4 Quick Hiring Tips for Early-stage Startup Founders

Limited resources, lack of experience in recruiting, and competition with tech giants — hiring talents for an early-stage startup is challenging.

The cost of a mistake is sky-high, too: Mishiring might cost up to 30% of the employee’s first-year salary, which means that a wrong hire for a tech position that pays $60,000 per year, for example, could cost the startup $18,000. That's a great deal of money for a small startup.

Working as head of recruitment at a VC firm, I know these challenges and help startups avoid financial, time, and reputational losses. Here are five valuable tips for founders to hire well.

Focus on attitude — not skills

Let's be honest: The startup culture isn't suitable for everybody.

Founders should look for individuals with an entrepreneurial mindset and a readiness to work in a hectic environment.

Seek out employees who have prior experience running a startup or working for one. If you come across a strong candidate with a corporate background, carefully assess their motivation. Why did they choose to leave a stable job and join a startup?

If a candidate who previously worked at a large company is seeking more responsibilities and aiming to advance professionally at a faster pace, then it could be a suitable match. However, when hiring, founders should conduct a thorough job interview.

Qualities to look for and interview questions to reveal them

• Problem-solving.

  Interview question: Can you describe a specific workplace challenge you've encountered, and how did you go about resolving it?

• Flexibility.
  Interview questions: How has your professional life evolved in the last three years? Have you actively sought opportunities to step out of your comfort zone during this time? If so, could you provide an example? What changes /unexpected events affected your work? Could you share a case where you had to adjust to a change you had no control over?

• Growth mindset.

  Interview questions: When confronted with an unfamiliar task, how do you approach it? Additionally, how do you stay updated on the latest industry trends and developments?

• Accountability/Proactiveness.

  Interview questions: Could you provide a case in which you prevented a problem before it happened? What have you done when you didn’t agree with the solution to the project? Could you provide a case you suggested a solution/idea to your manager and it was successfully implemented?

• Sense of ownership.

  Interview questions: Could you share a project or task you've taken a leadership role in? What steps did you take to ensure its success, and how did you demonstrate ownership throughout the process?

• Goal-oriented mindset.

  Interview questions: What specific goals did you set for yourself in your previous role? In cases where you couldn't achieve your goals, what actions did you take to address the situation and learn from it?

Hiring a senior-level specialist might not be an option given startups' limited resources. Don't chase the "market stars"; focus on promising young talents who will grow with the company.

Statistics show that in 2023, almost 38% of early-stage startups are planning to employ juniors, and 27% intend to focus on hiring mid-level specialists. For example, our portfolio startup, All Right, chose this strategy from its very beginning: The founders recruited juniors at an early stage, and now these employees hold leadership positions.

Yes, juniors won't bring expertise right away, but they can more easily embrace and adapt to the specific requirements of the startup and take on various roles as the company grows.

Juniors require well-organized onboarding, mentorship, and guidance, but they can grow into invaluable assets for a startup later on, assuming more responsibilities and advancing professionally in step with the company's growth.

Offer more than just salaries

Early-stage startups may not always be able to match the salaries of big brands. What startups can (and should) offer is equity or stock options. This can attract candidates who believe in your idea and are motivated by long-term financial gains.

When creating your compensation plan, determine the size of the equity pool. Generally, early-stage startups set aside approximately 5-15% of their total shares for an equity pool for employees. The number of options granted may be based on the employee’s role, their contribution to the company, and their experience level.

I know that Filmustage, a seed-stage AI startup, offers 0.5-3% of its total shares to its employees, which can be vested after a year of employment with the company. This way, the company can attract top talent while also aligning employees toward the startup’s success.

Avoid overhiring

After establishing your startup's immediate objectives, outline the roles and responsibilities required to achieve them.

In an early-stage tech startup, key responsibilities might be distributed among three employees:

• CEO: Guides the company's focus, handles sales, manages early recruiting, and addresses legal issues.
• CTO: Assumes responsibility for product development, product architecture, and team management.
• CMO: Focuses on customer acquisition and marketing strategy. In an early-stage startup, this responsibility is often divided among founders.

In the very beginning, you can hire a UX designer and a product manager on a part-time basis. As the startup grows, the team may expand to include more tech specialists such as developers and QA engineers. However, there's no need to rush this expansion and attempt to operate like a large corporation — it might not be financially feasible.

A common mistake that early-stage startups often make is hiring salespeople as part of their initial 10 hires. At this stage, sales should be led by the CEO. Only after having a product-market fit and understanding sales strategy, you may consider bringing in a dedicated sales manager.

Outsource recruiting

Founders typically hire the company's first employees using their network. However, once the startup begins to grow, it is often advisable to delegate this responsibility to an outsourced recruiter or seek assistance from your VC (if you're VC-backed).

By outsourcing the recruitment process, founders can concentrate on product development, sales, or marketing, rather than constantly searching for candidates. Additionally, outsourcing recruitment is usually more cost-effective than hiring an in-house recruiter, especially in early hiring.

Anastasiia Kuzmenko, Head of Talent Acquisition at Flyer One Ventures.