What losing three co-founders taught me about hiring

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Kevin Holler
Head of Product
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As a first time entrepreneur, I made plenty of mistakes while building my founding team at Huma. I went through three co-founders in the first year, parted ways with my first key hire and hired for skills we weren’t ready for yet. Each of these events had a significant impact on our strategy and product roadmap, consuming two of our most valuable assets: time and cashflow.

Building a founding team is arguably the most crucial and difficult task every founder must face. Selecting your co-founders, and subsequently your first key hires, is a fine art that takes careful thought and consideration. If you think of each team member as a wooden block in a game of Jenga, then you’ll know it only takes one to go wrong for everything to fall.

CBInsights published a report on the top 20 reasons startups failed, in which they analysed 101 Startup Post-Mortems. The third biggest reason for failure was not having the right team (23% of those analysed), after no market need and running out of cash:

“A diverse team with different skill sets was often cited as being critical to the success of a starting a company,” says the report.

Building your founding team is nothing like hiring people in an established company. Over the years, I’ve learned to look out for important traits and characteristics that can make or break your startup. I’ve provided some additional links for further reading below as this is more of an introduction to the topic.

An appetite for risk

My first co-founder was a good friend and former co-worker: an incredibly talented and experienced designer, who brought our brand to life and brought creativity to everything we worked on. Together we had everything we needed to start a company.

Two weeks after quitting my job and leaving behind a six-figure salary, my co-founder and I went to interview a candidate for our first position. After the interview, my co-founder turned to me and told me that after a lot of thought he would not be able to quit his job. He had a family to think of, which meant that the sacrifice and risk were much higher for him.

You need to look at the people for who they are, the lives they’ve lived, the things that are important to them and the experiences that have shaped them.

My failure to assess his appetite for risk left me without a co-founder or the skills to complete our minimum viable product. Because it was no problem for me to risk everything, I never flagged it in my decision process and put all my cards on passion and skill.

It’s easy to mistake appetite for risk with eagerness and passion, but to truly get the answer you need you must play devil’s advocate and consider:

  1. The worst scenarios you might be faced with
  2. A person’s personal circumstances
  3. How those circumstances affect that person if a worst case scenario unfolds: “If we run out of cash tomorrow, how many months are you financially able (and willing) to go without pay for the company?”

Questions like this are painful and uncomfortable. But if you’re looking for the people that will go to hell and back with you to succeed, ask them.

Passion and belief

My second co-founder was another good friend and also one of my roommates. An experienced and pragmatic software engineer with financial and business acumen – another perfect fit, or so I thought.

When he joined I knew he wasn’t passionate about the problem. I naively put this aside because he had the skills we needed to build a business. Four months later he resigned, unable to put up with the chaos and uncertainty of any new startup because his heart wasn’t in it.

Spend time with your candidates talking about when they last stepped out of their comfort zone and listen carefully to their experience.

About 18 months later I hired our first lead software engineer to develop our most complex intellectual property yet; another friend and one of the smartest computer scientists I know today. I was too focused on closing our first big round of funding that I did whatever I could to hire him, ignoring the fact that I had only ever known him to be passionate about one thing: security. My fear came true when we both realised it wasn’t the right fit only six weeks later.

Passion and belief are incredibly hard to find at the beginning, especially for those looking for the right co-founder(s). Again I made this mistake because I was so blinded by my own passion and belief that I didn’t flag this as a major problem. Without a network of potential candidates this becomes incredibly difficult, because finding people who care about the same thing as you, in just as big a way, is hard… very hard.

The ‘no-comfort’ zone

A few years back I wrote about going beyond the edge of your comfort zone. Little did I know that I’d end up living outside of that zone for the entire two years of my startup journey.

A coffee shop could open tomorrow and start generating revenue, while your startup could be in development for months or even years before you open your doors and see a paying customer. This kind of uncertainty forces people out of their comfort zone because each founding member is critical to the potential success of the company. It is imperative that each founding member you hire understands that they are taking on far more than the job they were hired for. The longer they have been in a secure and steady job the more difficult this transition will be.

My second co-founder, who left the company, previously worked as a contractor for large firms with big budgets, long roadmaps and processes for everything they did. In contrast, an early-stage startup is the complete opposite of this – in other words, total chaos. There was no structure and everything was changing all the time. As we approached the end of our runway I realised how uncomfortable this was for him – everything he was used to had been turned upside down.

Before taking the plunge and starting a company I spent several years working with startups. I enjoyed the chaos and learned to live with it, but again I was blinded and failed to consider some important signs. You need a good understanding of someone’s past to see how they will fair outside of their comfort zone. Spend time with your candidates talking about when they last stepped out of their comfort zone and listen carefully to their experience.

The overarching problem for me was that I was blinded by the things that seemed obvious to me, so I didn’t look for them in others. Risk, passion, belief and getting out of my comfort zone were not a problem for me.

It’s important to remember that skills should only be one of the variables in your criteria for building a founding team. You need to look at the people for who they are, the lives they’ve lived, the things that are important to them and the experiences that have shaped them, because when things get tough, and they will, you want to be amongst friends you trust – not people with job titles.

These were expensive mistakes to make and we were lucky to overcome a lot of them. One of the main reasons for this was hiring Thomas Cullen, who joined us few months in as a developer and shortly after took the reigns as co-founder and head of product. Together we spent two years facing every challenge together until the very end. Neither of us ever saw things playing out as they did, but I learned a lot about what makes a great founding team member from our time working together.

Further reading:

  1. Single-founder startups
  2. The founder's dilemma
  3. Drawing the line between founder and first employee
  4. How do you know you’ve found the right co-founder

About kholler

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06th Sep 2016 11:14

Thanks for the article Kevin, it's an incredibly useful, frank account of what you went through at Huma.

If you're reading this and have any advice to add please leave a comment below!

Chris

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06th Sep 2016 17:28

Thanks for the article Kevin. As Kevin’s “second co-founder”, I absolutely agree passion is essential in co-founders and Kevin is right that I didn’t have this when I joined Shake/Huma. I told Kevin from the very beginning that I wasn’t really interested in the problem domain itself but rather I was more excited about developing the business and tackling the engineering challenges. Passion is the sauce that helps get you through when nothing quite works out as planned (which is more often than not).

Various startup experiences before and after Shake have helped teach me that co-founders must be executing to a single vision. I didn’t have a deep interest in Shake’s problem domain but I did have my own vision for the company, which was very different to Kevin’s. Having a shared vision is crucial.

I was leaning on Kevin for vision but it wasn’t enough for me. We were haemorrhaging cash and we didn’t have the team velocity to achieve our targets in time. When it became obvious to me that the company would go bust if nothing changed and after trying (and failing) so much to alter the status quo, that’s when I made the decision to leave and sat down with Kevin to break the news.

I stayed for 6 months, invested in the company and facilitated a quick exit. I don’t regret joining Shake, as it was most definitely a defining experience for me and I met some great people along the journey.

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07th Sep 2016 11:59

So brave and honest of you to share your experience in this way. It's great advice and anyone setting up in business should take heed.

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to Karen Lord
08th Sep 2016 08:17

Thanks for the comment, Karen! Have you experienced anything similar?

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17th Sep 2016 19:18

Great article Kevin & thanks for sharing it with us.

You make several very pertinent points, especially about understanding an employees personal circumstances and motivations, particularly when they're out of their comfort zones.

When it comes down to it, most people don't know just how risk averse they are, until they're staring down the barrel at the risk. Likewise, many entrepreneurs find it difficult to understand other peoples reservations, particularly when their own driving force is a vision of what can be.

That's why one of the most important things for any founder to do is to share their vision, with fantasy ending and all, with every one they bring in.

Good luck!
Steve

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