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Why firing beats hiring for early stage teams

Notes from a 500 Startups session on early team composition.

The core argument

Firing matters more than hiring, especially in early stage startups.

  • Good teammates push you forward. Bad teammates you have to push.
  • You cannot become an extraordinary leader without extraordinary teammates. Bad seeds do not grow into tall trees.
  • If you are thinking about whether a teammate has problems, they do. If they were extraordinary, you would be thinking about their work instead of questioning whether they are good enough.
  • Everyone needs to learn on a good team, not just the founders. If someone needs to be taught everything, they should not be there. The people you hire should save you time, not consume it.
  • Many extraordinary startups become mediocre because the founders stay loyal to early teammates rather than to the company. People come and go across stages. Your responsibility as a founder is taking the company to its next success, not pleasing everyone.
  • Do not compromise on early teammates. Work only with the best.

Thoughts that mean the decision is already made

If you are asking yourself any of these about an early team member, the answer is to let them go:

  • They have a good attitude but learn slowly. Should I give them more time?
  • They are not good, but we cannot move forward without them. (Better to slow down and replace them.)
  • Is it my management that made them inefficient? (You can always improve, but that is not why they are underperforming.)
  • Am I putting too much pressure on them? (Extraordinary people know how to prioritize. If they do not, they are not the right fit.)
  • Rehiring is expensive. (If you rehire you will probably survive. If you compromise, the startup is over.)

How to manage in the meantime

  • Always state why. Do not just cover what the work is and how to do it. Explain why, every day.
  • Never fire suddenly. Say what you are dissatisfied with and be explicit that you will part ways if it is not fixed within a stated period.
  • Distinguish good mistakes from bad ones. Good mistakes are first-time mistakes, and you should encourage them. Bad mistakes are the same mistake three or more times. You do not need teammates who make bad mistakes.

The caveat

Managing humanely depends on having extraordinary teammates in the first place. Mediocre teammates drain the energy and confidence of everyone around them. B and C players rarely work well alongside A players. They are not the worst people available, but they are not the best, and on an early team there is no room for anyone who is not.