Why Hiring The Right People Matters: A Guide For Startups

There’s a terrible misconception in the startup world that reaching seven figures or closing a seed round means you’ve “made it.”

It’s not just first-time founders who think this. Even experienced startup founders and leaders are lulled into a false sense of security once their company reaches a financial milestone that most founders can only dream about.

It’s not a hot new competitor that dooms these startups; neither is it a poor go-to-market strategy. To be fair, those can be real factors, but I’m talking about death from the inside. It’s a tale as old as time: startup secures funding; startup hires in a mad dash for growth; startup finds out they hired the wrong people.

By the time they realize this, though, it’s already too late.

Read on as I share why hiring the right people matters and what I’ve learned after over a decade-long career of leading HR teams at startups.

Does One Hire Make a Difference?

In a word, yes.

But here’s the hard evidence.

While one hire could be a drop in the ocean of a large company, in a startup, especially in the 50-100 person range, each new hire can have an outsized impact on your company’s health and success.

After over a decade of consulting for fast-growing companies looking to scale from seven to nine figures, I’ve seen the dark underbelly of the startup world and the havoc one bad hire can wreak.

For instance, I worked with a B2B SaaS company doing $8M in revenue with only 15 employees – a promising start for any high-growth company. The problem was that their hiring pipeline was weak, and turnover was extremely high (over 50% of new hires left or were terminated in their first six months). This led to a revolving door of talent that was slowly sinking the company and stunting its growth, eliminating the possibility of building institutional knowledge from the outset, and preventing a strong internal culture from taking root.

By putting proper hiring practices in place, including implementing unified standards and a company-wide process for bringing in new candidates, we turned things around and propelled this client to the next phase of growth.

The Consequences of Poor Hiring Decisions

This isn’t just anecdotal. There are hard numbers to back up the consequences of bad hiring decisions.

Studies show 60% of companies fail because of internal, team-based problems rather than external challenges related to the business. And survey after survey paints a stark and often grim picture of today’s recruitment landscape:

• In 2024, the U.S. Department of Labor reported that a bad hire can cost up to 30% of the employee’s wage.
• According to a survey by the job search engine CareerBuilder, 75% of employers said they have hired the wrong person for a position. Of those who had a bad hire affect their business in the last year, one bad hire costs them nearly $17,000 on average.
• On the flipside, another study by CareerBuilder finds that to employers, the average cost of losing a good hire was $29,600.
• On the organizational culture side, Guidance Talent, a newsletter published by leading HR specialists, said 44% of CFOs agree that bad hires greatly affect the morale of the rest of the team. Bad hires can also result in a 32% drop in employee morale and a 36% drop in productivity.

Beyond those statistics, bringing the right people into your company matters because each new hire will have a substantial impact on your company operations, product innovation, growth trajectory, and precedents for future hiring decisions.

How to Make the Right Hiring Decision for Your Startup

If I haven’t scared you off entirely from hiring, here are four actionable things you can do to make sure you hire the right people:

• Start with a needs assessment
• Define your ideal candidate profile
• Post your job in the right places
• Watch out for common red flags

I’ll walk you through each one of these.

Start With a Needs Assessment

Don’t let the technical verbiage sway you, a needs assessment is nothing more than making a strong business case for each hire.

You need to sit down with your leadership team to define what this hire will enable your company to do, help you achieve, and determine the impact of the role and how you will measure its impact and success. It may help to frame the need as expanding capacity or improving the capability of your team.

Ask yourself, what objectives will this new hire enable you to meet? Where is your current team currently stretched? What specific skill or experience gaps require immediate attention?

Define Your Ideal Candidate Profile

Once you know why you are hiring someone, you need to define who will fill that role.

Much like a marketer or sales rep will create an Ideal Customer Profile (ICP) to focus their efforts, I recommend that founders, HR professionals, and recruiters identify an Ideal Candidate Profile. Not only does this focus your recruitment process and align your team on who to hire, it also focuses your efforts on where to post each job. When you know who you are looking for, it becomes much easier to find them.

Post Your Job in the Right Places

You’re (hopefully) looking for a specific type of hire who has the chops and personality to mesh with your company. You could post on the major job boards like Indeed or LinkedIn, but I recommend niche forums when recruiting for startup talent. These are a hotbed of startup activity where eager marketers, PMs, designers, engineers, and sales reps flock to find the latest opportunity.

My favorites are:

• Wellfound (Angel List): AngelList (now Wellfound) is one of the most popular ways for applicants to find jobs at early-stage startups. This is a great way to build visibility for your company and find people ready for the roller coaster ride of the startup world.
• VentureLoop: Like Wellfound, VentureLoop is another job site primarily focused on startups. VentureLoop offers a wider range of job functions, company sizes, and locations.
• WeWorkRemotely: Looking to offer remote opportunities? WeWorkRemotely is a remote-only job board that can get you in front of potential hires looking for their next role.
• Authentic Jobs: While Authentic Jobs is not explicitly for startups, they are a popular job board for product and creative roles. Companies like Apple and Facebook have hired through them, though they can be a good fit for smaller startups as well.
• Startup Jobs: As the name suggests, Startup Jobs is a job board aimed at startups, big and small, from founding engineers at early-stage startups to roles at unicorns like Airbnb and Spotify.
• Welcome to the Jungle: One of my favorites. For one, all jobs are curated and vetted by the job board, giving more credibility to job seekers. Secondly, they have a job matching engine based on job seeker preference, so you can improve your chances of your posting being seen by the right people

Check out my guide for where to post your next job for a deeper dive into these and a few other hiring tactics to try.

Watch out for Common Red Flags

Finally, watch out for common red flags that signal the person you’re speaking with may not be the perfect fit for your company.

Remember, each individual hire can have an outsized impact on your company culture and productivity. The top red flags I’ve seen when hiring for startups are:

• They focus too much on pay: I’ve always advocated for pay transparency and recognize that pay matters to people who work hard in their roles. Candidates are entitled to care about pay and bonus structures, but at the same time, many flock to startups seeking high salaries, equity, and bonuses, and so they prioritize those things above everything else.
• They have an employee mentality: While you are hiring for specific roles in your company, in reality, the demands on each person can (and probably will) change. Because of this, each person you hire needs to have an ownership mindset rather than an employee mentality.
• They’re in it for the startup perks: Like the allure of equity, many flock to startups for the perks. While workplace culture matters, candidates fixated on perks often underestimate the intense work, resource constraints, and uncertainty that come with a startup.
• Zero (or minimal) startup experience: Candidates coming from established corporations might expect resources, processes, and stability that simply don’t exist in early-stage companies. They may become frustrated by the ambiguity, rapid pivots, and need to operate effectively with limited resources. Without proper expectations, these candidates might burn out quickly or require excessive onboarding time that you can’t afford.

You can check out my guide to the seven most common red flags that come up in the interviewing process for the rest.

Hiring is Just One Part of HR: Download the Startup HR Survival Guide For the Rest

Hiring is a key piece of your startup’s success, but it’s only one element of a robust and effective HR strategy.

The most successful startups know that their path to scaling from seven to nine figures will be made possible by the practices they follow to attract and retain top performers in their company.

I mapped out this and more in my Startup HR Survival Guide. In this free guide, you will learn:

• How HR can drive growth
• How to hire
• How HR evolves as your company grows
• And more!

Fill out the form below to download the free guide and put your company on the path to hypergrowth.