Great startups don’t place wanted ads?

Cleaning out various RSS feeds and in-boxes over the holidays I came across a number of stealth or early stage start-ups looking to make key hires. Beyond recruiters and friend-of-friend “do you know anyone” emails, several were posted to specialized job boards. You’d be tempted to assume that hanging a “hiring” sign in such economically unclear times would be an indicator of success, but another notion struck me. Namely, are such wanted ads actually evidence of individual weakness because these companies haven’t been able to source key hires from their current employee base, funders or referral networks?

If a company can get key hires from known channels there are two main advantages.

1) Speed – As serial entrepreneur Mike Cassidy (Stylus, Direct Hit, Xfire) has emphasized, speed is a start-up’s best strategy. Check out this preso – specifically slide 16 – and notice how he looks to make offers the same day as interviews. Why can he do this? Great interview process but also familiarity – the people he interviews are folks his team has worked with before. Which brings us to…

2) Execution – The cost of a bad key hire to an early stage start-up can be fatal. When you’re hiring people you know there’s less risk in culture fit, aptitude, etc. And if you’ve actually worked together before there’s routine, process and shared vocabulary. I’ve written about this before re: YouTube and how a key success factor was Chad and Steve knew or worked with many of the first 30 hires, including almost all of the engineers.

I wonder how many of the first hires at Facebook, Google, eBay, Yahoo, etc were referrals, especially in engineering. When did they need to place their first wanted ads for non-technical roles?

I wonder how often the ability to source talent comes up in funding discussions, either as the entrepreneur evaluating this as part of VC “smart money” or the VC firm’s due diligence. Not just as a post-funding value add, which all firms try to do (Polaris Capital partner Mike Hirshland recently blogged about his satisfaction in helping place 143 senior execs in their portfolio co’s), but as something vetted upfront.

For example, asking the founders to document their next 20 hires by position and how they’d find these people. Or looking at how many of the current team came via referral. Or a founder posing a question to a funder like “I need help finding a rockstar VP of Sales. How would you help connect me with five great candidates w/o paying a recruiter.”

Great teams matter more than ever. If you can take some team risk off the table you’re way ahead of the competition.

4 thoughts on “Great startups don’t place wanted ads?

  1. Long time reader, first time poster. Heh. Timely read for me as I’m confronting this right now with my fledgeling It’s booming quickly and I’m trying to get my IA person brought on with some coders…and weighing working with friends vs. working with proven talents. Thanks for the food for thought. Tod Brilliant

  2. in particular, the ability to hire a previously-known quantity in engineering & development (which can be difficult to assess up front) can substantially reduce risk / increase success.

  3. @auren – thanks! i was thinking of you guys too when i wrote this knowing how much thought you put into hiring, culture and team composition at your companies.

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