent Podcast Notes episode featuring Y-Combinator’s Harj Tagger, Michael Seibel, and Brad Flora, their #1 takeaway was that almost all the advice that’s written online about hiring is written for post-product-market–fit startups.

    However, most startups are pre-product market fit. They are reading advice for a stage that they are not at now, and odds are they will never be at.

  • Founders have a unique skill set – as a founder, you know the problem better than anyone else, and you know how your product works better than anyone. So much of the startup is just reacting when things are horribly broken

  • Generally, you should start hiring only if it’s a post-product market fit scenario and things are going well and accelerating. In other words, you start hiring when each employee that gets hired results in the company making more money.

  • Over-hiring leads to a high burn rate which leads to a lower/shorter financial “runway” or even startup death.

  • If you don’t know if you are post or pre, don’t hire people to figure that out (lol).

startup-resources

Lies About Hiring And How It Doesn’t Solve All Your Problems

  • Some of the lies founders tell themselves that don’t really solve their problems:
    “If we only had more people, we could get more things done.”
    “We need more features… Let’s make an Android app and hire a specialist.”
    “Let’s hire more people to earn money faster.”

  • For some founders, hiring becomes a key performance indicator- founders feel like investors and customers will be more impressed if they have more employees.

  • “Just because you are a startup founder, it doesn’t mean that you are good at hiring and managing people.” – Brad Flora
    As a founder, that is probably something you will learn the second time around.

  • Hiring people due to availability and perceived opportunity.
    Do not hire people just because they are smart and available and you think they will magically solve all your problems

About the Author

James Spurway is an Angel Investor, Mentor, Advisor, Speaker, former Commercial Pilot, and Author who specialises in raising debt and equity capital. He strives to model diversity, equity, and inclusion in the founders he agrees to invest and work with. He has paused his angel investing activity to focus on raising his first US$ 50M venture capital fund, which will invest in startups that can accelerate the achievement of net zero emissions. James spent the past 33 years living in Hong Kong, Vietnam, Germany, Switzerland, Monaco, the USA, Thailand, the Philippines, Singapore, and Australia, his country of birth. In that time, he started 10 businesses, exited from seven, shut down two, and kept one. He has invested in a total of 50 startups since 2001 and had six successful exits.

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