Lessons - Why Most Entrepreneurs Hire The Wrong People | Steve Hoffman - Chairman of Founders Space

In this episode, we dive into key lessons for aspiring entrepreneurs and startup founders. We'll explore the importance of building a solid team, why the perfect idea isn't as crucial as you might think and how to attract top talent even without significant resources. You'll also learn about managing difficult situations, such as when to cut team members who aren't performing and how to lead your startup toward success from day one. So let's, you know, at a high level, what somebody wants to start something? What, what should they think about when they're when they're first starting a company? I was saying North America's, I mean, I'm almost positive. That's like 99% of the audience that would be listening to this, but what should they think about? So I tell entrepreneurs, you know, a lot of people have this misconception. They believe that when they start a company, the idea is so important, and they should like spend all their time iterating on like, what's the perfect idea I could launch with? And honestly, you know, your idea is not the most important thing because most likely that idea will change. Like when you begin your idea, if it's new, if it's groundbreaking, it hasn't been tested by nature, right? If it's really innovative and it almost has to be by nature for a small startup to grow into a unicorn, you have to have something very special, very new. So if it's that new, then you don't have the data to know if it will work or not. So don't waste a lot of time of thinking, you know, trying to come up with the perfect idea. Instead, take a direction you're interested in and then spend 80% of your time on one thing, one thing at the beginning, building your team. Now people don't think about this. Like they want to build the product, they want to raise venture capital, they want to, you know, go out there and get press or whatever they're going to do, but they don't spend enough time building their team. They often, so many entrepreneurs overlook this and I will tell you, the team is going to define your success, not you. You're one person, one person never built a billion dollar company ever, like you have to. If you're going to build a unicorn, you need, if you want to build a small solo business, fine, you know, you can ignore the team piece. But if you really want to grow and scale a company, you need an excellent team to start with and you need a team with skills that you don't necessarily possess. So I tell on most entrepreneurs, honestly, the reason 90% fail, you know, this is why I call surviving a startup is I want to show you what you need to do every step of the way to survive is the reason they fail is because they compromise on their team members. Like they'll, they don't know a lot of, let's say they have an idea they want to explore, but they don't know the right engineers, they will take whoever comes their way, you know, whoever, you know, it happens to be available, somebody they know or somebody they bumped into, but they aren't the best. Look, if you're going to build the best company in the world, if you're going to be number one in your market, which is what you have to be, if you're going to be a unicorn, you have to be the market leader, you're going to need absolutely the best team, which means the best people in every area, you know, technical area, design, business and sales. If you can't get top notch people, forget it, don't even start. If you get top notch people, I guarantee you, you will come up with the right idea. So how do you find those? So follow a question, very good points. How do you find those people? What do you, what do you look for? How do you, how do you, as a first time entrepreneur, a lot of noise out there, a lot of resumes are going to come your way, right? If you put up some job at her, where do you go to find these people? What do you look for? That is a question I get asked by every entrepreneur after I know. I tell them, you know, your team is subpar, you know, I try to be honest with them, but kind, right? I'm like, you guys, you know, you don't have a killer team, you're never going to produce a killer product or, you know, beat out your competitors and focus on it. They're like, but I can't affluent it. I have no money. Like, I can't, you know, I can't even pay people. And I tell them the none on one test of a great CDO. And this is what I look for. Like, if I'm a, I'm a venture capitalist. So when I fund entrepreneurs, I say, the first test you have is to find a great team without any money. Like, if you can't do that, why should I trust you with millions of dollars, you know, or any amount of my money? Because if you can't even, you know, convince people to join you at the beginning, uh, because they believe in you, how are you going to get investors to believe in you? How are you going to sell customers? How are you going to sell the world on your vision? You need that ability. So that leadership ability. So I tell them, first of all, it's not going to be easy. Like, there is no magic wand. I could pretend I'm going to give you a magic wand for, you know, that will make all these people appear. But honestly, what it is is it's getting out of your shell. It is engaging with other people. Not at the beginning, you don't have money, most likely, right? Unless you're already successful. Like, you know, Mark Zuckerberg or somebody like that, you have as much money as you need. You don't have money. You don't have other resources. But what you do have is your ability to communicate as a leader. So you need to go out and you need to engage these people on a deep level. Like the belief in your business and you need to be receptive to their ideas. Remember, if you're going to try super smart, ambitious people, they want to feel like they're contributing to a project that they believe in that they take ownership of. If you want them to own the idea, you have to let them contribute. You can't just say, this is my idea, you know, I don't want to hear what you think. Do you want to join or not? That just doesn't work. You have to truly for your core team, right? You have to truly make them a part of the thing. And this is why you don't need a fully flushed out idea. You need a direction that you think is very promising. You need to find people who believe in that direction. And then together, you can start to iterate. But by bringing that, you'll find it's absolutely amazing by opening the door and saying, let's build this together. I want to hear what you think. What ideas do you have? Where could we take this? Suddenly, these people who are excellent and they may be getting a job at Google or Facebook or something, they'll quit those jobs because they think, oh my God, because as soon as they start investing their time, all of us do it, we fall in love with it. Like that's what is a meaningful task. So you have to have a meaningful engagement with them. And then they will, you know, often it's their project too at that point. They will just work for you for equity and commit fully. And that is a start of a great relationship. And that is the beginning of a great business. I've always heard, I heard the saying, I think it was from one of the founders of Buffer. He said, if you're hiring for a start-up, and the first question one of your hires asks is, you know, how much vacation time am I getting or whatnot? Nothing wrong with those questions. But those aren't the people that are going to really love a start-up environment. They're not going to love it. And that's what you have to have at the beginning. You need to have that love, that passion that probably is an abnormal amount of passion that most people don't have for a company or for their work, right? You have to have to find people that can even emulate like a tenth of a percent of the passion that the founder would have. You can find those people. That's when you win, but it's very difficult. That is true. It is difficult, but people have that pack a lot. The people you want have that passion. And those people are out there waiting for somebody to approach that. So, often, I've heard horror stories and lived through horror stories. Of entrepreneurs, I'll give you an example. There's an entrepreneur I was working with. I'm not just one. This happened many times. But this entrepreneur brought somebody onto their team to do the coding, right? The person was from Google, Crack Coda. And this person was so excited about the project at the beginning. You know, this passion was there. But the person, when he asked the person, this coder did not want to give up the Google job, right? They were like, let me, I want to be safe, right? When this takes off, I'll do it, but I'll do your project on the side. Well, they started on great. And then over time, when things just didn't take off right away, the person got distracted. Like at Google, it's not easy to work at Google. I mean, they expect a lot out of you. They hire super smart people and they want them to work. So this person got distracted by other obligations. He had at Google. And all of a sudden, this productivity will tune and the entrepreneur's waiting. Like, where's that passion? What's going on? You know, in weeks go by, and should I cut the person and start all over, find somebody else and don't want to do that, then they're in this conundrum. You know, they don't know what to do eventually. After several months, they had to cut the person and start all over. So they wasted several months. I, to your point, I say, don't commit to someone unless they'll commit to you, right? So if you want, if you want to get, it's one thing anybody can say they have passion. And some people are truly passionate, but unwilling to commit, like they're passionate for a brief period of time. But there's a litmus staff like, okay, quit your job at Google and let's do this full time. No, I want to do it on the side. Okay, then you're probably not the right person. You just have to say that and move on. And I guess the follow up, because I know this has asked of you a lot, would be when you do have the wrong people in your organization, is there a way around it, or do you just have to cut them in rebuild? Is that the only solution? So in a big company, it can afford some, some dead weight. You could afford dead weight if you're Microsoft or any of these huge companies. You know, if people, they just, you know, if somebody isn't working out because it's often hard to fire people, the bosses just shunt them off to a corner. In a startup, you cannot afford an ounce of dead weight. You have to be a lean, mean fighting machine like you cannot have any dead weight. And that means that you have to make a decision. Now, I myself have stumbled in this area. My early startups, like I had this engineer who was good friends with my other engineers, and they recommended I bring this engineer on, but the engineer actually was not good. Like he was very arrogant. He've talked a good talk, but his implementation was buggy all the time. It kept crashing. It was a nightmare. But we again, after I only found out how, how inept he was, you know, six months in because we had already, uh, we needed, I didn't, I trusted and I thought he would build. They, they liked him because he was, um, because they were friends, right? But he wasn't the right guy. And, and this system, but we were six months in. I felt like we can't go back six months. It's insane, right? We spent six months on this. So I stuck with the guy, another six months and then another six months. And I will tell you the day I fired him, thinking all hell would go lose every, I got this new engineer and they just, oh, this, this system is crap. Totally redid it in a month, in a money and it worked better than it ever had. So I will tell you, you know, cut your losses. The day you realize somebody isn't working out as a startup, you cut them, you literally cut them right that day. And you go, and even if you think your whole company is going to implode and it will set you back six months or whatever it is, just do it and find the right person. Yeah. Very good advice. It's very, it's very hard. And I guess that's why if, uh, you know, I'm sure this will come off at some point, but if you are an entrepreneur and, um, you're having the deal, it is very difficult personal discussions with people that you've hired on. Um, it can be easy to default to literally what you just said, just keeping them on, keeping their own, keeping everybody happy. So maybe this, yeah, I was also worried about my other employees who liked them, but it wasn't a question of whether you like somebody. It's like, are they performing? You know, I didn't want to roll around. I didn't want to do honestly. You can't worry about those things. You just, in the difficult discussion, you just have to be totally on it. You like, you just have to say, you know, first of all, you have to give them a warning right away when you first see the problem. Like, don't ignore it. Like, just stayed it up front, put it in writing because that protects you legally and just stayed it up front. You know, these are the problems and you warn them twice. Third time out the door. Like, like literally, we're cutting the launch. It also, you're right. I like that though. It shouldn't be a surprise. I guess, yeah, that would be a surprise. They, and you shouldn't worry about lowering their productivity by telling them they're not doing a good job. If they're going to, honestly, if they're going to be offended, abide your words and not step up to the plate, then they aren't the right person for the job. So you just need, it's, it's, you just need to be totally honest, but not in a mean way. Like, you don't, like, you don't have to be mean. You just have to be firm. You just have to be, this is what I expect of you. This is what we need to get done. If we're not going to hit that goal, if the system goes down again or you don't hit your milestones, then we're going to have to review whether we can keep you on. Period. Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.