Founder / Employee Fit
The term “product / market fit” has quickly entrenched in to the lexicon of web startups as a litmus test for having achieved a repeatable, scalable business pattern.
This term is so useful, and so ingrained in startup culture today that derivative “fit” phrases have cropped up—e.g. David Lee looks for “founder / market fit” when funding a company.
Both of these abstractions are distilled in to (ideally) a yes/no answer so that decisions can be made against them—raising, spending etc. The lean startup community and most VCs agree that it’s obvious when these fits exist or not.
Another type of fit—between entrepreneurs who found startups and early employees—is overlooked but absolutely crucial to success of companies. I call this “founder / employee fit”.
In a smaller startup, say 5-20 people, the first hires define the culture so much so that bad employees can cripple a company. By far the most important component is “will he / she fit with me and the organization”.
But what does this actually mean?
I’ve found there are generally three main orientations that business founders / entrepreneurs possess: 1) sales oriented 2) product-oriented 3) business / operations oriented.
Below are some useful abstractions on how to think about this:
- Sales oriented founders: Many (most?) founders love chasing and closing. I call this the “in a room” type—can he / she go in a room with people and close. Raising money, partnerships, recruiting etc. These founders often separate implementation and operational complexities and want someone else to operationally execute what they’ve committed.
- Product-oriented founders: the ones you can’t pry away from their computer building things, the David Karp’s et al. Often they want someone else to deal with both sales and internal “business ops” duties – i.e. “people issues” like going over options grants with new hires, looking into new building leases etc while they focus on the vision and the product.
- Operations-oriented founders: This is the most common area I find startups to be deficient. Usually there are redundancies built in on the sales side but someone else is needed behind the scenes to make everything run smoothly. Is this the president? The COO? Not usually until the company is 50+ people as early on titles don’t really matter. But without this DNA on the founding team, you need to hire for it. Business ops people are often the unsung hero behind the scenes.
More often than not I’ve found business founders (usually also the CEO) excel in two of these areas—but not in the third. This is a generalization but I have seen it over and over.
Entrepreneurs who found startups are typically self-aware enough to know what they are good at, but disregard this pattern and e.g. hire someone they get along well with or a friend. Make sure to evaluate fit independent of existing friendships. Hiring a friend is great in that trust is baked into the relationship, but can mask incompatibilities and won’t sustain a startup when times are tough.
In the beginning early on (first 5-15 people) before hiring to offload, the founder is essentially doing everything. But steady state (post fit / growth) is so much different. One of the biggest mistakes I see at startups is people joining during the excitement phase (during hype, PR etc) but both founder / employee not understanding each other’s affinity for different tasks—e.g. the sales oriented founder hires an archetype of himself and both are awful at business ops.
This is bad, because (by definition) redundancy is almost non-existent in young companies. There are simply too many things to be done for much redundancy to be in the system. Sure—in the beginning everyone feels like they are doing everything. But your job will change from early stage to post product market fit growth (15-50+ people) and the job can change radically in terms of the % time split between “ops” and “sales” as the company grows and has product to sell and manage.
Keep in mind that if the business co-founder feels like you complement him or her extremely well, they may amiable to being more generous with equity. I think this is because instinctively people value the things they don’t like to do (i.e. aren’t good at).
So somewhat not surprisingly, roles usually gel around what each person excels at… But if the team isn’t formed early on to complement each other and execute in all three areas above, then there can be growing pains which mitigate any advantages your company has over other startups and larger competitors (agility, vision etc), especially as you accelerate to post fit sales and growth.