280: How to Figure out the Right Pace of Hiring

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Steli Efti: Everybody, this is Steli Efti.

 

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Hiten Shah: And this is Hiten Shah.

 

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Steli Efti: And, today, on The Startup Chat, Hiten, I want to talk to you about hiring pace. So, not just when to hire and who to hire, we’ve had plenty of episodes about that, but also at what speed to be hiring. When is too slow, when is too fast, what is the right pace of hiring? There’s a few reasons why I wanted to talk about this with you. One is that this has been a theme for us at Close. We started with not hiring at all for the first three years, and being just a tiny team of six people, just crushing in revenue wise, profit wise, growth wise, and loving it, until things became so big for my business, and the team was so tiny, that things started breaking apart and we didn’t take advantage of certain opportunities. So, we went from no hiring to very, very slow, and I think poor recruiting and hiring, to then slow and being pretty good at hiring, to then slow and being really, really great at hiring, I think. Now, we’re kind of entering the phase of trying to be a little faster, where we’re adjusting the pace of hiring because we feel like we’ve been doing a pretty good job growing the team and adding really amazing people, but we’re seemingly always two steps too slow versus just one. So, we’ve just increased the speed of hiring just recently, in the last quarter or so. So, that’s one. It’s been on my mind to talk about speed of hiring, ’cause I’ve had a company where I hired way too fast, and that’s a catastrophe. I’m absolutely against hiring too fast. Then I’ve had Close, where I’ve hired too slow, and if I had to choose one of the two evils, I’d rather hire too slow than too fast. But, ideally, you’ll hire at the just right pace. So, pacing has been on my mind. But, then, just recently, I was at a conference with you, and at one of the lunches we were talking to a group of founders, and one of the founders talked about mindset when it comes to hiring. He was saying, self funded, profitable startup, he’s like, “I’ve been in this mindset of the profits that my company makes and the money that we put aside, that’s my money, and hiring aggressively or even hiring at all is like taking money out of my pocket and my family’s pocket and my children’s pocket, and it’s a risky thing. So, I have this internal anxiety about it.” He was talking about the baggage of having his father being an entrepreneur, and his father made a shit ton of money and they were really wealthy, and then got really broke, and then nothing. So, he saw his father go through these ups and downs, so he feels like he has to have a nest egg and he has to be conservative because he has children and all that. He was talking about that transition of going from we’re going it all ourselves as a small team, to having to start hiring and having to start investing in people and into the business in a way that feels risky to him. So, we were talking about hiring and when is the right time to hire, and how fast is too fast and how slow is too slow, and all that. So, I felt compelled to bring it up as a topic for us to chit chat, and I felt obviously you’re going to have some brilliant thoughts on this. But, basically, how do you know when you have to start hiring, and how do you know that you’re hiring too fast or too slow? Let’s talk about it. Let’s unpack this a little bit for ourselves, but also for the listeners.

 

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Hiten Shah: I like just in time hiring.

 

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Steli Efti: Just in time hiring.

 

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Hiten Shah: I think that’s the way to think about it if you’re running a business. What I mean by that is it’s not about fast or slow. I think it’s about just in time, and just in time means two things. One, the framework I put on it is, is the business going to improve if we make this hire or these set of hires? The most obvious one is actually sales, to be honest. Because, if you want to grow faster in revenue and you have a sales team, hiring more salespeople does equal more revenue. If you disagree, let me know, Steli, but that’s a pretty simple rule, right?

 

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Steli Efti: Yep.

 

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Hiten Shah: So, just in time hiring, in that case, is like if we have everything in place enough to hire more salespeople, even money, ’cause money counts, then let’s hire more salespeople right fucking now ’cause it’ll make us more money. There’s a period of ramp up and all that good stuff, but I’m assuming, when I say that, you have a lot of that taken care of, or you are very conscious to where that’s going to break as you hire more salespeople. So, that’s the easiest answer. If it’s going to make you more money, do it. Same goes for marketing, to be honest, but less so than sales. If you have certain things working in marketing, such as content, and you’re writing it and it’s leading to results, whatever they may be, and this is an example, or even ads, as an example, if you hire more people in those areas, it’s likely they will produce more content, create more ads, for example, and you will make more money. So, to me, it’s very simple. That’s a simple lens, and that’s why I say it’s just in time. So, your pace of hiring is less important to me than are you hiring the right people at the right time. Then, velocity comes into play. Because, the thing is, you can say, “If we doubled our sales team, we’re going to make more than double the revenue.” Whatever, whatever way you want to look at it, right? But, there’s still a pacing to that instantly because you can’t hire … Let’s say you have 50 salespeople. You can’t hire another 50 overnight. There’s a pacing to it. But, then you have the pacing discussion, if you know that hiring more salespeople leads to more revenue, then you start thinking of it that way. So, that’s one, to me, very simple way to think about it, from a just in time perspective, instead of worrying about too slow or too fast. The other framework I would use – because not everything is sales and marketing – is still very similar, which is what are the outcomes you’re looking to get next year. Whatever they are. User growth, retention, customer satisfaction, reduction of some metric or problem in the company, or replacing people, any of that stuff. Then work backwards on how are we going to do that? Who do we need to hire? Where are our gaps? Instantly, I think the discussion changes around slow or fast, if you are starting the discussion with slow or fast. There’s a third thing, too, to me, which is another piece of just in time, which is where’s our bottleneck, which is kind of unrelated to the first two. ‘Cause sometimes bottlenecks don’t have to do with metrics, they have to do with someone doing 10 jobs when they should be doing eight or five. Then, it’s more of like, oh man, we’ve been under invested in this area from a headcount standpoint and we need to invest more in it. That includes hiring a manager, so to speak, or hiring more senior people, and things like that, because they can have a very big impact on a business if done well and done properly. But, the senior people and those managers don’t tend to be a pacing slow or fast thing, they tend to be a just in time thing. So, again, that’s my framework. Instead of worrying about pacing, I worry about just in time hiring, and this is the way I think about it.

 

[0:07:33]

Steli Efti: So, I love that framework. Now, the one thing here that stands out to me is that it’s one thing when you decide that you should bring somebody in for a specific position in your team because now is the time or because improving this area in the business is a priority and you can’t do it with the people onboard, or maybe there’s nobody on the team that is tackling that kind of KPI or problem or challenge … That decision is one point, but then the execution phase is another. Sometimes there is a delay, especially for companies that are … And, hopefully, most companies are pretty deliberate about that, or the people that are listening to us. You don’t just post a job somewhere, get 100 applicants, and then you just hire somebody within a week or two out of that batch. Depending on the position, it might take three, four, five months to find the right person. Sometimes you might find the right person within a month or within a few weeks. But, there’s a delay between you making the decision and you finding somebody that is perfect for the job and perfect from a cultural perspective for your company. That also varies, right? If you’re looking for somebody that’s a manager or a leader, that might take a much longer time. It might take six months to find somebody that is a VP of sales, a VP of marketing, a VP of something, versus hiring a junior SDR, from a sales perspective, that might be a hire that you could make in two or three weeks because there’s just a bigger talent pool to pick from, or an easier talent pool to pick from. So, how do you think about the hiring speed in terms of how much time it takes a company to fill a position? Do you have any things that you’ve seen in terms of best practice? Do you think every position should be filled within three weeks otherwise you’re doing something wrong, or do you think, yeah, some position might take you two years to fill, that’s totally cool? How do you think about time to hire, from the decision we need somebody, to the time that you make an offer? What have you seen there, with your framework there?

 

[0:09:50]

Hiten Shah: Yeah. Time to hire. Hire as fast as you can when you need the role, but not too fast. This is more on a role by role, case by case basis. Honestly, the thing I was actually thinking about as you were talking about that, and your earlier kind of thought about your personal changes that you’re making at your company around pacing, there’s something pretty simple, which is do you have the systems in place to make hires at the speed that you need to or want to? That takes a lot more thought than just saying, “I need to hire a marketer,” or, “I want to hire five more salespeople.” It’s more about, okay, if we’re going to hire a marketer, what do we need for them? What do we need to know? How do we vet them? All these things, honestly, the most startups, especially earlier stage, that I see, even later stage, even up to like 50, even 100 people sometimes, believe it or not, they don’t think about all that backend process. They don’t think about can we actually do it at that pace, or can we do it that fast, which are two different things. Pace is like one after another. Can we do it that fast is kind of your question, which is can we hire a marketer in a week? Which is probably not true, to be honest, in most cases.

 

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Steli Efti: Mm-hmm (affirmative).

 

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Hiten Shah: Unless you already have a pipeline, or you have a certain process. That’s why, for me, it’s kind of like experiments in a way, or testing, or optimization, where it’s like I just have to know I want to hit this goal. That goal can be hiring X amount of marketers or Y amount of salespeople. Then I work backward from there to say, “Hey, where are we screwed if we do this?” Meaning what are the things that are going to break if we want to hire those people overnight? If we had five great candidates tomorrow in sales, and we hired all of them, what would happen is one way to think about it, and are we already set up for that? Then you have all these interesting discussions about where everything’s broken or what you’re missing. The other aspect of it is what is preventing us from hiring those five people tomorrow? Then you’ll get into your whole pipeline and other sorts of things like that, that are going to help you figure it out. To me, I like being … You can probably notice from this discussion, I don’t like to just say, “We’re going to hire.” I like to really think through what’s going to happen as well as what’s preventing us from doing it right now.

 

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Steli Efti: I’ll give you … This is a beautiful point. I didn’t think about that part, but I’ll throw in a tip of one thing that has made a massive different for us, which is a lot of times … And we’ve talked about this before. Many companies are saying, or many people are telling you, that you need to write down and have a real clear vision of your ideal customer. Write down your ideal customer profile. Who is that person? Who’s that customer? The more detail, the more nuanced or the more niche, the better your idea who your ideal customer is, the better you’re going to be able to market and sell and product develop and build a business around it. I find that the same exercise is incredibly useful for hiring as well. A lot of times, when we wasted time, it was not because … It was mainly because there was not a fully aligned picture of who we were looking for. Often times, even three people on the same team that were saying we need to hire, whatever, XYZ, in the hiring process, in the evaluation process, in the writing the job description process, things would be misaligned, and then we would later discover that it took two, three, four internal discussions until we realized who we were really looking for and what the priority of that person’s profile was. We were too broad describing the person, and then we were discovering that different people in the team had a different vision in mind on who we were trying to find. So, now, what we try to do, is we actually will write out a profile. We’ll have a discussion, a very detailed discussion, to make sure do we understand who exactly we’re trying to hire. Do we all agree on that person? What are the strengths and the weaknesses? What are things we can make compromises on? What are the areas that are nice to haves, but if the person is lacking skills or experience in this or that area, that’s totally fine? Trying to really narrow it down and spend the appropriate amount of time to write a summary on who the person is we’re looking for, instead of just agreeing on a job title, has made a massive difference in speed and clarity, and also internal conflict. Because, sometimes people think we … Just like in everything else, you think you have alignment, but you describe the goal so broadly that there’s so much wiggle room, that people stand at different points of the room and all think they’re trying to accomplish the same thing, but they aren’t. So, that’s just a tip to throw out there. I love the question, the framework that you offer with just in time, of saying, “Hey, who do we think right now would add revenue and growth profitably ideally to the company? If we can add those people, let’s add them. Let’s grow the business.” And then what are some of the things that we want to improve on the business? It might be retention, it might be something else. Who do we need if we don’t have them internally already to do that work? But, then also asking what prevents us today from hiring these people. That’s a beautiful question I’ve never thought about before. But, the other thing I wanted to throw out is the tip of let’s describe in detail the profile of this person, and let’s make sure we all know and agree who we are trying to hire, even. That seems like an obvious thing, but I’ve found that it’s not in practice.

 

[0:15:38]

Hiten Shah: Yeah. You’re totally right. That culture stuff matters a lot. So, I think, to me, that relates to culture in terms of profile. It also relates to what should the person be able to do, etc. A lot of times, people don’t realize they need a manager, but then they ask that question and then they realize, oh, we need a manager. What I mean by that is someone who enjoys managing people, just very specifically. Whether their title is that or not, there’s people they are responsible for, and they’re responsible for those people having work output in whatever ways align with your company. So, I think we’ve done a pretty good job being thorough here and giving a framework on fast/slow, which I disagree with on both of those, and going for just in time hiring, and pretty much gave people four questions to ask, to get to just in time hiring instead of worrying about fast or slow.

 

[0:16:29]

Steli Efti: I love it. All right. So, that’s it for us for this episode. If you enjoyed it, please tell a friend, go to iTunes and give us a review and a five star rating. The more people discover the podcast, the bigger the family and community gets, the more value we’re able to create with it. So, we highly appreciate that, and we’ll hear you very soon.

 

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Hiten Shah: Yeah. It’s The Startup Chat by Steli and Hiten on iTunes. Give us a review. We want to see what you’ve got. Some of our friends at Seeking Wisdom, from Drift, their podcast, they say six stars, which I always find really funny. So, six stars only.

 

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Steli Efti: Wait, wait, wait. No. Let’s do seven then. Come on.

 

[0:17:08]

Hiten Shah: Nice. Seven stars, yeah. Screw you David and Dave.

 

[0:17:10]

Steli Efti: There you go.

 

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Hiten Shah: All right.

 

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Steli Efti: All right. That’s it from us.

 

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Hiten Shah: Later.

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