When you are starting a company and raising capital, it’s natural to think about your hiring plan. As you create financials, you’ll try to predict how many hires you need at each stage of the company and try to show a reasonable ramp of building your team. But as practical matter, how do you make the decision of when to hire for a position? Just because your plan says that you should hire a Marketing person in September of year 2, does that mean you should? I don’t think so.
Here’s another method: wait for the pain. Wait until you can’t stand it anymore and there is no other option other than hiring a new person. And if you don’t really feel the pain, wait longer.
I borrowed this thinking from my very early days at Punchbowl. I was talking to one of my friends (and angel investor) and I asked him, “How do I know when to quit my full-time job that’s paying my bills and jump all of the way in?” And he said to me, “Matt, you’ll know. It will be so painful to go to work, so painful to think about anything else but Punchbowl that you will just know. Don’t quit your full-time job until you really feel the pain.”
Several years later, I apply this fantastic advice anytime I think about adding a new employee. It’s a big responsibility to hire an employee, and I take the decision very seriously. I’m acutely aware that people entrust their livelihoods and families in me and I want to provide all employees with the comfort that they are joining a company with a bright future. I don’t want to over-hire and end up in the position where I have to reduce the staff in a layoff. To me as CEO, that’s the worst-case scenario.
Here’s an example of how I apply this advice to my hiring plan. For several years, Sean Conta (co-founder) handled all of the Punchbowl customer service emails. I would jump in and help when he was out of town or unavailable, but he handled almost all of it. In Q4 of 2010, our site was growing like crazy and that meant that we had more customer service than we could handle. Along with Sean, I was spending many nights answering customer service emails and we had to trade off on the weekends. But even with that effort, the volume of email and other work was too much to handle. We were crushed with customer service emails, and it was painful. So what did I do? No, I didn’t hire someone. Instead, I asked our Marketing Manager to step in and help with customer service. She had proven herself as a great utility player with the right startup attitude. So Stephanie stepped in and answered customer service emails. It temporarily relieved some of the pain and got us through the Q4 high-season.
By the beginning of 2011, the situation was no longer manageable. It was painful for everyone involved. I needed to focus on fund-raising and other responsibilities, Stephanie needed to get back to marketing and planning for the new year, and Sean still desperately needed someone to help with customer service. We had reached the point where there was no other option – we had to hire someone. So, in March of 2011, (coincidentally on Sean’s birthday) I gave him the present of a new customer service person. Ryan has now been at the company for two years, and his role has expanded to quality assurance. He’s been a great hire and an invaluable member of our product team. Last year ahead of Q4, we added another customer service person – same rules applied – the pain was so acute that it was time to add another employee.
Stop and think about the hires that you are planning to make this year. How many of these new hires exhibit the same kind of pain that we felt in 2010? Have you exhausted all other options? Is there an internal resource that can step in an alleviate some of the pain? Should you hire a temporary independent contractor instead? Think hard about whether you really need that full-time hire before you pull the trigger.
Hiring a new employee is a responsibility to the person you hire and their family. Use the above anecdote to decide if you really need to hire a new employee. More often than not, you haven’t hit that acute pain point yet. Make a careful, thoughtful decision before hiring any new employee. It’s simply the right thing to do for your startup and all of the people involved.