How to Hire When Everyone Wants to Found Their Own Startup | Hacker News Reader

How to Hire When Everyone Wants to Found Their Own Startup

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62 pointscoloneltcb66 comments

There's a way through this mess.

First, focus on people that want to be hired. There's lots of people out there who tried to roll their own and realized it's a lot harder than it looks. Plenty just want to focus on the fun tech stuff and leave client communications, marketing, and all the other small-business drudge work for others.

Second, be willing to build people up. Promote from within and let people grow into the role they want to have. Fuck a foosball table, I want room to grow. Convey this clearly in the interview. Leave off the X number of years in technology Y nonsense, and, if you're feeling particularly froggy, the demand for a four-year degree. Nothing about having one makes you any better at technology work, it's function is purely signaling. You can get a much better feel for who someone is just by listening to them talk about their pet projects or what inspires them or what they want to do.

Third, drop the pretentious bullshit. It's a seller's market for talent, you're courting them, do what you have to to minimize HR's influence on the process. Be responsive, don't ask stupid questions, do whiteboard exercises, all that tech interview bullshit that just skews the signal-to-noise ratio rather than increases it. You can get away with that shit if you're Facebook, but even there it's a dick move and it doesn't really help.

Agreed. And don't be afraid to hire people in their 40s who might not fit in visually but nevertheless have vast experience building stuff that actually ships.

And don't be afraid to hire remotely. You don't even have to go overseas - there is a vast untapped pool of underpaid talent in North America.

Playing devils advocate here:

> And don't be afraid to hire people in their 40s

Experienced, and expensive. Usually have families to support, and a greater desire for work/life balance. This does not mean they're less productive (per capita) but it doesn't fit the image of "start-up culture." Work long hours for peanuts, do what you boss says.

> And don't be afraid to hire remotely.

This takes damn good management/culture to work well. Someone who has faith in their employees. Someone that's not looking to blame everyone around them for failings. Someone who can see past the cognitive bias of the person down the hall, etc...

There are lots of managers and lots of cultures. Not a lot of good managers in good cultures.

EDIT: I do agree with you - just pointing out what I hear on repeat about the subject.

Playing even more devilish devil's advocate here:

> "start-up culture." Work long hours for peanuts

If your business model depends on people subsisting on ramen, and having no life outside of work, maybe what it really means is that your business does not deserve to stay afloat. Most startups fail anyway. You just fail earlier, because your cute Android game is not worth compromising the physical and mental health of everyone involved.

> ...be willing to build people up. Promote from within and let people grow into the role they want to have...

I think this is one of the missing pieces in modern companies. Very few places really want to train you up and all the procedures and processes either expect that (1) your school/course should have taught you or (2) you should have already taught yourself.

This goes back to people hiring for Tool Knowledge. Think of all the requirements you see on job postings.

Must have X years of [insert hyper-specific tool]...

Most hiring managers are looking to find someone they won't get in trouble for hiring if they end up sucking. This leads them to look for people who have used the same tools, not people who are intelligent problem solvers that can learn anything given a bit of runway.

We certainly don't help the problem. I have a few friends who switch jobs every 9 months or so, which almost certainly makes companies wary of investing years of training.

Maybe they wouldn't switch if they found similar advancement internally...

For myself, the desire to change jobs comes from the observation that the companies trying to poach me away are offering more money than my current salary even considering the foreseeable future of raises. I happen to like the people I'm working with, so I continue to stick around but at some point those numbers are going to get too far apart and I'll make a move. In my current company (very large), the prospect of raises and promotions are slow, small and far in-between. Maybe I'm in a weird place, but that's been my experience thus far.

>> Nothing about having one makes you any better at technology work, it's function is purely signaling.

Better than someone with more experience, possibly no. Better than someone with similar experience but without the degree - hell yes.

I'm still happy I did mine because it gave me a grounding in all sorts of concepts and it keeps on giving, even though I graduated 14 years ago now.

A comp Sci degree is way more than signalling.

--edit-- or perhaps I should say that a degree is no more signalling than experience is. I've worked with terrible, awful engineers who appeared to have both.

Talking to people, provides the best SNR. It's possibly best to down weight signaling from both degrees and experience.

Is that true? I think I recall hearing that studies show interviewing actually usually leads to worse results. Here's one that seems related to academic admissions, not hiring per se, but similar vein: http://journal.sjdm.org/12/121130a/jdm121130a.html

I think clearly the best SNR is from working with someone. That's not easy to fit into the hiring process, though...

I imagine that would be really hard to research in a coherent fashion. I personally know within minutes who I'll be able to work with and not. I look for three things. Have you shipped anything? Are you teachable? Can you put other's needs over your own yet still remain able to push back when necessary? Someone like that, I'd let him do anything.

I'm getting to quite like the idea of a trial period. I'm a contractor and I usually work to one. One day's notice for the first two weeks, if it's not working out (for either party) we say goodbye during that time.

Crucially, the prospective employee/contractor still gets paid for that. Unlike with some of the "Hey, come work for us for free for two days so we can see if we like you!" arrangements I hear about...

Yep, when I was hiring I tried to do that as much as possible as well. Bring people on for short contracts and then go fulltime (which obviously then brought equity) if it made sense.

Now I'm back working freelance, I also prefer that. I'd be fairly reluctant to take on a fulltime post without having worked with the team for a while first.

>>> First, focus on people that want to be hired. There's lots of people out there who tried to roll their own and realized it's a lot harder than it looks. Plenty just want to focus on the fun tech stuff and leave client communications, marketing, and all the other small-business drudge work for others.

... hired by a start-up, that is. Perhaps the dilemma is finding people who believe in start-up economics and culture, but don't want to found a start-up of their own.

>>> Nothing about having one makes you any better at technology work, it's function is purely signaling.

Likewise, nothing about having a start-up makes you any better at business -- its function is also purely signaling.

My comments, while they seem pretty snarky, point to a sort of parallel issue between start-ups and job applicants: How does each "side" see past the signaling aspects of the other side in order to pick winners?

Fourth, be open to remote workers. Remote work has some downsides but there are a lot of skilled developers that don't want to live in the valley or SF. Many of us are even willing to work at a discount relative to SF rates.

Eh, your business requirements are your business requirements. Work from home isn't something you can just implement in a day. You have to build your entire dev process around it. We're hiring for an entry-level Rails coder right now, our company culture just won't allow for remote. That may change in the future, but I'm not sure, even as the lead developer. Eventually we might start outsourcing some dev work, but I can't see us offering someone full-time salary and benefits to a remote worker. We're just not set up for it.

I could demand work-from-home days if I really wanted to, but I don't. I like going in to the office.

That's a perfectly legitimate call to make, as long as you acknowledge the tradeoffs of excluding a lot of potentially qualified people.

How about: give them a little bit more equity than just scraps?

Everyone want to found their company because they know it's the only way for them to be rewarded if the company is successful.

Right now it's more like: "the company got bought, the founder is a millionnaire, you get some pocket money and the awesome opportunity to be a cog in Google Adwords!"

What, you mean treat developers as managers? What a ridiculous suggestion! How about a nice Google-style office instead?

"the company got bought, the founder is a millionnaire, you get some pocket money"

That happened to me. I wasn't the earliest employee but I would have liked to have more than enough to buy a used 2000 Honda Civic when company sold for hundreds of millions.

Winning the startup lottery is hard enough. I end up doing it and get basically nothing. I honestly never thought my equity would be worth anything so I guess I can't complain.

Anyone who's founded a startup knows just how much risk is involved, and how significantly it's de-risked by the time they're hiring employee #1, #10, or #100.

Basically, 50% of an idea is worth less than 0.05% of a startup with traction.

Sure, but consider the case of B2B enterprise sales in some sectors: you might not be able to finish building a product until you've hired a few engineers.

Those engineers? They're more vital to your company than your precious idea, because without them you have nothing.

I don't think it's unreasonable at all to give them some real skin in the game.

There's something weird about the structure of your comment. How much traction do you assume a startup has when they hire #1?

Personally I think startups are too stingy with equity, 2% is considered generous, but this is not enough to compensate for the risk for employees 1-10, which is part of the reason the savvy ones want to be a founder rather than employee. I think the stinginess persists partly because of ignorance of the average prospective employee on stock option plans, so they're not getting the level of pushback they will about salaries. But more importantly from the granting side, it's very hard for founders to tell if a prospective employee has the all-out intelligence, hustle and tenacity to be a part of the critical core group that literally builds a money-making machine from scratch. It's true that hiring is a huge risk, but this is what the vesting schedule is for. Companies need to bet bigger on individuals, because the risk profile does not decline as precipitously as the equity grants, there's a discontinuity there that is keeping savvy employees out. If you are selecting only for people who can afford to work for free then you're leaving talent on the table.

I hate that "money" is nearly taboo to talk about. When considering a job, compensation is very important to me. Honestly, it is probably the #1 factor. Other factors matter a lot as well but they are usually only guesswork when at the interview/offer stage. Things like "office environment", "mission", how I get a long with my co-workers, etc all are important but what they tell me up front and what I imagine in my mind's eye might not turn out to be reality. But the money part, that is set. When they say $100,000/year, they pay it. Now we are talking start ups, so obviously equity is a different story. But you can still run the numbers and calculate what you will make depending on the size of the exit. I am not opposed to some risk for the reward (equity vs. salary) but if the reward is 10% of one year's salary if we sell for $100 million dollars, then why should that interest me? Sometimes they make those offers where you can choose more equity or more salary. Maybe I'm just insecure but it's as if taking the salary option says something about you and your commitment to the "mission" negatively. In the scenario I laid out above, I'd say it just meant you can perform simple arithmetic.

It's not taboo, most people just think it is, especially in industries where there is a lineup of qualified applicants.

I pick salary every time, the equity is fuck all in most cases. There isn't a mission, it's a job, in exchange for my time I require money, as the founders will say they are taking most of the risk, so you should get most of the money.

Dealing with these questions upfront is the way to get rid of people who don't know what they are doing who are wasting your time.

If the business is wildly successful as the founders claim it will be then they should be encouraging you to take less equity rather than more. No sane investor only invests in one startup, which is what they are asking wrt equity. It's far better to make lots of money and invest that money in a variety of startups.

Being generous with equity by default is a bad strategy. Employees are bad at valuing it, and it becomes a point-score system, which is almost the worst-case scenario for equity allocation. It also does few favors for the employees themselves, because when allocations get out of whack, the company can and (because it often has to) will pull the rug out from under them.

The better strategy is to be generous with salary, and to make equity available as an option for people who want a more uncapped upside and to assume more of the risk. That selects for people who understand what equity is, and is fair to everyone.

How about "realize there is a whole big world outside of the Bay Area"?

I have no interest in founding my own company. I'm a software developer and a pretty good one. I want to continue to develop software (it is what I truly love to do), not manage a business.

I also have zero interest is moving to the Bay Area. Been there, done that (prior to the first dot com implosion), nice place to visit but won't ever live there again. I get pings fairly regularly from friends and/or ex-coworkers asking me if I'd like to work in the Bay Area (remote not an option). The answer is and always will be "no, not unless you open up an office in San Diego (or allow remote work, without expecting me to constantly be travelling to the Bay Area)".

Surely there are more than enough people like me in places that aren't the Bay Area to hire to start successful businesses -- San Diego, Austin, Portland, Boston, etc, these places exist and have tech talent!

we're based in santa monica and have or have had full time remote employees in all the areas you mentioned. portland is my favorite.

in fact, when interviewing, we kind of look at bay area residency as a contra-indication. it's at least 25% more expensive to hire someone there.

so, if you flip that assertion on its head - for the same price, we can hire someone 25% better, that lives in austin, or portland, or whatever. and, in fact - our salary then becomes significantly above market for the area, and we get exceptional talent.

if you extend this philosophy to hiring more experienced (i.e. 'older') people, you get a triple-threat: above market salary, smart/good people, maturity/experience.

>Recruit Outside Of Central Casting

Good idea, start by being open to remote developers. I'm not going to relocate to SF, regardless of salary, equity, or how exciting the project is. I've worked remotely successfully for the better part of a decade, so I know it works. Slack, HipChat, Skype, etc. make the lack of physical presence nearly irrelevant.

Companies that can figure out how to create and manage a distributed team will have disproportionate advantages if the product is successful and they suddenly need to scale. Open-source projects are a good example of this.

Seems to me that only those who are in the start up culture echo chamber could hold this view.

Its just not realistic that the vast majority of talents people are not joining your start up because they have their own start up. The numbers do not make sense.

Also the graphic that shows the paypal talent diaspora also is off, early employees who make a couple million in a start up are not going to want to WORK for a salary cause they have a couple million. They may want to join as founders if you can sell them the dream I guess.

early employees who make a couple million in a start up are not going to want to WORK for a salary cause they have a couple million

This is empirically false.

Note that the suggested approaches do not include "offer them equity" or "pay lots of money".

Most startups fail.

Even equity isn't especially compelling. Unless I'm a founding team member, I will always take higher pay in lieu of equity. After being with a company for a year or two and having a solid idea of where it's going, I'd probably consider it, but until that point equity is worthless to me.

Also, even with the best equity agreement, you can still get royally screwed when it comes down to the wire.

Exactly, what's the liquidity preference for the salary you're leaving on the table?

Oh that's right about -10X

Alas, employee equity holders are last on the list of winners.

Personally, as a prodigy boy-genius languishing in a shit industry, I can't wait to fill my belly with mentorship and live under a roof of self-actualization.

hahahaha, very good. It's amazing that this article doesn't mention money at all. As if people who want to make startups are so idealistic that money isn't a factor in choosing employment paths.

The article doesn't mention it because it would be useless advice. Most startups don't have the money to match Facebook, Google, etc. and the ones that do don't need the advice.

First, I think this whole article was filled with useless advice. The only useful thing would be to talk about giving people better compensation. Maybe it wasn't obvious that I was thinking about equity+salary when I said "money". Startups have equity. Equity is a financial instrument. Equity would definitely be considered in any compensation package.

My experience is that startups are extremely stingy with equity. I honestly was shocked back when I first learned how little equity was given to engineers in general. So I disagree with your statement that it would be useless advice, if you also extend it to giving more meaningful equity to employees. Also, I've had salary offers from startups that matched offers from the big software giants. Startups have money they just have to decide how to allocate it. If they need engineers and they are having trouble hiring, they probably will have to offer a higher salary or lower their talent expectations. Or just keep the same plan and hope to get lucky.

It's arguably the most important advice.

Nobody said that you need to match Facebook and Google. First, it's not like the BigCorps will hire every single person that your startup is interested in (e.g. Facebook rejected Brian Acton who went on to cofound Whatsapp). Also, there are plenty of people who would rather work for (say).9x at your startup than work for x at BigCorp.

The problem is that everyone is trying to hire the best, partly because they know how good that looks when fundraising, partly because that's how you win in winner take all tournament type economies.

This ends up similar to NFL Quarterbacks. Even the worst quarterback in the NFL is exceptional, but everyone wants the best one because it's hard to win a Super Bowl with the worst quarterback in the NFL.

So it's not that talent is hard to find. There are 1,000s of of people that are very good quarterbacks. It's that the best talent is hard to find. And this is because there can only be a couple of bests at anything.

People also try to hire the best because the value of a team in an acquihire scenario is basically the sum of their "ranking scores"—if you're the #1 most-wanted developer in the whole talent pool, the acquirer will pay exponentially more than they will for the #2 most-wanted, and so forth.

If you want to succeed as a startup, recruit by setting a bar and hiring anyone who passes it, not by comparing people to other people. "Good in an absolute sense" is much more useful knowledge than "better than X."

Where are these rankings kept? I honestly never had a clue that there were rankings for developers. I've never once seen that or heard it talked about.

I didn't mean that there are literal rankings; to be the "#1 most-wanted" developer is just to be more well-known and sought-after (and thus to have higher social status and clout in the industry) than the "#2 most-wanted."

Google collects highly-ranked developers (e.g. Rob Pike)—for no other reason than their high rank—and calls them Fellows. Heroku hired Ruby's creator Matz, and let him continue working on Ruby itself in an open-source fashion, just to say they had him. It's like collecting baseball cards, basically.

"... This ends up similar to NFL Quarterbacks. Even the worst quarterback in the NFL is exceptional, but everyone wants the best one because it's hard to win a Super Bowl with the worst quarterback in the NFL. ..."

This reminds me of Moneyball and Billy Beane. Then I found Kirk Goldsberry doing the same for basketball. [1] It's going to happen to programming.

[1] Mark McClusky, 'This Guy’s Quest to Track Every Shot in the NBA Changed Basketball Forever' ~ http://www.wired.com/2014/10/faster-higher-stronger/

Where the analogy breaks down is that Quarterback is a very specific job that millions of people train for from a young age. Despite the uncertainty over how top prospects will pan out in the NFL, and the influence of the supporting cast, etc, there still is a huge amount of objective data to look at about performance over time.

To make a startup succeed you need some very special people. Many brilliant programmers, designers, sales people, executives, etc do not have what it takes to build a successful company. Heck, many people have what it takes to build one successful company, but not another one, or they have what it takes if they are with certain complementing individuals but not others. This is because unlike sports teams, every company is different, and every successful one succeeds in a unique way. The number one criteria for the initial hires should be people who, in addition to whatever concrete skill you need right now, also have a strong ability to feel out this invisible path and separate the 99% chaff of potentially promising tasks from the 1% that actually get you closer to a viable business.

Now how do you filter for that? Hell if I know.

Sabre metrics.

As I get more senior, I get less tolerant of exploitive cultures.

You hire me by giving great benefits[1], an office next to transit in a city I want to live in, good salary, a nice office for me alone, and hands-off management who will support me, along with a commitment to free software.

Generally those axes are how I rank companies, the scaling parameters vary depending on my life situation at the time.

I also want to note that lots of Bay Area companies seem to have a thing for recruiting from top 10 schools. Get over themselves, go out to the Mid-/Mountain West and scour those students. There are good students outside of the top 10.

[1] A compelling benefit would be fully funding a PhD in the US for a fully furloughed duration. No one ever has that as a benefit afaik. I'd like to see it offered.

Note, Foosball is not a benefit. Nor is having a video game station. Nor is gourmet food, happy hours, or senior devs with 3 years of experience (that's an anti benefit).

The everyone in the title is clear hyperbole, but obviously one meant to convey most or maybe even very nearly all. That's probably a belief held by TechCrunch writers and Startup School attendees but most likely far from realistic.

My previous job was at a small nonprofit and we worked in a large co-working space that had hundreds of startups[1]. Many of the people I had conversations with (or overheard) in the kitchen/common-areas were heavy into the startup-scene (serial-founders or engineers who would only work at startups). I'm now at a large tech company and not one of my co-workers has ever expressed interest in founding a startup (or even working for one). This is probably because startups tend to attract people who want to work for a startup and larger companies tend to attract those that would rather not.

If startups feel they are having a harder problem filling vacancies than large companies maybe that's a sign that talent pool is larger and they should ask what they can do to appeal more to that crowd, instead of what they could do to get potential founders to work for them instead of founding their own.

[1] http://en.wikipedia.org/wiki/Cambridge_Innovation_Center

Some other folks have hinted around this, but I think the best way to look at this is by rephrasing the title:

"How to Hire When Everyone Who Wants to Work for a Startup Wants Their Own"

By that I don't really mean "work for a startup" so much as "work in the stereotype of startup culture." If you're starting with a very small team and trying to build with no profitability while you try to attract a major buyer, then yeah you're going to have to work within that culture of young people willing to take on the attendant risks.

If you're trying to build a viable business that happens to be a startup, perhaps you need to look beyond that initial group - because if you're only looking at 20-somethings with Macbook Airs working in coffeeshops, you're going to get a disproportionate number of people who want not just a startup but their own startup.

You can't put lipstick on a pig.

What's largely missing in the article is a notion that you want to find candidates who are mutually good matches for your company. Your position should have enough opportunity and value to the specific candidate to not require much sales effort. Selling harder up front just sets your management up for a big commitment on top of everything else. Good engineers with multiple offers will bounce inside of a month when they join and see all the sophistry you fed them.

Put that salesman energy into 1. differentiating your opportunity or better 2. developing your current team and hierarchy to actually support the competitive talent you seek. Be /less/ greedy for hires. A mindset focused on talent is poisonous in the long term: http://www.newyorker.com/magazine/2002/07/22/the-talent-myth

The suggestions in this article are somewhat reasonable, but the article does much more to whitewash and promote the Paypal mafia (and especially Keith as a new VC) as competent. The recommendations for creating 'mentorship' and 'founder culture' have value, but that often translates into just fixing obvious management problems. To start, don't let your management burn too much money on recruiting.

Sorry to nitpick, but I think you're getting your metaphors mixed:

You can put lipstick on a pig, but its still a pig http://en.wikipedia.org/wiki/Lipstick_on_a_pig

You cant polish a turd http://en.wiktionary.org/wiki/you_can%27t_polish_a_turd

lol

I could imagine the biggest fear of a "founder type" might be a company they work for attempting to claim ownership of his or her work at some point. I don't know if there's a good common solution to concerns like that. If there is, it might be good to advertise that those concerns would be addressed right up front.

Um, everybody wanting to start a startup is a simple signal that salaries are too low.

Better to be employee single digit at a startup and get bought out by Google 3-5 years from now than to work for Google for those 3-5 years.

You start by mentioning everyone wanting to start a startup, then switch to saying how it's better to be an early employee at a start up.

Being the founder of a start up acquired by Google in 3-5 years may be better than working there for those years, however that is not necessarily the case for being an employee at one. Other comments in this thread point to equity in startups often being too low, so I wont repeat the same stuff.

The parent article is "How To Hire When Everyone Wants To Found Their Own Startup". Not be an employee of a startup, FOUND their own startup.

And, while equity distribution still stinks, it's still better to be part of a startup doing something interesting than being a drone at Google. Generally, your salary is probably comparable (being more than 80% from the going rate will be an issue), you're doing something important if not interesting, and there is upside.

> Recruit Outside Of Central Casting--

This is a big idea, worthy of more discussion. Where/How do you find a hidden talent? For example, there's a founder I know, who has been unusually successful finding & training up former Theater/Drama majors. He says they're creative, quick learners, and appreciative the chance to start a new career.

"Everyone good wants to be a founder" is ludicrous.

1. Most people don't have the connections to become founders without an incredible amount of work (that could be better spent in, say, finance where the long hours bring 20-40% annual pay increases). For every one person who has the connections to deliver Sequoia on an idea, there are 9,999 equally talented people who don't. If you can't find one of those other 9,999, then you're without hope.

2. The problem is that non-founder equity is generally quite pathetic. If the founders each get 20% and the first engineer gets 1%, then you're never going to see a "founder-quality" first engineer. It simply won't happen.

To a large extent, hiring in the Valley is about exploiting the Winner's Curse regarding the unknown value of the equity. As it were, the more talented and seasoned people tend to assign it a low value (perhaps 0.25x price-at-valuation, meaning it'd take $160k of equity on a 4-year-schedule to offset a $10k salary drop) while the clueless and young ones who haven't made their (business and technical) mistakes yet tend to overvalue it (sometimes 1+... which makes no sense because why would one pay a higher price than the VCs are paying?)

Talented people would gladly take non-founder positions if the terms (equity, autonomy, introduction into the investor class) weren't so terrible. It's not like being a founder in the VC-funded world is great; it's that everything else is worse.

I'm one of those non-connected people working non-stop nights and weekends on "startups". Switching to an industry that actually pays out according to the amount of work I would put in is interesting. I either haven't considered it or never really thought that type of industry existed (outside of something like sales).

Also, I 100% agree. Employee equity is so small it's kind of insulting. The only time I took equity was b/c I was able to work with some semi-"famous" founders and hoped to at least to grow my network. I did grow it a little, and I might be able to tap into it at some point but the equity returned me exactly zilch.

If you are a founder, you are a genius. If you are a genius, you can spot talent instantly or can otherwise overcome obstacles. Either way you don't need tips from TC, do you? If you need TC to tell you how to hire, then you're not really a genius and should just walk into the nearest bonfire or otherwise stop breathing my air.

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