Top Startup Hiring Challenges

Business success or failure always comes down to talent.

You need the best people you can find and afford. 

As a startup, everything is also working against you.

• You don’t have a lot of money.

• You don’t have time for recruiting.

• Your company is high risk compared to bigger corporate jobs.

• You have no process or structure for them to work in.

It’s also super exciting, and employees can make a big impact. Some people love the thrill ride of startups.

Today, let’s dive into some of the common challenges with hiring at startups and some solutions.

Advantages vs. Disadvantages

Startups have a lot of disadvantages when it comes to hiring. 

Startups can never match the salaries of large companies. They also lack processes and structure that many people need. Many people struggle with the ambiguity and unknowns of startups, trying to figure things out as they go.

The biggest disadvantage is that startups are seen as high-risk because of the chances of the business failing. You must always be prepared to calm those fears and reassure people of their job security.

The good news is there are also a lot of advantages.

Many people start their careers in big corporations and eventually get tired of the corporate world's BS. They want to work at a small company or startup where they can make a difference and feel like their ideas are actually heard.

Many people are drawn to that greater responsibility and impact.

It is also a great way for people to get faster career growth. Promotions at a large corporation can be extremely difficult. People are more likely to get those opportunities in startups that are hiring brand-new teams and rapidly growing.

In general, startups move so fast, and you get involved in so many different things that are just amazing experiences for people. I credit my first job at a startup to much of my success because of the amazing experience I got out of it. 

I always tell other software engineers that the best experience you will ever get is working at a very small company. It exposes you to so many things that people would never see in a big company. In a big company, all of those things get divided up to different people.

Generalist vs. Specialist

As a startup founder, you have to wear many hats. You have to be willing to jump in and do whatever needs to be done. 

You are the Chief Cook and Bottle Washer.

The same goes for your first few employees.

Your first hire might be someone who can help with sales, some basic marketing, and answering customer support issues—all the things.

You need generalists who are willing to step up and do whatever is necessary, like the founders.

Over time, you can afford to hire someone for sales, marketing, operations, etc.

But even then, you will need them to be generalists.

Your first salesperson will not be an SDR, account executive, or VP of Sales.

They are all of those things.

They have to be able to handle inbound leads while also doing outbound hunting, handling sales demos, and following up.

In a big company, those are often all different roles. You hire specialists for cold calling, demos, account management, etc.

Your challenge early on is finding people who can wear all the hats. You also have to realize they might not be the right person later when you need someone more specialized or a VP. 

Generalists build startups.

Make sure you hire people who can wear many hats—even better if they can juggle hats.

Potential vs. Experience

Do you hire someone with potential, or do you hire a seasoned veteran? 

We would all love to hire Patrick Mahomes or Lionel Messi to join the team and win!

Who is going to help them?

Patrick Mahomes or Lionel Messi can’t win if no other team is around them.

You need experienced leaders who are willing to roll up their sleeves and get their hands dirty.

At Stackify, I hired a brilliant Chief Marketing Officer. He had lots of fantastic ideas.

There was just one problem. 

We had no budget, people, or time to execute all his great ideas.

We needed more of an individual contributor. You always have to consider whether you are hiring a manager or someone who will do the work. Not many people can or want to do both.

At this stage in my career, I wouldn’t want to be a hands-on individual contributor anymore. (Except for writing this newsletter, of course!)

The challenge is hiring someone with the potential to be a future leader.

Someone who can grow with your company as it grows and be the future leader it needs.

A seasoned CTO, CMO, or other VP could easily cost $200,000+ a year. Can you find someone for a lot less that has the potential to grow into that position?

When you have a tight budget, you often don’t have any choice. You have to get good at finding people who have potential.

There is another alternative. You can hire fractional leaders!

Full-Time vs Fractional

Most small companies don’t need a highly powered full-time chief marketing officer, chief financial officer, or even chief technology officer.

They need someone for a few hours a week or maybe only a couple of hours a month!

A great option is to hire a fractional CTO, fractional head of marketing, or an agency to help you.

At Full Scale, we currently leverage a fractional CMO to help us out. We don’t have the need or enough work for a full-time marketing leader. 

For a very affordable rate, we can get 1-2 hours a day from someone brilliant.

Every startup should consider leveraging fractional talent. You can typically hire these roles for $5,000 - $10,000 a month—some might even be less!

This same concept applies to all roles, not just leadership roles.

You don’t need a full-time person to manage your Google Ads. You can find someone on Upwork to help you do it cheaply.

Always consider leveraging various vendors, hiring people part-time, or hiring people on sites like Upwork to accomplish tasks. 

You should avoid hiring people full-time unless you have the workload to keep them busy. It should be so painful you have to hire someone.

Local vs Remote (And Global!)

Another consideration is hiring employees locally, remotely, and even globally.

Imagine being in San Francisco and only being able to hire software engineers for $250,000 a year.

Imagine being in Tulsa, Oklahoma, and unable to find a single software engineer!

Hiring remotely gives you access to talent that you can’t find locally or perhaps can’t even afford.

In 2018, I hired ten software engineers in the Philippines because it was challenging to find developers locally, and I could employ those ten for the price of hiring three locally.

As a startup with limited funds trying to grow (and survive!), I had to leverage more affordable global talent.

It worked so well for me that we created Full Scale to help others access top dev talent in the Philippines. We now have 300 employees!!

Hiring software developers from all over the world is common, and 90% of developers don’t live in the USA!

Of course, you can hire people globally to do much more than software engineering.

I have friends who have employees in Jamaica, Romania, Paraguay, and many other countries—places you would probably never think to hire people to do sales, customer service, marketing, and more. 

There are talented people all over the world! 

Hiring remotely and globally is a smart way to scale any business affordably.

Hiring employees offshore can also come with various challenges. I have a great blog post here on this topic, which applies to more than just software development: 8 Common Offshore Software Development Challenges

Ultimately, depending on the roles and needs, having a mix of local, remote, and global talent would be best.

Nothing is More Important

A single bad hire can ruin a small company. You don’t have the money or the time to overcome hiring mistakes.

It is crucial to hire slowly and work with people you can trust. 

One of a startup founder's most overlooked and most important jobs is recruiting and training your team.

In the short term, it doesn’t always feel productive. It feels like an investment of time that could be spent on something else.

However, there is no better investment than investing in your people. Your team is your most valuable asset.

If your goal is to build something bigger than you, then hiring good people, training them, and delegating to them is critical.

Use the advantages you have as a startup to recruit the talent you need. Some people will be excited to join you on this wild ride.

So much of a founder's job is sales. That includes selling others on joining you on your crazy entrepreneurial journey!