There’s a lot of advice out there about how startups and entrepreneurs should hire fast and fire fast.  Fundamentally, I think this is backwards.

I am not surprised by this advice for a few different reasons.

First, the very nature of startups, as many in the industry define them, is high speed growth.  When you’re really on fire you have virtually no choice but to hire fast to keep up with the growth.  Along with this need for speed is the idea that everything should be done quickly. How will you go form $0 to $1B in five years if you’re not super fast?

Second, advisors, pundits, and senior executives love to look at firing as a test of a manager. How can you show that you’re tough without firing someone? How can you  show that you can make important decisions? Many times in my career I have been advised, ordered, or encouraged to fire someone and I have also seen this happen to many other managers. In my experience, executives ask subordinates to do the firing because they don’t have the guts to do it and prefer to delegate it.  (Many seemingly confident executives are not, of course.).  The advisors or investors who make these remarks do not bear any of the consequences of a firing—they only bear limited benefits.  So, “fire fast” is a cheap way out.

Third, hiring the right person is hard.  If you meet a potential hire online, you talk to them (In person or over the phone?) for maybe an hour or two, check their resume, have some other people talk to them and make a decision.  How can you possibly evaluate their skills in that time?  It’s easier to just say “some hires won’t work. Fuck it. Hire fast, fire fast until you get the right mix.”

I have three big problems with this approach:

  1. It’s unfair to your employee who is fired
  2. It’s unfair to your other employees
  3. It generally ignores switching costs.

In what will be a theme for some future blog posts, I think most entrepreneurs as a group are not paying attention to number 3, but let’s try to focus and break them down in order.

When you hire someone, they are under the full belief that a) they will be at the job for AT LEAST one year and b) THEY will be the ones who decide to leave.  People often leave higher paying jobs, stability, and a reputation when they leave a job for a startup. So if you, as an entrepreneur, make the mistake of hiring wrong and then decide to fire them, they have to find their way back to the right place.  You may have thought during an interview “well, it’s OK, I can always fire them” but you didn’t share any misgivings with the candidate. You just told them to hit the road after your hired them

This is about personal relationships and company culture. With respect to the team you have (and are keeping), you are asking them to integrate someone and then let go of them. The employee has to be trained (which your team probably does) and people want to get along with their coworkers, so investments are made in friendships and getting to know each other.  ”Firing fast” gives your remaining employees the impression that you don’t mind being unfair to people – and they may infer that means them, too.

Finally, you ignore switching costs with respect to training and workgroup harmony. As a corollary to the training factor, it takes investment to bring people on: teach them your systems, any job-specific tasks, etc. Interns aside, I estimate it takes 8-12 weeks to get anyone employee past the investment curve and fully productive.  If you fire them in 90-120 days you’ve wasted half of your time (and presumably they didn’t even produce what you expected in the second half of that time, since you fired them.)  As you continue to change the team around, it creates problems for the team within itself to get work done. Roles and responsibilities become unclear.  (This also applies if you love reorganizations, but that’s for another blog post).

Recognizing that Wallaby != Uber and our valuation is still in the 10 figures instead of 11, 12 or 13, I will still share something about our team and about why it works for us.

It’s been almost two years since we made our first hire.  We have six full time employees, plus the two co-founders. We haven’t had to fire anyone.

Our first employee landed in our lap. He sought us out before we even had funding and although I was surprised by it, so I stayed in touch just in case.  (I was also a little concerned that he managed to track us down, despite having been “in stealth,” via one random domain we owned that didn’t have privacy on.) In what has become a theme, we agreed to keep talking, just in case the time was right.  When we had funding, we had another conversation or two and sealed the deal.

I’ve always assumed we drove our second employee nuts because we went back-and-forth before we made an offer.  With less time to get to know him and having previously thought we were hiring a different person from my network (before we even posted the job), we were just less prepared.  We learned a lot about each other during this process and his patience with the whole thing made us know he would be the right hire. (Again, attitude is key.)

We’ve hired through a recruiter (after sorting through dozens of bad applications), we’ve hired out of our networks, and we’ve hired when people cold e-mailed us.  There is no one panacea to finding the right person, but we have developed a great process for understanding attitude and aptitude. (Note: BOTH are important.)  I have hired at least a dozen people in my career in various jobs and interviewed dozens more on committees. I like to think that I am starting to understand what works for me as a manager and for Wallaby as a team.

Because we hire slowly, we have a team that knows each other really well. They get along, they know each others strengths and weaknesses, and they are super effective.  There is a saying in software development that 1 good engineer is worth 3 bad engineers.  I know we have a team of great engineers and that because of how they work together, we are fast, effective, and making wonderful progress with double digit monthly growth and revenue in hand.

In the end, you have to build a team that works for you, but for us, we like to build it slowly so that we can operate faster in the long run.