Altman doesn’t mean your startup should be filled with trigger happy philanderers who spend their free time getting wasted. A great cofounder is unflappable, tough, and knows what to do in every situation. He or she needs to act quickly and be decisive, creative, and ready for anything.
James Bond happens to embody all of these qualities, so you want to find someone like him. (Don’t worry, though, the tuxedo is optional.)
(For more startup advice, check out How to Start a Startup: The Book. It’s the ultimate reference guide to creating a successful tech startup.)
Cofounder Relationships Are Critical
Altman told Stanford students that cofounder relationships are among the most important in the entire company.
“Everyone says you have to watch out for tension brewing among cofounders and you have to address it immediately. The number one cause of early death for startups is cofounder blowups,” Altman warns. “But for some reason, a lot of people treat choosing their cofounder with even less importance than hiring. Don’t do this!”
Having a Lot of Employees Doesn’t Mean You’re Cool
Of course, after you find a cofounder, you’ll probably want to start hiring employees. But Altman cautions to resist the urge to hire people right away.
A startup that has many employees may seem cool, but careful hiring in the early stages is key for the longevity of your startup. Only hire when the workload is too much for your existing team.
Unfortunately, the cost of getting an early hire wrong is really high. In fact, Altman says one bad hire can kill a young startup.
Building an effective team takes time and thought. And without a really good team, it will be harder to execute on your ideas and grow your startup. So don’t rush the process.
Learning from Airbnb
Five months. That’s how long YC alum Airbnb spent interviewing their first employee. And they only hired two employees their first year.
Before hiring anyone, the founders wrote down a list of the values that they wanted every Airbnb employee to have. The most important value? Candidates had to “bleed” Airbnb. If they didn’t, they wouldn’t hire them.
For example, Airbnb CEO Brian Chesky used to ask people if they would take the job if they got a medical diagnosis giving them only one year left to live. That question alone was enough to weed out the people who didn’t really possess the values Airbnb espouses.
Your employees play a huge part in defining your company. That’s why you need to hire people that believe in your startup almost as much as you do.
Hiring Amazing People
“The best source for hiring by far is people that you already know and people that other employees in the company already know,” Altman explains.
And experience is not always a reliable factor. Experience matters when you’re hiring someone to manage a large part of your organization. But for your early hires, consider their aptitude and their belief in your mission instead.
Startups don’t operate like traditional businesses, so why hire like one?
Altman recommends working on a project in lieu of an interview. (Or you could be like these guys and take prospective candidates to Vegas for a few days. To each their own.) If you’re settled on conducting traditional interviews, then you should at least ask about projects that people have worked on.
Altman also proposes contacting their references and asking questions such as: Is this person in the top five percent of people you’ve ever worked with? What specifically did they do? Would you hire them again? Why aren’t you trying to hire them again?
Skills to look for in a potential hire:
- Good communication skills
- Risk-taking attitude
- Maniacally determined
According to Altman, Facebook founder Mark Zuckerberg tries to hire people that he’s comfortable hanging out with in a social situation. Zuckerberg also looks for someone he’d be comfortable reporting to if the roles were reversed.
It’s important that you enjoy working with your employees. Your team doesn’t need to be wearing BFF necklaces, but nothing is worse than resenting someone with whom you spend 40-60 hours a week.
When it comes to attracting and maintaining talent, it doesn’t hurt to offer generous equity. It’s better to give your employees more equity than your investors, because employees will only add more value over time. According to Altman, YC companies that have done this well are often the most successful.
Retaining Your Employees
Of course, your work is not done after you hire your employees; now you need to retain them. And that can involve more work than the hiring process. The goal is to ensure your employees are happy and feel valued. That means that first-time CEOs need to learn management skills.
According to Atlman, a speaker at Y Combinator this past summer told other startup founders how he learned from his failings as a CEO. Even though he’s successful now, he struggled holding on to his employees early on in his startup.
Someone asked him what his biggest struggle was and he replied: “Turns out you shouldn’t tell your employees they’re fucking up every day unless you want them all to leave because they will.”
Qualities of a Great CEO
As a CEO, you have to be aware that, by default, you’re going to be a bad manager. You need to overcompensate for that with these two tips.
- Let your team take credit for all the good stuff. You need to take responsibility for the bad stuff.
- Don’t micromanage. Let people have small areas of responsibility. This will actually push them to work harder.
It comes down to giving employees autonomy, mastery, and purpose. Famed business author Dan Pink says those are great motivators to get people to do great work.
Firing People When It’s Not Working
Atlman says there are three things to look for in a hire: Are they smart? Do they get things done? Do I want to spend a lot of time around them? If he can say yes to these answers, he almost never regrets hiring anyone.
But what happens when it doesn’t work out?
Despite taking all the care in the world during the hiring process, sometimes you need to fire people. It helps to evaluate their performance if you’re hesitant about firing someone. Most people will mess up a few times. But if a person always does the opposite of what you would have done in a given situation, then you need to let them go.
If it’s not working out with one of your employees but you don’t want to fire them, then maybe you just need to move them into a new position. It helps to hire smart people who are great at learning new things. Those kinds of people will fit pretty much anywhere you put them.
Execution Makes All the Difference
Execution is one of those founder tasks that you can’t outsource. Ideas are worth nothing without execution. If you look at a company that executes well, chances are their CEO is a master executor.
So if you want a culture where people work hard, pay attention to detail, and manage the customers, you have to represent those qualities as a leader. Whatever the founders do becomes the culture.
A CEO’s job is often categorized as having four components – get the vision, raise money, evangelize the mission to people you’re trying to recruit, and hire and manage the team. But Altman reveals that there’s a fifth component: setting the execution bar.
“Execution gets divided into two key questions. One, can you figure out what to do? And two, can you get it done?,” Altman says.
Keys to Mastering Execution
- What you’re spending your time and your money on reveals what you as a founder think is important. Identifying the two or three things you need to focus on each day will help you execute better.
- Say no to almost everything. You need to focus your attention on the right things.
- Be intense. Running a startup will consume life, leaving little chance for true work-life balance. You need to outwork your competitors and that means countless long nights.
“Indecisiveness is a startup killer. Mediocre founders spend a lot of time talking about grand plans, but they never make a decision,” Altman says.
The danger of indecisiveness is something Altman knows first-hand.
His company was about to lose out on a deal with an important potential client to a competitor. So he called the customer and told them that their product was better and they had to meet them. They told Altman that they were signing the deal and nothing could change their minds.
Instead of accepting defeat, Altman and his team got on a plane and arrived at the potential client’s office at 6am. The customers ended up ripping up the contract with the other company and Altman’s startup closed the deal with them about a week later.
Had they not gotten on a plane and shown up in person, they would’ve lost a valuable customer.
Growth and Momentum Fuel Startups
Startups must never lose focus on growth and momentum. That’s why intensity is a requirement for any successful startup. Unlike traditional companies, startups are working to move fast while also being obsessed with quality.
“Momentum and growth are the lifeblood of startups. You want a company to be winning all the time. If you ever take your foot off the gas pedal, things will spiral out of control. A team that hasn’t won in a while gets demotivated and keeps losing. So always keep momentum,” Altman advises.
For most software startups, this means they need to keep growing. For hardware startups, this means that they can’t let their ship dates slip.
In 2008 Facebook’s growth was slowing down and so was their morale. Zuckerberg responded to this burgeoning crisis by creating a growth group to work on small projects.
This group lived up to its name and got Facebook back on track, making it the most prestigious group there. Morale improved and now the growth group is the most innovative part of the Facebook family.
How to Keep Momentum
Maintain momentum by establishing an operating rhythm at the company early. This means shipping product and launching new features on a regular basis and reviewing metrics every week with the entire company. This is where your board comes in handy. They often get companies to care about metrics and milestones.
In the words of Henry Ford: “The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.”
If you enjoyed this post, be sure to check out How to Start a Startup: The Book. It’s the ultimate reference guide to creating a successful tech startup.
Featured image was taken from the video of Sam Altman’s lecture at Stanford.