Building a biodiverse startup team
An early PayPal employee revealed to me recently that one of the key success factors early on for the company was hiring only friends or close acquaintances of the founding team. Some clear advantages of this approach are:
- Each candidate is already vetted.
- Compensation will probably be more reasonable since the relationship is proprietary.
- The close rate is naturally going to be higher.
The main disadvantage of this approach is that it doesn’t naturally scale beyond the social network of the founding team. At some point, even though the marginal employee brings on new connections, the number of net new connections will experience diminishing returns. I call this a lack of “biodiversity” on a team. At some point, you need to bring in an outsider to provide a shock to the system, which can make it more resilient and open up new networks.
The big question is when to do this. I’d argue as late as possible. Keep the team small and familiar until you simply can not do so anymore.
Unfortunately, I’m seeing lots of companies giving up too soon. And when they do give up, the floodgates open. Professional recruiters (both inside and outside the company), LinkedIn, GitHub, and other sources of leads are necessary at a certain point. But these can become a hard habit to kick once the recruiting machine is up and running.
If you’re going to reach out cold, at least focus on a few core people that matter deeply in your industry, and get those folks on board. Make sure their social network is non-redundant to that of your team. Then, empower their new hires to begin the cycle of hiring their friends and close acquaintances.
Thinking of each new hire as bringing on net new connections is a far better way to approach recruiting and will help push out the need for a cold-call recruiting engine until much later in your company’s life.