Don't Make These Hiring Mistakes

I've been trying to hire our first engineer for a year, and like, I can't like find anyone. And it's not because there's literally no one with the word engineer on their resume that they can hire, right?

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Hello, this is Michael with Harj and Brad. Welcome to Inside the Group Partner Lounge. So, Y Combinator Group Partners, we find ourselves repeating the same advice over and over again to startups. Before Covid, we'd often gather together in the Group Partner Lounge at the Y Combinator office to try to figure out why this was the case and how we could help startups figure it out faster. But now that we're all online, we're doing it in front of all of you.

Today, we're going to talk about startup hiring. So, frame this challenge for us, because man, this is something that we debate founders with all the time.

Yeah, so one of the most common things founders tell us they need to do during a Y Combinator batch is hire. And one of the most common bits of advice we give is to not hire. This is something we should talk about, and like, you know, where we sort of have headwinds in giving this advice is if you look at the list of the top Y Combinator companies or top startups, they have thousands of employees. So obviously, you do have to hire in order to build a big company. We totally get that.

And so when we give this advice to the startups to not hire so much, a lot of... well, you know, there's a little word out there saying, "Oh, like Y Combinator partners don't get how to build companies." Like, you know, you need to hire, you too, like they really ramp up your hiring. And so we have to find like the right level of advice that lands with founders and gets them to make the right decisions.

Yeah, for me when I think about this challenge, what's tricky is that almost all the advice that's written online about hiring is written for post-product market fit companies, folks that have products that users love, and those companies are trying to scale up to offer that product to more and more people. Most startups are pre-product market fit.

So now we confront this like very large dilemma, like you're reading advice for a stage that not only are you not at now, but odds are, you will never be at. And it turns out if you apply that advice to your pre-product market company, you might accelerate your death. So how do you deal with that? That's the challenge.

So Brad, why don't you start? What are the lies that Y Combinator founders and founders in general tell themselves about why hiring will solve all of their problems?

Sure, we'll jump into a couple of them. So the big one is the thought that if you only had more people, we could get more things done. I hear this every week from a founder. "We need more features, Brad! We don't have enough features!" That's right. We need to get the Android app out; we need to get the iOS app out. We need specialists for each of those different apps.

I've even had people tell me that we need to hire more people so that we can reach profitability faster. And do those people bring—are they somehow paying the company instead of collecting salaries? They're receiving negative salaries. That's an interesting business model—fascinating.

Harj, how about you? What are you hearing as the reasons why founders give to hire away?

Yeah, I think another one is just, it's a marker of progress. And so, founders feel like investors will be more impressed with them if they have more employees. I think they feel like customers will be more impressed. And yeah, it risks becoming like a KPI, right? That you focus on it. It feels good when you tell your friends too. You're like, "Oh, like, you know how's the company doing?" You're like, "Oh yeah, we're at like 100 employees now!" So I think, like, you know, things must be going great.

I think this is one of those fun stats that like second-time founders react to differently than first-time. Like, I remember when we were all going through Y Combinator, like the number of employees might have been the primary KPI for every one of our companies. Like, and I feel as though, like after managing people, I'm like, "Oh god, if I could just do it with fewer people."

That brings up another set of lies that founders tell themselves...