Startups Must Hire The Right People And Watch Every Penny. Or Fail.
Michael Arrington
236 comments »
Yesterday Jason Calacanis, the founder of Mahalo (and, full disclosure, our partner at TechCrunch40), wrote a blog post titled “How to save money running a startup.” Boy was he attacked. Bloggers lined up to take their shots at him. Examples are here, here, here and, especially, here.
Our own Duncan Riley also wrote a post criticizing Calacanis and a firestorm of comments blew in. He took a more humorous approach to make his points, but his opinion on the matter was clear.
I happen to disagree with Duncan and the others criticizing Calacanis, though. Our writers have complete editorial discretion, and I would never ask him to change his overall tone or message. But I do want to chime in with my own thoughts because this is an important cultural issue and worthy of further discussion.
Some of Calacanis’ points were probably written in haste, like his statement “Fire people who are not workaholics” (he later changed it to “Fire people who don’t love their work”). Others were not controversial, like his advice to “Buy cheap tables and expensive chairs.” Overall, I get the impression that if he had spent just a few minutes editing his post, he would have had a 100% different reaction from readers.
I’m not that interested in analyzing each of his 17 suggestions - some I agree with, some I don’t. But I am interested in adding my thoughts to what I believe are (or should be) his underlying messages:
Startups Must Hire The Right People
Startups that hire incorrectly fail. They don’t probably fail, or maybe fail. They just plain fail.
You must hire the right people. In particular, the early employees must be perfect. This is more important than anything else, including the product or business idea. Perfect teams can adapt to failing products or market/competitive issues and correct for that. That’s why great teams tend to work together over and over again, and sometimes start companies even before they know what the product will be.
The most important part of hiring correctly is to not hire the wrong people. The second most important part of hiring correctly is to hire the right people. What that means is that it is better to not hire anyone at all if you can’t find the right person. And if your startup fails, all the perks, time off and general coddling that many outraged commenters called for isn’t all that useful.
So who are the right people and who are the wrong people? It’s not that hard to tell. The right people are the ones that really, really want to work with you. You can tell they’re excited to be a part of the team. They actively look for problems to solve, and then solve them. This is a personality type that is very easy to spot once you know what to look for - they have fire in their eyes. They’re warriors.
I’ll take the fired up warrior any day over the more experienced but otherwise meek alternative. Skills can be learned quickly on the job (excluding certain specialized skills, which mostly means developers for a young startup). But if you aren’t already the kind of person who’ll just get the job done no matter what, you’ll likely never be.
Warning signs to look out for during an interview: people who care about status symbols like titles, people who resent the success of others, people who act like they’re doing you a favor by talking to you. And people who want to negotiate salary endlessly but couldn’t care less about the stock options.
If you hire badly, it isn’t just that employee who’s not performing. They poison the entire organization. If everyone is pushing hard to get a product out the door, but one sulking individual is passive aggressive about working late, morale drops across the company. It spreads like cancer.
I’m not saying you should chain people to the desk. I’m not saying you should make them work 24 hours a day. What I’m saying is that you should hire people who work 24 hours a day because there is nothing else they’d rather do. If you’ve got a product to launch and you’re ultimately trying to disrupt a bigger and better funded company, it’s likely that you are going to need a superhuman effort from the team. I doubt Google’s early employees complained about the hours (and take a wild guess as to why Google gives employees free lunch and free dinners).
If something about this doesn’t sit well with you, that’s ok because you are part of the vast majority of people out there who have an appropriate work-life balance. That doesn’t make you a bad person. It just makes you a bad hire for a resource-strapped startup that needs a team of kick ass all-stars to have a hope in hell of succeeding.
The bottom line is this. The only people in the world that should feel warm and fuzzy around you are your customers/users. Your employees don’t want to feel warm and fuzzy. They want to win. If they are warriors, they’ll respect what you are doing and follow you into the wee hours of every morning to mark their place in history and fill their bank accounts with stock option dollars.
Watch Every Penny
Startups cannot waste money. If they do, they’ll fail. As I said above, they don’t probably fail, or maybe fail. They just plain fail.
That means a really cheap office, to start. Don’t even think about an administrative assistant. Or flying business class. Double up in hotel rooms. And even things like telephones are probably not needed. You have cell phones and skype for that. Matching 401k plans? HAH. Three weeks vacation? Not going to happen. You cannot waste money because every dollar is an amount of time you can keep running the business before you have to shut down. Run out of dollars before you reach profitability or convince investors to double down, and you’re done.
However…you cannot be penny wise and pound foolish. Get your developers the hardware and software they need. Pay your employee’s cell phone bills (the nice thing about reimbursing expenses is that it’s tax efficient to both the company and the employee v. income). Attend the conferences you need to attend to push the business forward (but try to sneak in for free)(unless it’s TechCrunch40).
Here’s another tip - make sure your accountants and lawyers know that you are watching every penny. Bring up cost issues to them on every other call. They’ll be far less likely to pad their bills if you do. But also make sure they know that there’s upside - a successful client that raises venture capital, gets sold, enters into a lot of deals, etc. will generate fees for them down the road. Make sure they see you as a partner, not an ATM machine.
Something else that I’ll pass on - when startups raise their first big round of financing, they are at their most vulnerable point. The new investors want results. Expansion. Market domination. Etc. Too many startups start to spend that money on really dumb stuff - new employees that aren’t needed, new office space, etc. It’s incredible how a company that got to launch on $200k will start to spend that amount every month after they raise $5 million. And the results - bad hires who not only don’t perform, but who also bring the rest of the team down. When and if you raise that money, make sure you are doubly cautious about spending.
Push to the breaking point on everything. Pay money out as slowly as possible. Collect revenue aggressively and quickly. And never miss payroll.
If you do all of these things you will have a 2 in 10 chance of middling success, and a 1 in 10 chance of a serious win. Don’t do these things and you’ll fail.
Well written and helpful, but I’d honestly like to see you go into more detail, along the lines of Jason’s original post.
Nice post Mike, Extremely impressed that Duncan had the free reign to write what he was thinking though.
Not everyone disagreed with Jason though
http://url.ie/a1l
Pat, damn, actually i meant to add a section at the top with people who agreed , including your post, and forgot.
Nice post Michael. The only thing I’d add, is that it shouldn’t just be while you’re in an early startup mode that’s strapped for resources. That passion (from every single person involved) needs to be there even after you cross the threshold from merely surviving into competing and overtaking your competitors. They’ll most likely still have huge advantages over you in many areas, but the one thing you should always be able to count on is your guys (and gals) wanting it more and working harder than their guys (and gals).
-mike
Wow, great post for everyone going through the early stages of a startup. I couldn’t agree more about the importance of having great people. I’ve always felt that the best CEO or startup founders are the ones who surround themselves with employees who they believed are even better/smarter than themselves. Also, human willpower is amazing - if you are part of a rockstar team and every single member has the profound belief that you WILL succeed, the chances of that eventual success increase exponentially.
I think all the bashers have never funded a startup a 100% out of their own pockets or have done software development themselves.
Every penny does count, in fact, we created our startup between developers and we’re not going to hire anyone unless it’s strictly needed. We’re not chained to our desks, but we work hard when we gotta work hard.
We spend every penny as if its ours, we don’t go for bullshit enterprise solutions, we use Google Documents not office, we use Linux, Macs, Windows and we custom build our servers from NewEgg getting the best bang for our buck.
Phones, we don’t need them, in fact when I was an employee I never needed a phone, it’s totally true, I was coding, I didn’t need to receive any calls. In fact whatever calls I got were related to my business on the side, and I received them on the phone.
Flexible working schedules are a must, but again, most employees will never get this.
By the time you make the money to really hire employees, it shouldn’t be called a startup anymore, the same rules will probably not apply.
I’m totally supporting the Mahalo guy, only that we’re even cheaper than him, we don’t hire employees, we don’t rent offices, we’re all about our IT infrastructure (given the nature of our business).
Startups are companies ran and sweat by owners. Once they can offer benefits and all that crap, I don’t consider them a startup anymore.
We’re all owners, don’t rent an office, do everything online, and we’re pulling over $500k a month already. When we’re doing $2MM then we’ll hire employees, but only if truly necessary.
it’s hard : especially if your doing it all out of your own pocket, if funded well i would for sure know exactly how to spend the money and run a trustful productive business just the very same way i run my coffee shops. give people time off space peace of mind : but in a start up that bleeds dollars away at you .. ya gotta kinda be crazy, as long as people are on board for insane work cause they want to, never make anyone do anything, if they don’t want to then i probably don’t want them to either. but i agree with some things for sure, and he could of also - like mentioned, re worded things to make it more “friendly advice” : if 37 signals is making money or is funded then it makes sense to work the way they do, if they are spending and building from the start.. running your company like that won’t get you off the ground. i wonder how it was before they made a dime.
Couldn’t agree more. A friend recently worked at a start-up which was being run by a CEO (not the founder) who ran it to the ground in a very short time. When my friend joined he had all the fire required and felt defeated everyday when his co-workers were just mediocre and just not interested in moving the product forward. It came from the top, the CEO lacked vision, passion and was generally clueless about running a start-up and creating something great. His 1st hires were a team of VPs and money was being spent on ridiculous things. He was more concerned about how the engineering pit looked vs. what the engineers were doing. He however did take one of Jason’s point to heart. He wanted everyone chained to their desks. I think there should be a primer for all start-up CEOs if they want to succeed. Be cheap and spend on the right things.
One huge way to save money is to only attend conferences that can generate business.
There are lots of tech conferences that are a lot of fun and very interesting, but if your customers aren’t there, then chances are you shouldn’t be either.
For example, Foneshow isn’t at SXSW, we are at Radio Ink Convergence. Our customers are radio networks and stations, not other tech companies.
I agree with Pat. Freedom of Speech and open discussion rules.
I think if Jason had sequenced his post with; 1. Culture/Hiring, 2. Rewarding Performance and then Fiscal Responsibility. All would have been fine!
Anyway, I’m more then satisfied by Jason’s response to my Tweets question about rewards:
“i’m all about the rewards… we have stock options and the editorial team gets raises/reviews 2x a year (1-5% each time!)”
Good points overall, and I agree mostly. But after being in at least six startups myself, I’d flip what you said about hires a bit and claim that starting with the right founders & board is where it gets made or broken. Weak owners/officers hiring even strong employees will still sink the ship faster than any one rotten egg.
Founders who are just good at selling ideas and raising money may not be (often aren’t) good leaders. Top investors can tell the difference, but many can’t. And people with the confidence to ask someone for a million dollars may not see their own limitations clearly enough to _not_ to be a founder.
Poor leaders make poor decisions, not just about hiring, but about basic things like desks and chairs, and things that ruin morale much faster than a bad hire, like setting the wrong public perceptions about your or the company’s priorities and values.
That’s why ‘don’t be evil’ is one of the most powerful slogans I’ve seen, even if Google can’t always stick to it, and why Google gets such crap when they appear to stray.
Sensible stuff. All good advice .one caveat ? Don’t let people burn out . Its very costly timewise to replace them and time to market is usually critical . Watch the signs like a hawk.
Here are my thoughts from the other side of the fence: as an employee who was hired into a great startup called fitnessAnywhere.com, which develops/manufactures/markets TRX suspension trainer and training content for everyday people.
I had a few offers on hand while just started talking to FitnessAnywhere, they just moved into a bigger office while everything appears to be a chaos, nothing fancy at all. Hours into interviewing with key founders and VP, we both realized that its a great fit not only on the skill level, but on the passion level, we both want to embrace a new hire that is passionate about active/healthy/green life style, fitness, a new environment that encourages creativity and self-discovered projects/initiatives, while the salary is slightly lower than the offer I had, and the company was not as profitable, VP told me “follow your heart, when were you wrong last time when you follow your heart?”
That got me thinking…2nd day, I took the offer.
Nowadays, I work super hard, around the clock without even realizing it, no-one asked me to, I created my own projects with company’s goal in mind and manage all resources available to reach that goal. That does not mean we don’t have a life, since we are a fitness company, in the middle of day, a few of us will take a 4 miles runs down to crissy field or a 10 mile bike rides across golden gate bridge and come back, sweat like a hog, clean up, energized and kept working till others yelled at you: stop working!
I guess my point, you have to enjoy the work you do, more importantly you have to believe in the company’s goal/ambition. At http://www.Fitnessanywhere.com, our goal is to become THE fitness brand with our disruptive TRX suspension trainer product family, empower everyone in the nation, no matter you are busy professionals, gym goers, personal trainers, military first responders, club owners, fitness enthusiasts for a sustainable, powerful, flexible work out, and reach your fitness and health goal.
Hey if you travel that much, if you just want to work out in the nature, if you want to go green, then use your own body weight and TRX trainer to train, you will love it, why? Because everyone else already does, and I clearly know, I do.
Mike Hedlund - agree, with one clarification. You can’t push employees to the breaking point indefinitely. Product launches are a great way to get everything they have, but they need time to refuel afterwards. True warriors will keep going all the time if you let them, but you have to force them to take it easy between big pushes.
This actually happened to me recently. Nick Gonzalez, one of our writers, worked side by side with me from mid 2006 until last month. For a crazy period of about 7 months it was just me and him. No Heather. No interns. No Duncan or Erick. No one. We both worked until we dropped every day. Eventually he burned out, said “I just can’t write about another fucking startup.” he took it easy for a couple of months, but the fire was gone. He left TechCrunch for a startup:
http://www.techcrunch.com/2008.....-miss-you/
Michael,
I enjoyed this article very much.
I think this is an excellent post. I applaud Mike for allowing Duncan his opinion, while I still–respectfully–think Duncan went a little wild with the post. Changing my words and spinning them was NOT what I expect from TechCrunch/Duncan, and I happy that Duncan made it clear that he spun my words because half the folks in the comments thought i said the crazy stuff Duncan rewrote for comic effect.
could I have stated it a little better? sure… I’ll will concede that. End of the day this is a very important discussion and I’m glad we had it.
… ok, back to work you slackers!!! page views!!!! page views!!!! page views!!! at all costs drive some page views!!!!
best jason
ps - Funny how nick denton’s get 800k page views a month or you’re fired spirit didn’t make it in to the discussion. I’m just saying…
Avi - absolutely. Hopefully you have a better eye for the real deal now after six missteps.
Editorial Editing is done by mike in very unique way, slams his own, way to go !!!
I think you accidentally deleted my post. It was the first and it said “Captain Obvious returns.” Must be a glitch…
Anyway, this is obvious as hell - “if you hire the RIGHT people” which by definition are the RIGHT ones for success and don’t spend money like a retard you’ll do fine. Except that’s not even always true. So thanks for obvious, useless advice.
Jason - I disagree. Duncan wasn’t the only one criticizing your post and I think you need to take responsibility for writing too hastily. I don’t think he went “a little wild” at all.
Stephen - exactly. you should definitely avoid startups.
Michael Arrington — agree completely. But, I think part of hiring great people is that you don’t need to push them. They *want* it. In my case, that’s exactly where I look for the fire in people. I spend more of my time trying to keep people I work with from burning themselves out, not pushing them myself. I’ve been burned out before– by my own actions, and pushed there by others. It sucks equally. Having said that, I could never trade the startup life for a ‘normal’ 9-5.
-mike
Theoretically yes. Practically, yes and no… ref: del.icio.us / flickr / mybloglog, eg.
Michael, I don’t disagree with any of what you’ve written, but I think you’ve got to be careful with the 24/7 thing for two reasons.
First — and this applies to anybody — the important part it loving the work, not the appearance of working. Too often, statements like yours turn into a culture that values long hours and apparent heroics for its own sake. If this happens, it can wreck a company: people are too tired to nip problems in the bud, and anyway the biggest rewards come from a work-all-weekend dramatic rescue, not the one-hour fix that could have avoided the issue in the first place.
Second — this mainly applies to my fellow developers — productivity can easily go negative. A one-minute coding mistake can eat a whole day when it turns up later as a bug. Being tired is like being drunk: one of the first things you lose is the ability to monitor your own performance. Some techniques, like pair programming and test-driven development, help developers know when to stop coding.
Mike - it’s interesting I just gave the 37Signals response/recruiting drive post trashing Jason. They talk about burnout and 4 day work weeks. I prefer seven day work weeks myself. But there is nothing wrong with doing 4 day weeks between projects. But if you hire people who want to work 4 day weeks, you’re completely hosed.
http://www.37signals.com/svn/p.....orkaholics
william - no comment on your third paragraph, sounds reasonable. On your second paragraph, I totally agree. What I love though is when someone on our team sends me an email from home because he was excited about an idea or strategy. It signals to me that he really enjoys working here. We’re pretty distributed here, so face time doesn’t matter much. In some companies it does, and it shouldn’t.
Whatever “bashing” Jason got was frankly his own fault. Mike, you said you don’t agree with some of his points, but left out which ones so to some extent you might be willing to bash if it wasn’t Jason
As I wrote in my post, there were some great tips like buying good chairs - so many companies forget this part - I am sitting on a hotel chair as I type this and it’s not good.
Jason’s other points are ones that he should be questioned on. This is Jason’s style though - he will go too far, let everyone bash (while linking) and then reel back in. We saw this with his “seo is shit and seo people are x” from last year and this year his attacks at the affiliate marketers. I can’t wait until SES just to see what group he attacks this year!
Jason is a smart guy and if he could polish some of what he shares outward, people would be more likely to be more open to him. Perhaps there is a new business there — startup communication coach (though there are some bloggers who could use this as well!)
To this tip end, I’ve shared 7 tips for reducing costs from a travel and organization perspectve:
http://www.centernetworks.com/.....vings-tips
And I remember my accountant and auditor days watching what some companies spent money on. I agree with you that watching every penny is critical. Not buying 3 macbook airs with SSD for example is a great way to save some $$.
I do see less spending now than ~10 yrs ago. My days at CKS showed just how much money could be spent — heck, they had an entire setup dedicated to limewire downloads for employees to share. Stocked european beer fridges, top of the line pool tables, etc. Everyone had 2 computer setups and 2 aeron chairs, etc. Wonder why they went out.
And I totally agree with you that for x duration you can work someone to death but the person needs to understand what happens once x duration is completed. There has to be downtime.
I do wonder what is the startup view on marriage, parenting and pregnancy. Can anyone chime in here? Am interested in opinions and real world feedback.
Michael. Excellent article.
Many outsiders (non-start up personnel) don’t get what it takes to start a business and the dedication that is necessary. It’s not just intelligence or a good idea; it’s the passion for what you do and the ability to fight through the tough times.
Anyone can write a good business plan; it’s the adjustments along the way and the character of your team that leads to success.
This coming from a guy with a psychology degree. His biggest accomplishment was starting and selling a “blog empire”…absolutely peanuts (and no creativity at all). Hey Calacanis, why don’t you start something useful… oh I forgot, you can’t.
Allen - I think you missed the bigger point in your rush to bash him though. more tips for saving money is great, but what I want to make clear is that startup life is both rewarding and impossible. Most people can’t handle it, and some of those people spend too much time criticizing those who relish it. You cover startups, so I expected a more thoughtful analysis from you.
Your second to last paragraph shows me that you just don’t get it:
“And I totally agree with you that for x duration you can work someone to death but the person needs to understand what happens once x duration is completed. There has to be downtime.”
No, they don’t need to understand that. Think of them as a goldfish. Goldfish will eat everything you give them until their little stomachs explode (or so I hear). The key isn’t to find a goldfish that knows when to stop eating. They key is to know when to stop feeding the goldfish, for their own good.
BTW - about 3 months ago, Jim Cramer took his entire show to go over his career. What he said was clear… he got in to his desk before anyone else. He saw that most fund managers got in at 7, he got in at 6 and already had everything prepped before they got it. When they realized what he was doing, they came in at 7, he moved to 6. All the way to where he was working at 4am.
While as the commenters note, it’s not always a surefire absolute that if you are first, you will be a success, it certainly helps.
Another item - as a leader, it’s important to make sure all of the employees are working their most efficient. Many times people work 2x more because they aren’t doing things effectively. Sometimes it’s about adjusting the actual work, the environment or even the tools used.
Of course for some startups and some entrep., luck beats out hard work. But most times it’s a combo.
allen - being first, as you put it, doesn’t guarantee success. I agree with that. But what you don’t seem to get is that “being first” is your only chance at success.
And I think your last paragraph about luck being the major factor is just a way of saying that startups that win get there serendipitously. Again, that’s just wrong. Startups that win must have the right team, the right execution and, also, luck. But if you don’t plan for luck, it does nothing for you when it arrives.
Michael,
I learned of your site during your recent appearance on Charlie Rose - I’ve now bookmarked it and read it every day!
To your posting … I believe it was Guy Kawasaki or someone else of his stature in the tech community who said that within a few seconds after arriving in a tech startup company, he can tell whether or not the firm has a chance of succeeding. If the desks & chairs are too pristene, if the snacks & drinks are too luxurious then he knows they will fail, absolutely and without question. Why? Because they’ve clearly received too much money too soon and are investing it in the wrong things.
Another interesting quote I heard one time was this: “Remove one zero from the investment amount and you’ll see people get really creative!” I don’t recall who said that, but have long felt it is pure genius.
Michael, actually three of the six did/are-doing pretty well, so I have both good and bad examples to learn from.
The one that did the best financially ($1B valuation in the boom) was in fact, the one that was the worst to its employees. However, I didn’t stick around long enough to partake. I figured the market would figure out their product was as bad as their management, and it turns out, not so much. But leaving was still the sanest thing I could have done.
Any company that relies on its employees being sheep had better hope the market is hot for sheep dip.
Funny Duncan took the bait - Im sure Mahalo’s traffic spiked a little from all this!
Michael
I actually don’t disagree with most of that. My issue was, and still is the tone/theory behind Calacanis’ post. Great employees will work hard for you no matter what, but if you approach them from the point of view that you have to squeeze every last penny pinching cent out of them many wont respond positively. Trust works both ways. Sure, if they wont work hard fire them, but give them the trust and respect they deserve and your employees will want to work hard for you. Ride them like a horse, tell them they have to remain chained to their desks up to 18 hours a day without a proper break, you’ll not only burn out the hard core workers, you’ll piss the rest of them right off, and as others have mentioned (and I believe to be correct from experience in management), saving money now means nothing if you’re having to constantly rehire staff….short story: a little extra now could save you a lot more later down the path.
The leave/ break side is interesting though. Only in America could you get away with that. Most civilized countries have mandated basic rights like a lunch break (in australia 30min after a 5 hour limit, most companies give 45-60mins) + 4 weeks leave a year (I believe it’s longer in some countries). Great, happy employees wont want to go on leave that often (you accrue it, but you don’t have to take it, but ultimately its still a right, usually after 6mths of employment). I’d note this isn’t the 19th century, people have basic rights, Calacanis seems hell-bent on subverting them.
You argue that you need great staff: wouldn’t your chances of hiring great staff be better if you offered basic rights? like a lunch break or the right to get some fresh air once a day?
Duncan - whatever. get back to work.
Avi - they aren’t sheep. They’re winners who all brainwashed each other into thinking that working at that particular startup is the coolest thing in the history of the world. They’re happy and they kick ass. and they win, while everyone else complains about coffee breaks.
Yeah, Duncan, whatever, your opinion does not count !!!
Great post and subsequent discussion. Seems like most of the time people *know* what they should do but don’t always see the ‘right way’ in the heat of the moment (i.e. that their decisions aren’t adhering to the principles laid out in this discussion.) People do not wake up with idea of ‘failing’ today rather they just get caught up and can not stem the momentum. Michael’s discussion of his experience with edgeio is an excellent illustration.
Michael-
This post was amazing and as one of those employees who works in a startup and has that fire, I totally identify with it. I really think the right people are nothing to a startup if they are not properly utilized. It is the oddest thing when a company is strapped for resources and needs to stretch every dollar but doesn’t allow employees to work at their potential because management is not focused on the product. The result is a shitty product and a high burn rate.
I agree with Duncan
read this post. hadn’t seen it before. good thoughts there:
http://webworkerdaily.com/2008.....on-legree/
mike
exactly
you see . techcrunch.. informative ..wisdom ..and when your sarcastic/arrogant its funny cause you have earned it! read your post ..if your not a still start up ..all still applies for smallcos.. first thing is know your product.. Duncan just isnt you and eric .. might be time to really edit him …
oh yeah, something else I forgot to put in the post: Duncan is one of the hardest working people I know. 7 days a week. very little time off. he still spends time with his family, but i don’t think he actually sleeps. He’s also one of the most competitive people i’ve ever met. you want a person like that on your side.
Scoble adds his thoughts - http://scobleizer.com/2008/03/.....d-slackers
the world is basically being divided into two camps - those who disagree with me on one side, and the winners on the other.
You’re assuming “kick ass all-stars” have no life and will work 60+ hour weeks. You’re wrong.
Mike feeling guilty now ?
I have never met JC but do know a few who work in a similar space. Perhaps I am missing something here… Most great inventors and innovators are a little ” different” which often causes them to be disliked or over analyzed. This whole thing seems to be a lil dramatic… To be honest my bottom line is that if you want a gig a startup… you should expect to bring more to the table. It’s not a walk in park for anyone at the company on all levels and takes dedication and hard work to make it happen. Am I saying ask employees to work for pennies on the dollar and pull all niters … no (unless they have a large stake) however and maybe this is just my eastern PA background. Hard work stands out and will take you further. Just thought I would share my two cents.
#30 Mike - sorry if I wasn’t clear - I completely agree that as the leader, it’s your job to know when x person needs a break. Most great workers will work as you say until the goldfish explodes. Part of this is the difference between a manager and a leader.
But I agree - I’ve seen it from both sides.
“Fire people who are not workaholics”
and
“Fire people who don’t love their work”
Are completely words apart in meaning.
Worlds even!
I have to disagree with Michael’s “You must hire the right people. In particular, the early employees must be perfect. ” The most important thing is the idea. I side with Marc Andreassen on this that an idea with a great market will succeed if the team executes competently. A great team that brilliantly executes a duff idea, will fail.
It’s far easier for me to come up with examples of mediocre teams that are successful than great teams that succeed with ordinary ideas.
I think founders like Arrington and Calcanis display the very human trait of preferring explanations for success that are in their control - like the team. The more luck that’s involved the less brilliant they appear. (That’s not snark btw, just an opinion - I’m sure you both execute to a very high level).
Nice post! Has any of the startups on here checked out Sun Microsystem’s startup essentials program? We went to their event in nyc a few months back and it seemed like they were really out to help startups. Here’s their link for those interested: http://www.sun.com/startup
The airbrushed “hire people who love their work” suggests that you as an employer have no responsibility for creating the conditions upon which people can sustain their love for their work. To suggest it is purely tongue-in-cheek as a way to dismiss the substance of the comment misses the point that keeping good employees is a lot hard than hiring them in the first place. One reason why startups fail is that they have an unsustainable environment that drives the most talented people away from the business and sows the seeds for it’s own decline. It’s all well and good to talk about the “startup life” and young employees vs. old, but how many startups CEOs simply brush aside these concerns while at the same time lamenting or worse, ignoring, the difficulties of building a functionally complete team. Most startups have very talented individuals and really shitty teams.
Michael,
Have to echo Jason’s thoughts, its great you allow your writers freedom here but its nice to see your take as well. Especially enjoyed your paragraphs on hiring the right people and I’ve never seen anyone do this better than Jason. Fired up warriors? Yes we have them, lots of them! Although I’m probably one of the more vocal ones we have many who would fight to the figurative death to ensure our products success.
Its probably important to also point out we aren’t building Mahalo for the techmeme crowd, the 1% we like to say. We are building it for the other 99%, people like your parents or even kids who have trouble searching online. While most of us understand how to tweak search, use multiple sources and identify bad/damaging content the general public does not. You should see the emails we receive from thrilled parents who used Mahalo to easily find the information they or their child needed. They don’t have to worry about adult content, misinformation or malware. Simple the best of the internet hand refined and filtered.
While I tend to take posts like this personal (perhaps a little too personal) I simply need to step back from it all and remember these moments. They save me from burnout and keep me going because I know the job is far from over.
Yes, Great post… However these are just common sense business tips that only apply to start-ups that have no discipline. So I think you should write a post about discipline, and how even the most successful start-ups can be ran in to the ground by careless CEOs… What these guys are lacking is basic common sense when it comes to handling finances. When I go to an office and see a bunch of PS3s flat-screens and really expensive gizmos that have no relation to productivity, I am thinking not a lot is getting done around here.
LMAO @ #37
And none of this is actually relevant if the company cannot follow compound interest and reinvest at least 80% if not 100% of the profits back in to the company. Most of the start-ups covered in TC are fatally flawed, and actually will lose and have lost investors money. There is probably 500 companies alone that were based on the impression they could be acquired by Google. They start with investor capital, and first thing they buy is offices… WRONG, already they fail, and it is pathetic. If this was monopoly (which it is) these are the guys that don’t buy property, and hope to land on free parking.
That is why I respect Michael so much, the TC offices are right in his house. Grassroots, ground up operation with low start-up cost and an effective, efficient, and simple business model. Kudos for not being like every other company you write about every day
“the world is basically being divided into two camps - those who disagree with me on one side, and the winners on the other.”
So Netscape, Ning weren’t winning companies? So 37signals isn’t a winning company? I demand a recount.
Michael - This kind of determinism is plain stupid. That’s the way to “send a message” to the ignorant crowds. not to your readers.
lately the quality of your posts is deteriorating. seems like you actually start to believe that the sun is shining out of your ass. careful. it’s not.
You have to do correct business decisions…. shocking.
@56
welcome to web 1.0.
This is a good post Michael and I agree with most of it, unfortunately I don’t see much relation to what Jason said in his original post.
You definitely do need passionate people, and just as importantly you need the company to reciprocate by providing the appropriate environment and projects for people to realize their passion and potential. When the two come together, people will see little difference between their personal lives and work lives, they will be happy, their will be productive and they’ll get plenty done.
Much like you say Duncan works hard, so it is with people that disagree with Jason - its not that we’re a bunch of lazy losers that pine for their scheduled coffee break (note, I’m posting this as a break from working on a saturday afternoon). Its just that Jason’s mentality displayed in his original blog post is the management equivalent of the clock-watching worker - a ridiculous throwback to industrial-era thinking. It’s because I dislike that mentality (in both management and employees) that I am glad he received the negative reaction to his post.
It comes down to loving what you do, it doesn’t matter how much money somebody says you might make, if your not passionate, then in the end you won’t have the drive.
Some people can put money first and in this world money is important, but over time it won’t motivate you, you have to be committed on a conscious and subconscious level that what your doing is worthwhile otherwise forget it, as much as you tell yourself I can do this, if your not convinced deep down…you’ll crash.
Hey Mike and Duncan!
Are you guys playing “Good Cop, Bad Cop”? Is this some traffic/link baiting technique that we don’t know about?
I’m confused…and I’m also a little tired with this “Hi, my name is Mike Arrington, and I run TechCrunch and it’s MY blog and I can do with it what I like, but if any of my writers/staff get outta line, I won’t take responsibility because I give them free reign…” jive.
It’s really sad brother, because on one hand, with have you doing a great service with the likes of your Charlie Rose interview (nice one), and then we have this Aussie Geezer Duncan — who isn’t the brightest IMO — writing blatant Tabloid BS about something he obviously has no experience with.
So Mike, if you’re gonna stick to your guns and keep defending him, can you get one of your guys to install a “DUNCAN FILTER” on the site? That way we can turn him off — thanks!
Best
-Oz
Perfectly put.
Great write up Michael. For what it’s worth I think JC’s article was more or less spot on, no matter how harsh it may have seemed.
TC needs more stories like this and less crap about Facebook, like how it’s being translated into other languages. There have been three of those stories so far - we get it, enough
Love the logic here: Failed startups hired the wrong people. Successful startups are made of stars! Nice self-reinforcing tautology there. It’s like the tortoise and the hare never existed, no, we all have to aspire to being a dick to our employees at the ground level. Let’s get that corporate culture going, first things first, your success depends on it!
As to some of the comments up there about founders putting their own money into the operation, do you trust any executive who doesn’t put their own money behind the company? I don’t.
Maybe the first star that needs to be hired is the founder. I think it’s the less than stellar executives who can’t forge a success from the available talent (price, location, skills, etc.). You can’t polish a turd, even if you’re Jason Calcanis.
@59: And you would be? This blog is about business, something you may not be familiar with. This is one of the best posts on TC because it shows Michael knows what he is doing. He knows controversy sells, and this is a controversial topic. 67 comments in under 2 hours, congrats because apparently the sun is shining brightly out of Arringtons ass.
Hiring the wrong people is not the cause of why startups fail. Bad founders are. If you hire the wrong person, you should know after a few weeks/couple of months, and then fire them. If you hire the wrong person, and you let them continue to work in your company, then it’s your damn fault.
yep, and the hardest thing to do is to hire the right people…for the right offer.
I generally agree with your post.
Jason “Hot Air, Self Promoter & Tightwad” Calcannis’s post was about working your staff 18 hours day and paying them a pittance. That I don’t agree with. Fair day’s pay for a fair day’s work.
Plus its easier to be “passionate about your work” etc etc when you have an equity stake, not when you’re being paid minimum wage…
Expanding a little, one part of having the “right team” is having the right incentives. Screwing your employees for every dime and expecting excessive overtime isn’t the right or sustainable way to go.
Good post Michael although I’m not sure all readers fall into one of two camps.
Another reason for hiring the right people to begin with is they tend to become default trainers for new hires. You want someone who can pass along their good habits and methods.
It’s HARD to be passionate about your work if you’re working for an idiot boss like this no-talent clown Jason Calacanis.
Those of us that have started and run several companies recognize how true your words are and Jason’s message was.
For those that have not run a company, the problems and liabilities of terminating an employee grow year by year.
And while it is critical to hire right, sometimes you have to just take a chance on someone. Sometimes you’re right, and then when you’re not make sure there is a stated probationary period and terminate them without delay.
I remember one hire in particular where we could not decide if the guy was brilliant or had been hit by a bus as a child. We took a chance. We guessed wrong.
A bad employee is a huge distraction, infection and can turn the tide in a small company for the worse.
As a boss you can’t lose with being frugal, demanding and driven. he only people that won’t like it are the slackers.
Startup school of YCombinator
http://yooflix.com/ShowVideo.a.....6406672182
I am passionate about paying people properly.
I joined a service industry company (ie the company’s assets were its staff) and at that time it was no.13 in its (well established) market, 7 years later we were no.1. (revenue AND profit). In terms of staff management:
- across the board we paid average 15-20% above market rates
- our top staff we paid outrageously well
- we worked our staff quite hard (but that was a fair trade)
- our continuing success created opportunities for our staff
- with a combination of the above we could attract “the right people”
- but you can’t pay great wages to everyone and not expect performance. every year, without fail, we sacked the bottom 10%.
I think overall, pay your people well, work them hard and get rid of the free-loaders.
@JosefVirek #61
I don’t feed anonymous trolls who clearly have no idea what they are talking about.
Whoops!
Having been through 7 programmers in the past 14 months, there are truths in just about every post made here. ( well, almost all ) I gave them specific goals and allowed them to work flexible hours. Come in at 6 a.m, or come in at 3 p.m…just get the job done. It became apparent that I made many mistakes with very young hires, although they were very capable, they lacked enough life experience to undertake real responsibilities. Their passions were tp spend endless hours on the social sites and hooking up or not missing the crowd at the local Starbucks, even if they had to leave work to do it. It’s very difficult to hire people with the same passion as I have. They couldn’t see the long term. For them it was all about instant gratification. I don’t like to fire anyone, but enough became enough and I let them all hit the bricks. I found better alternatives.
technically speaking, Sean, I don’t think that’s a troll comment. He’s simply suggesting that times have changed.
Its seems like “passion” is a euphemism for “I’ve got equity and/or stock options”
Richie - I think it would be hard for an employee to work long, long hours knowing that they were making someone rich, just not themselves.
” Passion” was purely hormonal. They could have cared less about equity and/or options. Thinking with the wrong head.
Decent post, yeh be tight with the expenses, higher all-stars, etc…but no 3 weeks of vacation? The ‘best’ employees are able to kick-ass, take names and live spend time with the fam.
Michael
I think that was an underlying tone with Calacanis. If people don’t want to work hard at their jobs, they need to do their own thing, only do it somewhere else besides their employers address
it seems the post by JCal has gotten on alot of peoples radar and to be honest i agree with the original statements he made…a start up is all or nothing if you cant squeeze all you can out of the employees in those first vital months then they arent dedicated enough to reap the rewards at the end.
Where has this “You are posting comments too quickly. Slow down.” screen gone today??? ;-(
Top 3 Reasons Why Mahalo will Fail
1) It will NEVER scale
2) Trust. I don’t think i will trust search results edited (or “powered”) by a bunch of underpaid asian kids living in Bangladesh.
3) You guys suck.