Let’s question the idea that startups need to hire employees before they actually need them, ahead of growth.

I personally observed many times that this is actually terrible advice, but somehow, this misconception exists in the industry as soon as founders get new funding, they go on a hiring spree like there is no tomorrow.

I totally get it, though… It does feel reasonable on the surface to believe that if you hire more people sooner, they could do more things and the company will grow faster.

The problem with this is that when startups hire more people without considering other factors, they experience the following growing pains:

• Hiring in a rush will unavoidably generate a number of bad hires, toxic people, and personality clashes, which will have to be managed and resolved by the exec team.
• You will be delaying important decisions and product launches until everyone is on board or waiting for new people to join or hoping that the next meeting should bring more clarity about the next steps.
• Out of nowhere, you will be swamped by team meetings and 1:1s that don’t really end with decisions
• Everyone will start requiring more coordination, better structure, better communications, more transparency, and more discipline, as if all these things must be hired separately, like a catering service.
• Several experienced hires will find a lot of mistakes from the past where documentation needs to be fixed, a strategy needs to be drafted, and contracts need to be re-reviewed… It would feel important at the moment, but it will not drive new revenues and it will not open new partnerships.
• More people will start more projects that remain unfinished…
• … And newly hired employees will start complaining about dysfunctional inexperienced management, general chaos, lack of direction, and bad company culture.

The mistake of hiring people too soon to fuel growth fundamentally comes from the underlying belief that growth comes from having more people. However, if this assumption were true, bigger companies would grow faster, however, we all know very well, that large companies rarely grow faster than 10%-15% YoY, if even that. In most companies, more employees mean slower growth.

A variation of this misconception that leads to excessive hiring is when founders don’t feel they have the expertise in a particular area, so they want to hire an expert who would know what to do. In reality, there is always plenty of ideas about what to do, plenty of examples, and plenty of Google options. 

I’d like to argue that growth in FinTech comes from the combination of 3 factors: risk-taking decisions, efficient operations, and paperwork. When you hire more people, you can address the paperwork part and possibly improve your operations (if you hire engineers and other builders), but you must be realistic about the fact that when you are hiring people, you are slowing down your decision-making because risk-taking becomes more difficult. More people never make faster decisions. Delegation and empowering people are good with execution, and almost never work with risk-taking.

If you’d like your startup to grow faster with more people, either the CEO or the founding team need to become way more aggressive and almost dictator-like to overcome the inertia of the bigger organization (and founders generally don’t want that, because they prefer to be inclusive and empowering and liked by the team) or you need to build and incorporate a new way of making decisions and taking risks, that will be aggressive enough and transparent enough to be able to pull all your teams together and forward without alienating them.

I have been testing a new strategy of how organizations should take risks and design experimentation and testing phase for all important organizational decisions, and if your team is suffering from slow decision-making and many unfinished projects, please, send me a DM, and let’s discuss how I can help your organization to achieve your ambitious targets.

Cheers!

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