Latest / Success Story with Scott Clary / Lessons - Why Most Entrepreneurs Hire The Wrong People | Steve Hoffman - Chairman of Founders Space

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Lessons - Why Most Entrepreneurs Hire The Wrong People | Steve Hoffman - Chairman of Founders Space · Success Story with Scott Clary

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  In this episode, we dive into key lessons for aspiring entrepreneurs and startup founders.
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  We'll explore the importance of building a solid team, why the perfect idea isn't as crucial as
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  you might think and how to attract top talent even without significant resources. You'll also
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  learn about managing difficult situations, such as when to cut team members who aren't performing
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  and how to lead your startup toward success from day one.
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  So let's, you know, at a high level, what somebody wants to start something? What, what should they
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  think about when they're when they're first starting a company? I was saying North America's,
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  I mean, I'm almost positive. That's like 99% of the audience that would be listening to this,
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  but what should they think about? So I tell entrepreneurs, you know, a lot of people have this
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  misconception. They believe that when they start a company, the idea is so important,
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  and they should like spend all their time iterating on like, what's the perfect idea I could
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  launch with? And honestly, you know, your idea is not the most important thing because most likely
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  that idea will change. Like when you begin your idea, if it's new, if it's groundbreaking,
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  it hasn't been tested by nature, right? If it's really innovative and it almost has to be by nature
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  for a small startup to grow into a unicorn, you have to have something very special, very new.
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  So if it's that new, then you don't have the data to know if it will work or not. So don't waste
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  a lot of time of thinking, you know, trying to come up with the perfect idea. Instead,
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  take a direction you're interested in and then spend 80% of your time on one thing, one thing at the
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  beginning, building your team. Now people don't think about this. Like they want to build the product,
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  they want to raise venture capital, they want to, you know, go out there and get press or whatever
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  they're going to do, but they don't spend enough time building their team. They often, so many
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  entrepreneurs overlook this and I will tell you, the team is going to define your success, not you.
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  You're one person, one person never built a billion dollar company ever, like you have to. If you're
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  going to build a unicorn, you need, if you want to build a small solo business, fine, you know,
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  you can ignore the team piece. But if you really want to grow and scale a company, you need an excellent
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  team to start with and you need a team with skills that you don't necessarily possess. So I tell
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  on most entrepreneurs, honestly, the reason 90% fail, you know, this is why I call surviving a
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  startup is I want to show you what you need to do every step of the way to survive is the reason
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  they fail is because they compromise on their team members. Like they'll, they don't know a lot of,
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  let's say they have an idea they want to explore, but they don't know the right engineers,
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  they will take whoever comes their way, you know, whoever, you know, it happens to be available,
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  somebody they know or somebody they bumped into, but they aren't the best. Look, if you're going
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  to build the best company in the world, if you're going to be number one in your market, which is what
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  you have to be, if you're going to be a unicorn, you have to be the market leader, you're going to need
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  absolutely the best team, which means the best people in every area, you know, technical area,
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  design, business and sales. If you can't get top notch people, forget it, don't even start.
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  If you get top notch people, I guarantee you, you will come up with the right idea.
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  So how do you find those? So follow a question, very good points. How do you find those people?
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  What do you, what do you look for? How do you, how do you, as a first time entrepreneur,
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  a lot of noise out there, a lot of resumes are going to come your way, right? If you put up some job
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  at her, where do you go to find these people? What do you look for? That is a question I get asked
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  by every entrepreneur after I know. I tell them, you know, your team is subpar, you know, I try to be
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  honest with them, but kind, right? I'm like, you guys, you know, you don't have a killer team,
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  you're never going to produce a killer product or, you know, beat out your competitors and focus
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  on it. They're like, but I can't affluent it. I have no money. Like, I can't, you know, I can't
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  even pay people. And I tell them the none on one test of a great CDO. And this is what I look for.
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  Like, if I'm a, I'm a venture capitalist. So when I fund entrepreneurs, I say, the first test
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  you have is to find a great team without any money. Like, if you can't do that, why should I trust
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  you with millions of dollars, you know, or any amount of my money? Because if you can't even,
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  you know, convince people to join you at the beginning, uh, because they believe in you, how are
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  you going to get investors to believe in you? How are you going to sell customers? How are you
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  going to sell the world on your vision? You need that ability. So that leadership ability.
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  So I tell them, first of all, it's not going to be easy. Like, there is no magic wand. I could
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  pretend I'm going to give you a magic wand for, you know, that will make all these people appear.
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  But honestly, what it is is it's getting out of your shell. It is engaging with other people.
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  Not at the beginning, you don't have money, most likely, right? Unless you're already successful.
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  Like, you know, Mark Zuckerberg or somebody like that, you have as much money as you need.
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  You don't have money. You don't have other resources. But what you do have is your ability to
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  communicate as a leader. So you need to go out and you need to engage these people on a deep level.
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  Like the belief in your business and you need to be receptive to their ideas.
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  Remember, if you're going to try super smart, ambitious people, they want to feel like they're
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  contributing to a project that they believe in that they take ownership of. If you want them to
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  own the idea, you have to let them contribute. You can't just say, this is my idea, you know,
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  I don't want to hear what you think. Do you want to join or not? That just doesn't work. You have
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  to truly for your core team, right? You have to truly make them a part of the thing. And this is
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  why you don't need a fully flushed out idea. You need a direction that you think is very promising.
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  You need to find people who believe in that direction. And then together, you can start to iterate.
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  But by bringing that, you'll find it's absolutely amazing by opening the door and saying,
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  let's build this together. I want to hear what you think. What ideas do you have? Where could we
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  take this? Suddenly, these people who are excellent and they may be getting a job at Google or
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  Facebook or something, they'll quit those jobs because they think, oh my God, because as soon as
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  they start investing their time, all of us do it, we fall in love with it. Like that's what is a
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  meaningful task. So you have to have a meaningful engagement with them. And then they will, you know,
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  often it's their project too at that point. They will just work for you for equity and commit fully.
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  And that is a start of a great relationship. And that is the beginning of a great business.
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  I've always heard, I heard the saying, I think it was from one of the founders of Buffer. He said,
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  if you're hiring for a start-up, and the first question one of your hires asks is, you know,
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  how much vacation time am I getting or whatnot? Nothing wrong with those questions. But those aren't
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  the people that are going to really love a start-up environment. They're not going to love it.
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  And that's what you have to have at the beginning. You need to have that love, that passion that
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  probably is an abnormal amount of passion that most people don't have for a company or for
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  their work, right? You have to have to find people that can even emulate like a tenth of a
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  percent of the passion that the founder would have. You can find those people. That's when you win,
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  but it's very difficult. That is true. It is difficult, but people have that pack a lot.
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  The people you want have that passion. And those people are out there waiting for somebody to
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  approach that. So, often, I've heard horror stories and lived through horror stories.
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  Of entrepreneurs, I'll give you an example. There's an entrepreneur I was working with. I'm not
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  just one. This happened many times. But this entrepreneur brought somebody onto their team to do the
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  coding, right? The person was from Google, Crack Coda. And this person was so excited about the
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  project at the beginning. You know, this passion was there. But the person, when he asked the
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  person, this coder did not want to give up the Google job, right? They were like, let me,
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  I want to be safe, right? When this takes off, I'll do it, but I'll do your project on the side.
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  Well, they started on great. And then over time, when things just didn't take off right away,
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  the person got distracted. Like at Google, it's not easy to work at Google. I mean, they expect
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  a lot out of you. They hire super smart people and they want them to work. So this person got
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  distracted by other obligations. He had at Google. And all of a sudden, this productivity will tune
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  and the entrepreneur's waiting. Like, where's that passion? What's going on? You know, in weeks go by,
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  and should I cut the person and start all over, find somebody else and don't want to do that,
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  then they're in this conundrum. You know, they don't know what to do eventually. After several
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  months, they had to cut the person and start all over. So they wasted several months. I, to your
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  point, I say, don't commit to someone unless they'll commit to you, right? So if you want,
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  if you want to get, it's one thing anybody can say they have passion. And some people are truly
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  passionate, but unwilling to commit, like they're passionate for a brief period of time. But there's
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  a litmus staff like, okay, quit your job at Google and let's do this full time. No, I want to do it
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  on the side. Okay, then you're probably not the right person. You just have to say that and move on.
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  And I guess the follow up, because I know this has asked of you a lot, would be when you do have
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  the wrong people in your organization, is there a way around it, or do you just have to cut them in
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  rebuild? Is that the only solution? So in a big company, it can afford some, some dead weight.
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  You could afford dead weight if you're Microsoft or any of these huge companies. You know, if people,
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  they just, you know, if somebody isn't working out because it's often hard to fire people,
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  the bosses just shunt them off to a corner. In a startup, you cannot afford an ounce of
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  dead weight. You have to be a lean, mean fighting machine like you cannot have any dead weight.
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  And that means that you have to make a decision. Now, I myself have stumbled in this area.
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  My early startups, like I had this engineer who was good friends with my other engineers,
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  and they recommended I bring this engineer on, but the engineer actually was not good. Like he was
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  very arrogant. He've talked a good talk, but his implementation was buggy all the time. It kept
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  crashing. It was a nightmare. But we again, after I only found out how, how inept he was, you know,
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  six months in because we had already, uh, we needed, I didn't, I trusted and I thought he would
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  build. They, they liked him because he was, um, because they were friends, right? But he wasn't
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  the right guy. And, and this system, but we were six months in. I felt like we can't go back six
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  months. It's insane, right? We spent six months on this. So I stuck with the guy, another six
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  months and then another six months. And I will tell you the day I fired him, thinking all hell would
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  go lose every, I got this new engineer and they just, oh, this, this system is crap. Totally
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  redid it in a month, in a money and it worked better than it ever had. So I will tell you,
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  you know, cut your losses. The day you realize somebody isn't working out as a startup,
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  you cut them, you literally cut them right that day. And you go, and even if you think your whole
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  company is going to implode and it will set you back six months or whatever it is, just do it
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  and find the right person. Yeah. Very good advice. It's very, it's very hard. And I guess that's why
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  if, uh, you know, I'm sure this will come off at some point, but if you are an entrepreneur and,
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  um, you're having the deal, it is very difficult personal discussions with people that you've hired
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  on. Um, it can be easy to default to literally what you just said, just keeping them on, keeping
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  their own, keeping everybody happy. So maybe this, yeah, I was also worried about my other employees
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  who liked them, but it wasn't a question of whether you like somebody. It's like, are they
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  performing? You know, I didn't want to roll around. I didn't want to do honestly. You can't worry
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  about those things. You just, in the difficult discussion, you just have to be totally on it. You
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  like, you just have to say, you know, first of all, you have to give them a warning right away
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  when you first see the problem. Like, don't ignore it. Like, just stayed it up front, put it in
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  writing because that protects you legally and just stayed it up front. You know, these are the
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  problems and you warn them twice. Third time out the door. Like, like literally, we're cutting the
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  launch. It also, you're right. I like that though. It shouldn't be a surprise. I guess, yeah,
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  that would be a surprise. They, and you shouldn't worry about lowering their productivity by telling
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  them they're not doing a good job. If they're going to, honestly, if they're going to be offended,
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  abide your words and not step up to the plate, then they aren't the right person for the job.
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  So you just need, it's, it's, you just need to be totally honest, but not in a mean way. Like,
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  you don't, like, you don't have to be mean. You just have to be firm. You just have to be,
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  this is what I expect of you. This is what we need to get done. If we're not going to hit that
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  goal, if the system goes down again or you don't hit your milestones, then we're going to have to
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  review whether we can keep you on. Period. Thanks for tuning in. If you found this valuable,
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  don't forget to hit that subscribe button so you never miss an episode. And if you want to dive
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  deeper into this conversation, check out the links in the description to watch the full episode.
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  See you in the next one.