When building a company, one of the most critical skills (and also one of the least popular ones) is hiring. The process can be extremely tedious, making you grind through 100s of applications until finding a great fit for a critical role. It is a very important process to get right though – companies are essentially a social network of people working together towards a common goal, and having the right people in your team can make or break a company’s success. In the case of research-intensive companies, it’s often the teammates who come up with innovative strategies and who bring in external expertise, both vital to solving challenging problems.
I spoke with the founding teams of Engage Bio (6 FTEs), Luminate Medical (35 FTEs), Conception Biosciences (40 FTEs), and Mammoth Bio (150 FTEs) and I think a good way to scale hiring is to break down the process into 3 different stages:
Stage 1-10 teammates
The first stage of hiring is perhaps the most critical and at the same time the most difficult one.
At this stage, you may have raised a pre-seed or a smaller seed and only have limited resources on hand to be able to compete with competitive compensation packages and benefit offers from larger companies. While mission alignment and personal impact can be a good way to poach strong candidates, company equity is probably the most valuable tool to make an attractive offer. Your first hires take a good amount of risk by joining a very early-stage company that has a limited runway, and it’s just fair that they receive a fair share of ownership for the risk they take. A good rule of thumb is rewarding first hires with 0.5%-1% of share options – make sure to set a vesting schedule that makes sense. In most cases 4 years with a 1 year cliff is the most standard one, but because science companies often take longer to reach significant milestones going up to 6 years could make a lot of sense as well. A longer vesting period gives you better insurance for teammates not working out or departing earlier than expected. Stock options are much more valued in the tech and software world and less so in biotech and healthcare. Make sure potential team members understand how valuable they could become if the company achieves its north star (my teammate Matt Krisiloff wrote a great blog post about this topic).
It’s a good idea to think of your first hire as a junior co-founder who has the potential to be an important leader of your company in the future. It’s critical to get this hire right – they will not only bring in core technical expertise but also be an example of the company culture you want to build since they will be interfacing with the rest of the team often more than you when you take care of other aspects of the company. It is better not to over-index on pedigrees, technical know-how, or experience – very smart generalists can work at this stage as well who are mission-aligned and are able to figure things out from 0. Prioritize people who can get things done and who have no problem with executing mundane and less exciting tasks – it’s important at this stage to see senior teammates not shying away from taking care of repetitive and boring things like media changes, stocking up reagents, and general support work.
When you are at 1-10 full-time employees, a more organic and flat company structure works often well where there is not too much hierarchy yet and people see each other as peers (there should still be clear decision-makers of course). This way you create a collaborative environment from the start, communication, and decision making is more efficient, and teammates feel ownership of their work. This will encourage employees to take on more responsibility as the company grows. A bonus point is that you also avoid a lot of unnecessary bureaucracy at this stage.
Stage 10-50
At this point in your company’s life, you will need more and more people to handle the ever-increasing workload and talent that comes with deep domain expertise. You can move away from the more generalist phenotype and focus on subject matter experts (SMEs) at this stage. At this size, the company can swallow SMEs who may not be perfect at some things (e.g. an engineer who is not a great communicator but excellent technically) but are really excellent at one important thing. You will also need more teammates who can take care of more repetitive tasks and produce robust results at high throughput – they are often the engine that keeps a company running and can free up critical time for others. The domain expert and technical support will help your smart generalist move through complex problems much quicker and this will really accelerate things.
At the same time, it will also get more difficult to keep a very detailed overview, and you will need to introduce structure to empower teammates who can take on more responsibility and create well-functioning team dynamics. When introducing a company structure, it’s tempting to reward your teammates with titles to make sure their work is acknowledged. Titles can help to solidify your company structure, but it is very important to make sure you do this the right way because it can also backfire in the long run. Make sure you lay down the right foundation for a career ladder that explains the criteria and career development steps for each title or role clearly and can be built upon as the company progresses. This will save you a ton of headaches down the line and avoid confusion, resentment, and potential conflicts between teammates.
The more you grow and the more you build your team, co-founders will have less time for interviews. If possible the aim should be that every co-founder has a chance to chat with each hire, even if it is just for a short 15-minute call. Recruiting for a Chief of Staff who can run most of the hiring processes could be a good idea at this stage, but even if you have someone whose judgment you trust, make sure every co-founder can still chime in on a candidate to make sure you don’t miss any red flags. As at the previous stage, prioritize people who will work well with others, and are a good fit for your company culture in general. Skills and technical know-how are important but techniques and knowledge can be learned and taught – the right personality and culture fit needs to be there from the start. The good news is that in most companies, 70% of hires work out as excellent fits. At the same time though, you need to make sure that the other 30% who are unhappy, not a good culture fit, or do not perform as well as the rest, move on. Just a few bad apples can disrupt well-functioning team dynamics, and introduce interpersonal conflicts, and fixing these can take up a ton of your time that would be much better spent elsewhere.
Stage 50-200
In the third stage when your company is expanding more rapidly, something that can be very powerful is making use of the network of your employees. If you did a good job recruiting the right people this can lead to a compounding effect where existing employees bring in friends or previous colleagues they liked working with, who share the same values, and who come from similar technical backgrounds.
Promoting existing teammates you trust to take on more responsibilities is often a good strategy and also something that can be very rewarding, especially for the ones who have been going over and beyond for the company. At the same time though, you will need to actively recruit for senior leadership positions. These are probably some of the most challenging roles to fill and to vet because in addition to technical knowledge and achievements you need to make sure they are good managers, can effectively lead teams, and will integrate well into your existing company culture and structure. A strong sign of a great manager or team lead is when employees from their previous companies choose to follow them to a new workplace. This often shows they earned the trust and respect of their team and they come with a healthy leadership style. When interviewing for a senior leadership role it’s important to ask for examples where people have followed them and to double-check that in reference calls.
When it comes to the C-suite roles, it’s important to invest enough time and effort into selecting the right executive hires and Board of Directors members. These are often very accomplished individuals with impressive personal track records and it is important to strike the right balance between deep domain expertise and a humble attitude. In some cases, this could be the first time they join a startup and a down-to-earth personality can help integrate into a new culture that can be very different to the one they might be used to at a larger corporation. Make sure that roles are clear and well-defined to avoid confusion or conflicts and get a good sense of how comfortable senior executives are working with less experienced co-founders.
Reorganizations can be a very effective tool to make sure your project teams are operating as efficiently as possible. While the idea might seem intimidating and you might worry about disrupting teams, workflows, and productivity, do not shy away from it and have a constructive conversation with your team leads to come up with a plan to reorganize things if this can benefit the company in the long run. In many cases, teammates value constructive reorganizations, feel more heard, and will trust you more as a leadership team when you see things that are not working or can be further improved.
I hope this helps you to get an overview of how we think about scaling hiring from a small team to hundreds of employees. If you have ideas or suggestions or would like to share your personal experiences growing your company we would love to hear from you.
Thank you, Lucas, Matt, Aaron, and Will, for reading previous versions of this post and for helping to improve it.
Alex Schubert 