On Building a Founding Team
Tactical advice for founders and candidates
TL;DR: We often get questions from founders who have questions about building their founding team, and from people who are wondering if they should join an early startup. No great guide exists that we could point them to, so we wrote the ~4,000 words below.
In the early days of Dropbox, co-founder Drew Houston asked one of his early investors for advice about building a startup. In response, the investor sent a 10-item list:
Hire the best people
Hire the best people
Hire the best people
Hire the best people
[...]
It’s great advice that is exponentially more important if you haven’t actually hired anyone yet. Brian Chesky (co-founder of Airbnb) described hiring their first engineer like bringing DNA into their company. “If we hire this person, there [are] going to be a thousand people just like him or her in the company.”
The DNA analogy is apt. Every person you bring onto your founding team is a new batch of foundational genetic code—code that will be expressed throughout your startup’s lifetime. Your founding team will build the lore of your company. They will determine its direction. They will be the reason other great people want to work at your company. They will even help determine what “great people” means. Building a great founding team might be the highest-leverage thing you can do early on to raise your chances of success.
What’s scary is you have a very low margin for error. A 500-person company can absorb the cost of hiring one or two bad people (and in fact they do it all the time). But your early startup may never recover from hiring the wrong founding engineer, or designer, or growth lead. One or two mistakes here can send your company reeling. It’d be pretty good if you could figure out how to not mess this up.
It’s unfortunate, then, that most founders (perhaps you!) do not know exactly how to hire a founding team. That’s because, prior to hiring, you’ve spent all of your time building the product. Talking to customers. Growing revenue. But when you reach the point where it’s time to build a team, you—as Brian Chesky puts it—go from building the product to building the company that builds the product.
Partly, building a founding team is hard because company-building, including hiring, is hard. And partly it is hard because there are things that are true about hiring for a founding team that may not apply across the rest of hiring. The rest of this guide is practical advice for building founding teams. It’s for founders building their teams, and for the people interested in joining them.
One of the biggest challenges founders and founding team members face is prioritization. We all only have so much time and it’s challenging to figure out precisely where to allocate it.
While it’s hard to give general advice here, there’s one thing we know with confidence—you should not waste time on back-office, administrative tasks like startup banking* and accounting and payroll. Instead, you should outsource them to trusted providers who can save you time and let you focus on what matters most: your product, your customers, and your team.
When we started Next Play, we decided to work with Mercury for all things banking* and payments. They have saved us (literally!) dozens of hours and it’s a joy using a banking* portal that does not look like it was made in the early 2000s.
Mercury was kind enough to partner with us on creating this piece—largely because they are committed to bringing all the ways people and businesses use money into a single fintech product that feels extraordinary to use, anchored by a powerful bank account*. In addition to sponsoring this piece, they also create a bunch of other great resources for the community like their founder community Raise, their blog, and their magazine, Meridian. Be sure to check out Mercury if you are looking for help with your business banking*, bill pay, and more.
*Mercury is a financial technology company, not a bank. Banking services provided through Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.
Your general mentality towards hiring
Perhaps the most useful way to begin is by establishing some general framing, and by clearing up the misconceptions you may have. Our best advice?
Hiring people for your founding team should be a win-win. In theory this is true across all hiring, but it’s especially important when you’re hiring a founding team. You should be honest. You need to find people who actually want to do this crazy thing you’re pitching them, not people you are tricking into joining your risky startup, where they get paid less, as opposed to joining a well-paid job at a stable company.
None of the other advice in this essay is helpful if you can’t be honest. It’s also not useful if you are persuading people to join your startup who would probably be better-off elsewhere.
Here are a few other factors that may differentiate your founding team from your 1000th employee:
You are looking for persistent people with high risk tolerance. Even if your startup becomes a $50B company someday, it is going to have a lot of ups and downs. It is probably going to have pivots, and scares, and almost-failures. So, when hiring for your founding team, overindex on persistence and risk tolerance. It doesn’t matter if Person A is a great engineer if they’ll drop out at the soonest sign of risk. You don’t need to hire people who are willing to devote their entire lives to your company (though you can), but you do want people who understand and are okay with the risk involved.
You may want T-shaped people. On his blog, Andrew Chen (a16z) writes about how your early employees should be T-shaped: an incredible depth of skills in one area and competency in a bunch of others. You’re probably not looking for a generalist (shallow everywhere) or a specialist (can only do one thing). It’s rare that someone on a founding team works in their own little narrow silo; hence why having someone who’s broadly competent is helpful. These people are hard to find, but that’s what the next section of this essay is designed to help you with.
You need to have an unbelievably high level of trust. Most founders who’ve been interviewed about founding teams (e.g. Ben Silbermann of Pinterest) talk about how important it is that you trust people you hire onto your founding team. It’s true that you want to trust every employee, but it’s extra true for founding teams. Maybe this is why so many early teams are made up of close friends and connections—more on that in the next section.
How to identify great people for your founding team
How do you know if somebody is great?
It’s a hard question to answer in any context. And it’s even harder when you’re building your founding team, because the pool is even smaller. Out of 100 great engineers, for example, only a handful might be a great fit to be a founding engineer. The already-difficult task of hiring just got even more challenging.
Good news is, there are plenty of useful questions you can answer to determine whether someone might be a fit. We find that the most useful category of information is about past experiences: what have they done already? Even a 21-year old college student who’s never held a full-time job, if they are great, will have some interesting past experiences. Here are some things to look for.
Note: You’re not just looking for someone who is good at their job, but someone who can be great on a founding team with a lot of risk and ups-and-downs, a place where scope of ‘their job’ is ambiguous.
Have they owned projects from 0 to 1? And did they actually do the work?
Have they worked with ambiguity? (3 years as PM at Google is not that ambiguous.)
Have they had to define their own roles in the past?
Have they founded a startup before?
Have they worked on a founding team at a startup before?
If so, why did/didn’t it work out?
Have they experienced the ups and downs of a startup?
Are they T-shaped: great at one thing but also broadly competent?
Have they had founding team-level ownership of anything in the past?
Have they ever produced truly great work?
You can try to answer most of these questions without even talking to the person; a sufficiently thorough search of their LinkedIn profile, personal website, and online footprint can sometimes get you most of the way there. This is helpful, because these questions can be criteria you use to filter the list of people worth interviewing.
Vetting past experiences can get you some, or most, of the way there. But you should also be interested in somebody’s mentality. At the risk of sounding like a broken record, the mentality you should be looking for in someone on your founding team is rarer—and more specific—than the mentality you might look for in your 500th employee. You might be able to allow more diverse mentalities when you’re hiring your 1,000th employee and their job is to update numbers in a spreadsheet; not so when you’re bringing in your first engineer.
On this subject, people often tell you that you should hire folks with a “startup mindset”. What does that really mean, though? Let’s be more specific. Here are some questions to get you started.
Are they at least a little bit naive? Meaning, are they optimistic and high conviction people who can see things with fresh eyes? Or are they cynical and jaded?
Are they a complainer? Are they generally negative?
Are they honest?
How do they define “great”? Do they care about producing great work?
Do they have a strong ability to learn?
Do they actually have a passion for your customer or opportunity?
Are they mentally tough and persistent?
Can they be an entrepreneur (the criteria Zynga’s founder used)?
You may only be able to decide the answers to some of these questions after you’ve spent some time talking with the person. But, it’s always good to have criteria before you start your search. You can only answer these questions if you have people to answer the question out, though, so let’s get to that.
How to actually find people
So where are all of these brilliant potential founding team members? Well, there aren’t many of them, and you may have to work pretty hard to find them. You can’t follow the default hiring path of posting something on LinkedIn and crossing your fingers (one of the reasons is because people may not apply—you’re an unknown startup). You may have to do a bit of hunting.
The default path for many (and possibly most) founders is to hire people they know. Drew Houston of Dropbox said that you “start by getting your most talented friends.” Lenny Rachitsky wrote a piece on this topic and interviewed dozens of founders, many of whom basically said the same thing.
Probably this is because you should have high conviction and high trust in your founding team, and it’s easier to have those things when your founding team is made up of friends you’ve had for years.
The downside of hiring your friends, though, is that it’s a skewed sample; your friend group is nothing close to representative of the entire pool you could be hiring from—there are probably blind spots. Be careful of overrating people just because you know them personally, or because someone you trust recommended them. While it’s possible that some of the best options for your founding team are in your immediate social circles, it’s unlikely that you should stop the search there before you’ve figured out if someone else, someone you don’t know yet, is a better fit.
So, hiring friends and connections is a (potentially useful) shortcut. Where else should you search?
Next Play (and similar communities). Find places where ambitious, curious, smart people in your potential hiring pool might hang out. Next Play, if you’ll excuse the self-promo, is a good example—multiple startups have hired founding team members they found in our community. There are a few ways you can chop this up: (1) you can join the communities (i.e. if they have a Slack or Discord) and reach out to interesting people, and/or (2) you can figure out a way to publicize your founding team search within the community, like getting featured on Next Play. You can email us at hi@nextplay.so.
Search in other smart places. Start from first principles (an overused phrase, but true here!) and reverse engineer hiring: what “smart places” are your potential founding team members hanging out in? If you’re looking for a Founding Engineer, what college(s) could they have gone to? What projects would they have participated in? What forums would they be on? How would you find them? Tools like Scout can help make it easier to find interesting people and get their emails. You could:
Find people whose equity at their current company is about to vest.
Hire people with startup experience at some of the top companies.
Hire people who have built their own projects.
[There are 100s of ideas like this!]
Finally, you may as well post a job. While we wouldn’t bet on it happening, it’s not impossible that your perfect founding team members apply to a job you post somewhere, like on LinkedIn. Again, this is not usually how founding teams are built. But it doesn’t hurt to expand your surface area.
How to write a good outbound email
With most of these methods (including personal connections!) you will probably find yourself having to write cold outbound emails to people who seem interesting. Most people, founders included, do not write very good emails. And it would be frustrating for the perfect founding team member to slip through the cracks just because you wrote a bad email. This isn’t an email guide, but here are some tips:
Keep it short. <200 words if you can.
Focus on them. Make it clear you want to talk to them, specifically. Mention a project of theirs you came across, or say you’re curious about learning about [X experience] they have.
Don’t send your whole big pitch. If you can, say in a sentence what you’re doing. This is another thing that most early founders are not good at, but try.
Be clear and honest. Tell them you’re hiring for, say, a Founding Engineer and that you think they might be a good fit. And that you’d like to chat. That’s it.
Offer to provide more info async. Don’t make a Zoom call be the only path forward, especially after just 200 words of context. Tell them you’re happy to answer more questions.
One decent example of an outbound email to a promising founding team member might be:
Hey Alexandra -
Impressed by your work at Replit and some of your projects back at MIT.
Reaching out because I’m hiring our startup’s first engineer - and I think it might be worth us having a conversation, if you’re up to it.
We’re building a tool that automates outbound in B2B. We just raised $2M and have a working product with a few early customers (like Ramp).
Open to a chat? Want to learn more about you and could answer any questions you have.
Mike
The reason we call this example “decent” is because it’s a bit generic. In your actual email, you should try to write in a way that sounds like you—that shows the other person that you are a real human with a real personality, not a LLM fishing for a response.
Beyond that, though, this email is a useful format. Short, clear, personal, informative, with a simple call to action. Most people, especially talented folks who could work at 100s of startups, do not want to read your 800-word treatise about how your company is changing the world. They’re more likely to respond to concrete details (at least for now).
Speaking of concrete details, I wanted to give another really quick plug to the sponsor of this piece: Mercury. Mercury is a fintech ambitious companies use for banking*, credit cards, and all their financial workflows — and (I promise you I am not exaggerating when I say this) it is _really_ easy to use. Sending and receiving payments takes just a few minutes and yes you can do it from your mobile phone. You can check out Mercury here.
Pitching
Once you’ve found people and they’re potentially interested, you need to convince them that your company is worth joining. Yes, it’s true that the interview process is partially about you assessing their fit (more on that later). But if you are trying to hire someone great at your early-stage startup, you may have to do more persuasion than they do. And there are a few ways you can avoid screwing this up.
Start by remembering the general mentality from earlier in this piece: this should be a win-win. Your goal is not to trick people. If you find yourself bending the truth in an attempt to convince people to join your startup, you may want to go back to the drawing board.
Thankfully, it’s possible to have a great founding team pitch that is also one-hundred percent honest. It’s just that you need to lean into different traits than a more mature startup might lean into.
Ask yourself: why would someone want to join your founding team?
It’s probably not for the money. They have better economic options. Many of the people you’d want on your founding team could probably take their pick of most of the startups that currently exist. Or, if they really cared about money, they could go work at a Big Tech company that pays more. So don’t try too hard to convince people that your compensation is competitive. Frankly, in most cases, it is not. It is rarely in their best interest to be overpaid in a way that jeopardizes the company’s success. (Exceptions are if you are unreasonably well-funded or if you are spending much more than the median at your stage.)
Instead, think about what your startup can be uniquely good at offering.
Responsibility. Being a founding anything means a lot of responsibility. As a Founding Engineer a person might have more responsibility than most engineers (even senior engineers, VPs, etc.) at bigger companies. That can be exciting.
Impact. On a founding team, a person’s individual contributions have an outsized impact on the company. This is hard to get elsewhere.
Learning. Ambitious people value learning fast, and that’s valuable to the right people.
Working with the founders. Partnering directly with a (hopefully) great founder is more interesting to most people than working under middle management.
Fun, crazy, wild times. Startups are unpredictable. For some people, that’s a plus.
Hard work. Most people you’d want to hire for your founding team are attracted to difficult problems. So, for those people, “hard work” is a powerful offer. It’s something that more established companies cannot always offer them, at least not the way you can.
Shape the culture. Your early team builds the lore of your startup.
This is about as far as general advice can go; your startup is the lens through which all of these ideas will refract. The best thing you can do is not just to pitch people on what makes joining a founding team unique, but on what makes joining your founding team unique. Finding those answers is up to you, but you could consider focusing your ideas around the pillars above.
The love bomb
In dating, ‘love bombing’ is a negative term: it’s when you shower someone with affection without any real intent to follow through on your implied (or stated) commitment. The same can be true about hiring. Your goal is to be honest, and we do not recommend that you tell people things which are not true.
But there’s a different version of love bombing which can be useful and is used by many startups.
Once you have decided you may want to hire someone—more on that in the next section—you should make sure they know just how much you’d like them on the team. Some ideas that startups use:
Have everyone on your team record a genuine video saying why they’re excited about the candidate potentially joining.
Send the candidate an email explaining all of the reasons why you think they’d be a great fit.
If you have mutual friends, tell their friends how impressed you are (in the hopes that their friends will pass on the praise, which is common).
The point of all this is to show your genuine interest in a person, help them connect with it, and get them excited both about the company and about work with you and the team. You can get more creative than the ideas above, but be conscious of boundaries—don’t overstep them and get creepy or invasive. Also, try to wait until you’re pretty sure you want to hire someone before you send a love bomb. Doing it too early can be disingenuous.
The anti-pitch
You could also try the opposite of the love bomb: the anti-pitch. Sell the candidate on all the reasons not to join your startup. This can get the right people excited and scare the wrong people away.
Some things you might include in an anti-pitch (these are examples, not what is true for your startup):
Full accountability and transparency—everyone knows exactly what you’re doing
Crazy, intense work hours
In the office every day, working in person
Extremely high quality bar
This list will change for every startup. Pick the things that are both (1) true and (2) you think will scare away the wrong candidates. Traba was famous for their intense work culture and six-day work week. While unappealing (and outrageous) for many, it attracted people who wanted to work that way.
Compensation and equity
This isn’t a guide on how to structure the financial details of offers for employees. For that we’d recommend looking elsewhere and thinking about what makes sense for your specific situation. However, it’s worth noting that if someone is joining your early startup for the right reasons, there is a decent chance they will care more about equity than cash. Not guaranteed, but likely.
Our only other advice here is to avoid being slimy or trying to scam people (e.g. taking advantage of the fact that someone doesn’t know much about how equity works). These people are the foundation of your company and should be treated as such. It’s true that you probably should not shell out Big Tech salaries, and your employees will know that, but you should do what you can to take care of them. If in doubt, research what other startups at your stage have done. You can also reach out to other founders.
Assessing fit
Airbnb interviewed hundreds of people over the course of many months before they hired their first engineer. Patrick Collison (Stripe) said he wished he had put even more thought into finding the right people earlier (and we imagine he did put a lot of thought into it). You may want to be equally cautious, and rigorous, as you decide who is the right fit to join your founding team.
There are a few places that most fit-assessing processes fail.
One way you can fail is by being too impatient. The solution to that one is easy: take your time and don’t hire someone until you are extremely confident that they are the right fit. Remember that taking your time is not the same as exhausting all your options (for more, read about optimal stopping). You want to be patient until you have conviction—but once you have conviction, you want to move fast.
Another failure mode is to overindex on general intelligence and problem-solving (like IQ). Sure, it’s good to have someone who is ‘smart’ in the way that most of us define smart. But general questions and intelligence can only get you so far. Focus on learning information about how the person would work at your specific company, not just how intelligent they seem to be. There are millions of genius-level people who would be a terrible fit to work on your startup’s founding team.
You should also try to avoid ranking candidates based on how well they talk. The best talkers are not always the best workers. Sometimes they are, but we doubt there is a strong correlation. Pay attention to the actual details of people’s answers and press harder if it seems like someone has something to say but is bad at expressing it. Fluffy answers are red flags.
Then what should you actually do?
The clearest way to tell if someone will work well at your company is to run a paid work trial. A lot of startups run these now (notably, Linear is famous for doing them, and they wrote about their process). A few pieces of advice for maximizing the effectiveness of your work trial:
Have the candidate work on a real thing. Imagine you just hired them and wanted them to jump into a project—what would that be? Avoid giving them a fake theoretical project—unless you’re really thoughtful about it, you may ask them to do something that is irrelevant and/or gives you unclear signal.
If you can, have the candidate work on a medium-sized project (something that may take days, not hours). This can give you a better sample size.
Try to assign something that’s collaborative so you can see what the back-and-forth is like. It won’t be perfect, of course, but there’s a lot of collaboration on a founding team. Doing a test run of that collaboration can give you a rudimentary idea of what future work might be like.
You will likely learn most of the information you need via the work trial and interviews. But there are a few other things you can do that can further increase the likelihood of picking the right person.
Have them take a personality test. It sounds cheesy, but a personality test may be marginally useful in helping you accept fit. ‘Big Five’ is generally the accepted personality test framework (and it’s been validated across all humans, including forager-farmers in the Bolivian Amazon). The legality of doing this may vary depending on where you are, so be sure to look into that first.
Get references. This is a good essay that contains advice on checking references.
Hang out with them outside of work. If you can, go grab dinner with them. Or do something more unconventional, like going to a sporting event or playing basketball. Get them outside of a professional interview context and see what sort of person they are. Founding teams at startups spend a lot of time together, so you ideally should like the person as a human.
Ask yourself revealing questions. We like Patrick Collison’s framework. (1) Is this person so good you would happily work for them? (2) Could this person get you where you need to be way faster than any reasonable person could? (3) When this person disagrees with you, do you think it will be as likely you are wrong as they are wrong?
Finally, reflect on the questions they asked you. What does it seem like they care about? Hearing a lot of questions about work-life balance, vacation days, and an extra $2k of salary is different from hearing a lot of questions about the customer, the product, and the problem. This isn’t a binary thing—people can be curious about everything—but we recommend you pay attention to what their priorities seem to be and where their curiosity lies. The role you hire someone for should, ideally, fit the life they want to build.
Did you hire the right person?
The first time you assess someone’s fit is in the interview and work trial process. The second time is during the months after you hire them. Our goal with this guide is to help you hire, not manage, and there are plenty of other guides to management (here’s a blog we like with some good advice). So we’ll contain our advice here to a single question.
After 90 days, ask: Knowing what I know today, would I enthusiastically re-hire this person?
If your answer is not a confident yes, then you may want to move on—and to do so quickly. An early-stage startup is not a place with a lot of cushion. Make decisions and move on. The reason you wait three months to ask yourself this question and make a decision is that it gives you a bigger sample size of their work. It is rarely healthy to fire someone, say, a week after hiring them (though there are lots of opinions on this, and it may be effective in some cases).
Understand that there’s a reasonable chance you will make some hiring mistakes, even if you’ve been thorough, even if you’ve followed every step in this guide. Your real goal is to increase the probability of hiring the right person as much as you can—because hiring a great founding team is your startup’s best, and perhaps only, path to success.
Major thanks once again to the team at Mercury for partnering with us on this piece. We very much appreciate Mercury the banking* and payments product (which we use every week) but also their efforts in supporting the startup ecosystem.
The team at Mercury very much share the Next Play ethos of participating in positive sum games and spreading useful knowledge via freely accessible resources. We highly encourage current and future startup founders to check out the plethora of resources Mercury has created — ranging from deep-dive essays like this one on the invention of SAFE financing to their program Raise that connects founders to investors.
And if you are looking for more resources, please do check out our blog at Next Play. Our goal is to help you figure out what’s next – we do that in a variety of ways ranging from curating content to highlighting interesting job opportunities to connecting you with like-minded peers.
*Mercury is a financial technology company, not a bank. Banking services provided through Choice Financial Group, Column N.A., and Evolve Bank & Trust; Members FDIC.
I like the DNA analogy for hiring people!
Great article, thanks a lot, lots of super helpful advice!
I like the part about the difference between a founding team member and the employee number 1000.
Note: I got curious about the Bolivian people study, and it looks like the conclusion is the opposite of what you're mentioning: the Big-5 model isn't replicable with them. I don't think it changes much, I feel like all of these models are imperfect, and to take with a pinch of salt, but they can still be helpful to get more information on people and their personality.
But you might want to edit your reference :)