Maybe it's the tight job market, the cycles of the moon, or perhaps founder inexperience, but my portfolio companies have had multiple cases of bad hires in the last six months. The reasons varied but the results were the same--having to let people go and paying big severance amounts.
Here's what I learned in the process:
1. Let your advisers interview top hires--In two cases, the entire hiring process was handled by the CEO, without much outside help. Big mistake. The candidates suitability for the position was flawed in both cases, something that more interviews may have uncovered.
2. Expectations not well set--In another case, two senior executives were hired from old school large companies. They really did not know how to operate in a fast paced startup world. We needed results in six months, they were thinking two years was the right answer. Not...
3. Too much equity--In another case, a new hire was given a substantial amount of equity without investor approval. This person, although coming from the startup world, wanted to extend every production deadline by months to get things perfect. With clients ready to sign based on current technology, the match was not made in heaven and the exit cots were substantial.
4. Poor background checks--CEO's can fall in love with a candidate and get pressured into an offer without looking carefully at a candidate's background and references. It is critical that hiring include not only speaking to the references the candidate provides, but also ones from other people he or she has worked with or for.
Hiring is never easy, but shortcuts are more costly. With each hire, sit back and ask yourself if you both share the same passion and urgency to make the company successful. Hiring people who don't share your ideas of how to go-to-market can be costly. Note: I'm not saying you should ignore different ideas on how to go to market, just that you all need to be on the same page about what needs to be done in what time frame.