Timing enters into a lot of our decisions as founders. For example, back in 1990, I lived in Cincinnati at time when the Bengals were an NFL powerhouse that sold out every game at the old Riverfront Stadium. I had just graduated from college and devised a scheme to make tiger striped tie dye t-shirts and sell them in downtown Cincinnati before and after the games. The shirts were staggeringly popular and I sold out every game (until the police gave me a warning about permits and such ahem). Of course, my Bengals had won the AFC Championship that year and Cincy was rocking the tiger stripes then.
Fast forward to 1996, the Bengals–during their miserable “lost decade” became the losingest franchise in the history of any sport ever in the world–mostly due to sticking with a hiring blueprint that was failing: hiring coaches from within the organization and the owner’s personal network, and keeping lots of “nice guy” C-Player placeholders on the roster. It got so bad a season ticket holder once actually gave my friend and I $5 each to take his extra tickets. Not a good time for tiger striped tie dye.
Hiring is all about the timing. The kind of people you might hire as a founder (and possibly CEO) of a start-up are usually different from the people your investors might hire in subsequent years of your company. So says Noam Wasserman in The Founder’s Dilemmas and Stanford Project on Emerging Companies (SPEC) Studies beginning in 1994. Researchers determined that start-ups tended to follow one of five (of 36 possibilities) so called “blueprints” which tracked bases of recruitment, rewards, and control of hires.
Wasserman points out that as a founder, you’re more likely to hire “commitment” blueprint employees out of your personal network “believing such employees would take more responsibility, make more sacrifices, and be more proactive for the company” like the founder of Pandora did. (212) As the start-up progresses into scale up and requires more venture capital to sustain growth, investors often insert “spies” into the operation–most often a CFO to monitor how the money gets spent–and leaning toward a more authoritarian or bureaucratic approach to new hires.
This growth also alters the company hiring blueprint. Why is that? Wasserman points out that “Evaluating a hire’s fit with the start-up can be much harder than evaluating his or her skills,” (216) especially, one supposes, if that hire comes out of the founder’s personal network. Baron and Hannon posit that “‘built to flip’ replaced ‘built to last,’ as entrepreneurs and their financial backers raced to cash in…”(1) with their nod to the wealth model. Wasserman also refers back to role dilemmas, were founders who initially assigned themselves C-level titles shed those more administrative roles as they determined the company was better off with a professional at their post. (218) Finally, there’s a need in the early days for people who know a little about a lot, so called jacks of all trades, to “pitch in wherever needed.” (225) But as the business grows, the need for more specialists grows along with the ability to hire more people to perform more specific tasks. And of course, as any enterprise of any sort grows, organization gets more and more difficult to manage and people tend to fall back on familiar constructs….like bureaucracy.
Wasserman, Noam. The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton University Press, 2012.
This is not only my Professional Blog where I post my assignments for my Master of Entrepreneurship program at Western Carolina University, it’s also my Professional Blog on my actual business web site for my actual functioning business! Since they overlap so neatly in my personal Venn Diagram, I think clients, potential clients, or just idle passersby will find some value in my analysis as much as my classmates and instructors. Enjoy!