Back before founding a company was cool, it was a lot easier to get a lot of smart people in a room. Rock stars were hireable because they weren’t forging their own paths. That led to powerhouse teams like the “PayPal Mafia” seen below.
Alongside the future founders of LinkedIn, YouTube and Yelp at PayPal was Keith Rabois, now of Khosla Ventures. Today at the Postseed Conference in SF, Rabois explained how PayPal was lucky to start at the right stage of the talent dilution cycle.
According to Rabois, during down times when there’s not a lot of funding or fever to start companies, it’s easy to hire great talent. With enough intelligence centralized on a few startups, they grow. With time and success, hype builds around the idea of entrepreneurship and being a founder becomes a full-blown fetish.
Eager to coin on the success of the ecosystem, funding becomes plentiful and smart people found their own companies rather than join others. It becomes tougher to get a critical mass of talent on the same team. These companies raise money but don’t have the skills to win big and deliver returns. The bubble deflates, hype around startups cools off, and it becomes easier to hire strong people again.
But what should startups do if they’re unlucky enough to be getting off the ground when there’s a ton of recruiting competition and everyone wants to start their own company? You know, like now?
Rabois laid out four strategies for founders facing a tough hiring climate:
- Sell The Mission – Founders must learn to convince potential recruits that their company will do good for the world, not just make a lot of money. Sure, they could go start their own company and potentially get rich, but joining this one will let them have a real impact. Founders have to sell both this macro mission, but also the micro mission of why the recruit’s contribution will be critical to making people’s lives better
- Recruit Outside Of Central Casting – Rather than just trying to hire seasoned technologists or entrepreneurs, Rabois suggests sidestepping that scene and looking for people beyond the startup sphere. That could include prodigy college kids or geniuses from other industries, who haven’t seduced themselves into founding a company.
- Create A Founder Culture – People often become founders because they can’t or think they can’t submit to being managed by someone else. To hire these types, companies have to build a culture where free-thinking self-starters can flourish. Rather than process-driven bureaucracy and hierarchy, founders must empower employees to make and execute decisions so they feel self-actualized while still having a boss.
- Mentorship – Create a culture of learning, not just doing. When founder types know they can get an education that could help them start a company later, they’ll be more willing to join one now. If they only stay two years before fleeing, that’s still two years of valuable talent, and it’s on the founders to make the company interesting enough that employees want to stick around.
The tactics might seem time-consuming, but early hires set the tone for the company, and mediocre recruits can be toxic. It’s worth the effort for founders to enlist lieutenants they can trust to inspire the rest of the troops.