3 biggest mistakes founder CEOs make when building that crucial first team
I’ve recently been reflecting on challenges many founder CEOs face—myself included—in getting a company off the ground, and I keep coming back to the importance of the team. All startups have a vision and seeds of a product that has the potential to be something great, but success comes down to how well you execute the vision and build the right team to act on it.
Far too often, technical CEOs who have brilliant ideas cannot execute on them, leading to their replacement by seasoned CEOs. These CEOs with years of experience know the ins and outs of the business world, but they often lack the vision and passion that the one who came up with the idea brings to the table. Therefore, the vision goes unrealized.
By assembling your first team strategically, you can avoid many of the roadblocks first-time CEOs encounter. Here are three of the most common mistakes when it comes to hiring for your startup’s executive team and how to overcome them. These may seem obvious, but they’re easy to make when running a fast-growing company.
Mistake 1: You pass ownership to familiar cofounders and early employees
Building a stellar team means making key hires to lead across many functions, including marketing, sales, product, HR, finance, and customer success. But for founders coming from a technology background, trusting people who might not understand your technology, or think as analytically, can be hard.
Many times, the reasoning function of execs from these functions is different from the way you think—after all, they come from fundamentally different fields than from the one you came from. Initially, it may feel like you can’t trust them to carry out your vision. After interviewing a few external candidates, I often see founders go with the familiar option, choosing the cofounder or early employee who is like-minded. But this co-founder or employee is not a world-class CMO who grew up in marketing: they’re just a brilliant engineer who helped you build your product and don’t have what it takes to run a world-class marketing team.
So think twice before putting your cofounder or early employees in a top role, and stay frugal with titles. Don’t give a cofounder or friend a CMO title while running a three-person marketing organization. Maybe you name them as a temporary head of marketing—but quite soon, you’ll need to hire someone who has experience in the function to help your startup grow.
Mistake 2: You don’t allocate enough time to hiring the right person
The next mistake I see founder CEOs make comes in the search phase of hiring. Once they understand that they need a professional to run a function, it’s critical to also recognize that hiring well takes time. By the time you really know the house is on fire and you need to hire someone, it’s probably too late to run a proper search.
Adjusting to new personalities and backgrounds means giving yourself extra hours to hire for key roles and rethinking your recruiting process. Start your search earlier than you need for the role to give yourself time to see many candidates, optimize for quality, and learn to identify which attributes of leaders will help your company grow. Also, spend time doing your research and taking stock in what those who have worked with the candidates before have to say about them.
Also look for people who have built the next stage you want to reach, which narrows your candidate pool and can take more time. Don’t hire an executive that runs a 1,000 person HR organization—chances are, they aren’t builders, they’re optimizers. They know how to optimize a 1,000 organization or double it from 500 to 1,000 people, but they won’t know how to bootstrap your five-person HR team. Spend the effort making sure the candidates’ experience aligns with the current stage and short-term goals you want to accomplish at your startup.
Mistake 3: You can’t relinquish ownership, even after you hire the right person
With the hiring phase complete, the next mistake comes in the first few months of working with the new hire. Many CEOs struggle to build trust with new executives and micromanage their decisions, which is both time-consuming for the CEO and incredibly frustrating to the new executive. You can avoid this by working hard to build trust. Spend a lot of time with the new hire, and know that trust won’t happen automatically—you can’t build it in two months, nor will it happen by working alongside someone for a year and not putting effort into the relationship.
Also recognize that once you trust them, you might still disagree with their approaches or decisions. Pick your battles and only interfere with bigger decisions. When you disagree on critical, potentially business-altering decisions, settle on a high-level framework and give them leeway within that framework. For instance, if you think they don’t negotiate equity or salary well, put a budget constraint on them, and don’t micromanage every hire. If they’re not technical, put a process in place where the tech side of the house has to jointly approve the material. Avoid being in their business every day.
Ultimately, it doesn’t matter how brilliant your vision for a company might be unless you have the right team to bring it to life. That means learning the ropes and staying intentional about how to operate effectively as a CEO. By hiring right, strategically bringing the right executives into the fold, and building trust with them the same way you have with your technical cofounders, you’ll assemble a team that can scale your idea and set your business up for success.
Ali Ghodsi is CEO and cofounder of data analytics company Databricks.
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