The right time to hire at a startup is probably later than you think

It’s a long race. Don’t rush it.
It’s a long race. Don’t rush it.
Image: Kirby Lee-USA TODAY Sports via REUTERS
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Let me tell you a tale of two startups.

The first hires a sizable team of junior- to mid-level employees as soon as there’s enough money in the bank. While this feels like exciting progress, the founders end up stressed about the financial overhead they’ve created—and overwhelmed by the needs of their employees, which ultimately make them unable to spend much time on the business itself.

The second startup stays lean for as long as possible—just the two co-founders working hard on the product for the better part of two years. When they finally are able to hire, they have the financial stability to bring in top-level employees who can take their company leaps and bounds forward.

These aren’t hypotheticals: This is the story of my two companies, edtech platform Imagine Easy Solutions and gaming company Unwind Media. Both ultimately reached multimillion-dollar valuations. But with the first—where my co-founder and I took the path so many companies do and hired as quickly as we could—the path to success was much longer and more stressful than it needed to be. The decision to stay small this time around has paid off in spades.

I’m not here to tell you that there’s a perfect time for every growing business to bring on other team members. But I do think many founders should probably start hiring later than they might expect.

Here are four questions to ask yourself to figure out if it really is the best time to bring on some employees—or if your company could grow more efficiently by staying small.

1. Do you have your core business figured out?

No? I’d hold off on hiring. Your number one job as an entrepreneur should be figuring out how your business can generate meaningful, sustainable revenue. When founders hire too early, they end up diverting a lot of their energy into management, distracting them from doing the most important startup work. At an early stage, this means determining product-market fit and what it takes to scale your business.

Until you’ve figured out precisely how to make your business succeed, it’s better to stay laser focused on doing what you’re best at. Roll up your sleeves and put your skills to work. As a founder, you’re uniquely in tune with the problem you’re trying to solve, and more importantly, you have the grit to do it. Draw on your past experiences to see what you can apply to growing your business. Try things to fail (and learn) fast.

Once the business is on a clear path forward, then it could be the right time to hire. At that point, you’ll want to start delegating the repeatable strategies you’ve put in place, so you can free yourself up to think about the next steps forward.

2. Do you know what expertise you need for the long haul?

If you aren’t absolutely certain of the skills you’ll need to move your company forward (and that you’ll keep needing those skills), the last thing you want to do is hire someone only to later realize their expertise isn’t what the business needs at all.

A better approach, I’ve found, is to lean on expert contractors and part-time hires to support the business in its early stages. This allows you to test out different strategies, tap into different strengths, and learn what you really need before going all in.

For instance, when we acquired the gaming website im-a-puzzle, we were considering hiring a full-time marketer with experience in paid marketing. Instead, with the help of contractors, we were able to test some different strategies and now feel confident in searching for a full-time employee with expertise in paid social media marketing.

3. Is human capital the most efficient way for you to grow?

There are a lot of investments you can make to grow your business; investing in people is just one of them. I don’t think enough founders explore other growth options before jumping into hiring.

My co-founder and I have found a lot of success in diverting the money we’re saving on not hiring employees into either partnering with or acquiring other businesses in our space. For example, when we started working with classic gaming platform Solitaire Bliss, we immediately gained access to years of another team’s work, including their institutional product knowledge, technology, and brand. This helped us improve our tech stack and product experience, and grow our user base—all without the overhead of having to hire employees.

Acquisition and partnerships may not be the right approach for your company, but it’s worth considering if your funds would be better spent elsewhere before investing in full-time employees.If you can align your goals with that of another business, it can be a win-win.

4. Can you really afford the right people?

I see many founders who can’t afford the hires they really need, so they cut corners—typically by hiring more junior employees—and then end up paying for it in the time it takes to manage them (or, worse, having to fire people and go through the whole hiring process again).

My co-founder and I ultimately want to build a business that can grow itself. To do that, we knew we needed senior employees who could work independently of us. So we waited until we had grown to the point where we could competitively hire experienced people, while also de-risking the business opportunity for them.

Maybe junior employees are the right first step for your business, but in any case, take the time to figure out who you really need. If you can afford them,great—carry on with hiring!

If not, don’t make compromises. Instead, roll up your sleeves, work with contractors to tide you over, and get your business to the point where you can truly bring on the best people.

Take it from me: It’s a far smoother path.