When to hire?


November 23, 2015

Abhi, a friend of mine and his brother run an early stage consulting company out of the UK. Here's an email he sent me recently:

How do you synchronize your capacity with your sales? It feels like a chicken and egg problem, no capacity means no sales, no sales means no capacity.

We also do not want to hire unless there is a clear customer commitment for 3 to 4 months and we have enough money to cover for one year salary.

I am in need of your advice on this. Could you help me figure this?

Here's the response I sent him:

Hi Abhi,

This is a bit of a complex topic, so this response is long. Its basically two things:

  1. The first few people you hire are the ones who are critical for you to grow your startup. Treat them like your co-founders, not as employees.
  2. There is no business without risk. But even risk is sometimes blown out of proportion. In most cases, it’s the fear of failure rather than failure itself, that holds people back.

Here's the full response:

Its not about Capacity Planning, yet

You could think of this whole thing as a purely 'capacity planning' question. But that's more useful once you cross the 15-20 people threshold. At this early stage, you can rest assured that there's more than enough work out there - you just need to get your sales and marketing working well for your market to discover you.

So, this response instead focuses more on the 'how' (and "why") of hiring the first 5 employees. This is important because you're going to grow faster when you've hired some really good people initially. The value they will add will not just be in terms of shipping client work - it will also be in terms of ideas to expand your business - while they're wearing the 'co-founder' hat. Of course you've got to encourage them to do that.

Marketing and Sales

Your primary responsibility as the CEO of an early stage company is to get your Marketing and Sales in order. You should focus on building a pipeline and ensure that at least 50% of your time is spent in working toward that.

[Yes, when you’re also coding, this means 80-100 hours weeks in the beginning. But you knew that already :)]

To make this happen, you will need both of the following:

The earliest employees

Its best to have the following expectations for the first 5-10 employees:


The following aspects of trust are very key to focus on, right from the start:

You should have space to fail as the founder. And you should be comfortable in your skin failing in front of your people. You should also give everyone on your team space to fail. So, this goes hand in hand with Autonomy.


This is related to the point about Purpose above. But this is important to highlight as a separate point, because:


There is no business without Risk. The SpaceX story is especially telling here. You as the founder have to believe in yourself, in your vision and and in your team and take brave steps forward, when the future is not clear.

Sometimes things work out and sometimes they don’t. And that’s okay. But if you stop taking risks, I’m afraid, growth is just not going to happen. In most cases, it’s the fear of failure rather than failure itself, that holds people back.

The other key thing to keep in mind is that Time is a startup’s biggest enemy. Not money. So, when even you’re not totally sure about something, but all of the above points are taken care of, go ahead and take the step forward. You’d have spent your time wisely, even if things didn’t turn out so well. Why? Because you’d learned something in the process and become wiser.


I hope this helps. Its best to see entrepreneurship as a journey of personal growth and an opportunity to interact with and learn from the fantastic community out there.

So, to summarize in just one word: “Start”. :)