Talent density in early teams

The team is the company

“The team you build is the company you build, not the plan you make.”

Vinod Khosla

At a startup you can be tricked into thinking you’re building a tech company, so you focus a lot on product. But ultimately, you’re really building a team to build the product and then the company.

Your first 10 hires are the most important hires you’ll ever make

Early employees multiply.

• The first 10 employees become the first 100 employees.
• The initial employees will interview new candidates and they’ll hire people in their own image.
• The people who want to come work for you judge your company by who’s interviewing them.

The right folks will deliver dramatically better results

People in creative roles like engineering or marketing differ across both productivity and ingenuity. Across these dimensions, there are people who are 10Xers.

The best people can also do things that other people will never be able to do. Five average designers simply could not have designed the iPhone, regardless of how much time they had.

If the team dictates the outcome and top performers are 10x better than average performers, then it follows that you should focus more on the quality of the people you hire than anything else.

The challenge startups face with hiring

• By the time someone is 30, it’s usually quite easy to see if they’re exceptional or not.
• If someone is obviously good, other companies will be all over them.
• Startups usually can’t compete on salary or brand.
• So to build a team of A-players, you need to find “undiscovered” talent.
• This is really f***ing hard!

Moneyball for tech employees

“You can relax one constraint: you can relax the fact that they are talented, or relax the fact that it’s apparent that they are talented. We relaxed the latter.”

Patrick CollisonStripe

Bet on potential, not pedigree

If you can’t hire people who are obviously good, then you need to bet on people who have high potential but lack pedigree. People at the ugly duckling stage of their career.

Much like a value investor, you’re looking for talent that the rest of the market undervalues. It requires contrarian thinking, novel ways of assessing talent and a willingness to sometimes get it wrong.

You’re not aiming for zero defects. In fact, you specifically want to go for high variance candidates.

Hire people with a steeper slope, even if that’s more upfront work

Injecting raw talent into your company comes with some tradeoffs.

New hires often won’t actually know how to do their job, at least initially. You’ll have your work cut out for you with new hires. Make the investment.

Slope matters more than starting position and the right people figure things out remarkably fast.

When deep expertise matters

Most employees should be hired for their potential, but there are instances when you need expertise:

• Executives are usually recruited based on proven experience building out functions. You want the playbook as much as the player.
• Consultants are useful when you need deep expertise on a particular problem. There’s no reason to hire someone full-time with very specific knowledge when you could just rent it.