Startup Hiring

How difficult is hiring people when you start a startup? Turns out, it’s very tough by any standard measure. And like most things related to startups, founders often have zero experience related to hiring. We were as clueless as it gets when it came to hiring in the early days of Razorpay. It’s less of a confession & more of a ground reality for most first-time founders. In the early days of Razorpay, my co-founder Harshil and I juggled multiple roles - coding, selling, fundraising, and hiring. We went about recruiting without any significant experience. But we learnt that hiring is the one of the most critical functions to get right & fast. Our initial few hires set the culture of the organisation. And they have been extremely critical to Razorpay’s success in the later years.

A few wrong hires at the onset will lead to startup failure. But it’s not always clear to the founders that their initial hires are the root cause. Having built Razorpay from a two-founder team to a late-stage startup, I have found hiring to be the highest-leverage activity. I have learned from multiple mistakes and talked to many other founders of early-stage startups who have gone through the same journey.

Why is hiring in the early stage so tough? The startup doesn’t have any brand recognition. The risk is significantly high for anyone joining as the company can shut down anytime, and the person doesn’t know when they will be out of the job. Attracting the right people to this high-risk environment is difficult because people prefer to be in a safe zone. And a founder is now fighting against the brand of global companies like Google or Amazon as well as all the established and late stage startups in the region to hire for their very early stage venture.

The best early hires are talented generalists who are passionate, geeky and have a lot of hunger and ambition to grow, to prove themselves to the world. Let’s break this down.

During the early stage, it’s immensely better to hire generalists rather than specialists. If you are building something on the cutting edge of technology, then you definitely need folks with a lot of depth and specialisation in that area. But that’s not the case for most startups. It’s better to hire people with a high degree of ownership, people who can work horizontally across multiple areas. And people who thrive working in an ambiguous work environment with a strong bias for action. Many folks trapped in the corporate systems itch for a work environment like a startup. A lot of people also do much better as generalists rather than specialists in the early stages.

It’s important to set the talent bar high from the get-go. Lowering the hiring bar is the easiest way out when you can’t find candidates with the desired traits. Once lowered, it’s extremely difficult to raise the bar again. As Steve Jobs said, A players hire A players, B players hire C players. This is true in more ways than one. And there is so much to do in early stage startups that you absolutely do not want the additional complexity of dealing with people who are not aligned with the organisation and cannot get things done independently. Any advantage you may feel you gain by hiring quickly will be lost in the complexity of getting work done.

On the opposite end, I usually see startup founders focusing inordinately on hiring a few rockstars, thinking they are needed for the success of a startup. These are founders with very high bar, or they have got bad advice to only hire rockstars. Unless you are a second time founder or a seasoned exec with a large network, don’t try to hire rockstars. Except perhaps when you know them personally and have a high trust relationship. Instead, hire and bet on high quality people who will grow and become rock stars along with you. Just like investors and VCs search for unproven founders with vision and chutzpah whom they want to back, founders and leaders should scout and back people hungry for growth but are raw and unpolished. A lot of talent around the world is hidden and waiting to be discovered, and you should build your own capabilities and networks to unearth them. Many of these folks are not from the Ivy League in the States, IITs/IIMs in India, or are working in top pedigree companies. However, dozens of founders, leaders, and recruiters still reach out to the same set of candidate pools every day and fail to elicit responses or match their compensation. It further contributes to the echo about the tough hiring market and the salaries going sky high.

At Razorpay, we have created many such rockstars over time. And we will create more of them in the future. Our initial engineers used to wear multiple hats: coders, testers, product managers, and pre-sales consultants, all in one go. Hiring people ahead of their growth curve and giving them freedom and space to fail, learn, and grow has helped us continue scaling at every stage. Many of our best people, be it in engineering, product, or sales, are not from the top colleges, and many have very unconventional paths in life, but they ended up finding a home with us. One of our early hires was someone who spent seven years in college for a four year graduation course but was one of the best technical people who we knew personally. In another case, we hired someone who used to design in college as a hobby and would not have secured a designer job in a big company due to a lack of formal design education. He turned out to be our best design hire.

How to go about finding such people? And more importantly, how do you develop your own intuition for filtering for such traits?

In your network, you will know of friends or people who have a knack for getting things done, people who are always constructively curious, and people who are trustworthy. These traits, along with the ability to execute, make for great attributes for early hires. Our initial eight hires came from our friends and acquaintances. You can get very far in your own network if you have cultivated healthy relationships and have an idea of people’s skill sets.

Failed entrepreneurs are a great fit. They have seen the grind of an early stage startup before and learned a lot from the failure. People who like creating or hacking together something new in their free time are passionate about technology and find it enjoyable to work without structures. They are also more suited to thriving in ambiguous work settings. If you hang out in hackathons, tech-focused events, then you can see who is participating in the creative activities rather than simply consuming passively.

There are enough online tools to reach out to people - Social media platforms like Linkedin, like X (Twitter) and others are also great for discovering amazing talent. Uber’s Travis Kalanick hiring Ryan through X [1] for Uber’s first hire is now a legendary story as it turned out great for both Uber and Ryan. It’s worth investing time on some of these platforms, scouting people who can be a fit for your startup. But most of these mediums are very noisy, and it will take time to fine-tune the approach that works for you. Even after you can find people with potential, you still need to figure out if they are the right fit for an early stage startup.

One easy hack is to check for passion. People who are passionate about a specific piece of tech, their job, or some personal hobby usually stand out. It’s very difficult to fake passion in a conversation. Some people can talk about a topic for hours because they feel so strongly about it. The topic can be technical, like Golang or crypto, or slightly tangential, like anime or lighting. If you are interested in Golang, then do you take part in the forums or do you read its source code? Did you try publishing a library to help others or do any other creative work? Today, it’s much easier to create than just being a passive consumer. Other questions I would love to ask are: What’s an unconventional project the person has worked on? What’s the accomplishment they are most proud of and why? How would they deal with ambiguous situations in their field of work? Most of these questions do not have a single right answer, but they reveal a person’s behavioural patterns and are a good setup for discussions.

I also ask people what they do in their spare time, especially when they are young. In college and in their 20s, people have a lot of time. Did they build something during that period or take part in some creative activity outside of academics? People who show initiative are often better at dealing with ambiguity.

During interviews, some startups make the mistake of projecting themselves as a corporate, especially if they have experienced founders with rich work experience. The settings of early stage companies filter out many who look for a structured job. At Razorpay, we were operating out of a house at the start. We would regularly interview people on the open rooftop. One time, someone came to the interview wearing a suit while we were all in t-shirts and pajamas. He absolutely loved the vibe and came on board quickly. But people who believed real work only happens in an office showed themselves out and saved our time.

If you find potential high-quality people, then you should keep developing relationships with them even if they don’t join the startup immediately. The longest I have taken to hire someone is about five years. But that person has now spent more than half a decade with us and contributed immensely. Even now, I focus on building relationships with people who I believe are trustworthy and whom I admire because I will learn a lot working with them. Many great candidates must be courted and nurtured for some time to build trust in the founder before committing to work for them.

Lastly, pay attention to the pace of hiring. Especially at a point when you don’t have PMF or clarity on what you are building, then going slow is always better. There is a belief that hiring the next two engineers will greatly accelerate product velocity and increase the chances of reaching product market fit or the next milestone. However, with the number of tools and technology available at our disposal, the cost of building an MVP has gone down in most areas now.

Hiring will continue to be a tough problem despite a lot of effort. You will get many rejections from good candidates, even at the last minute. Don’t give up or get turned off if you cannot hire on the first try. We had a case where a very good engineer joined us and then ghosted us within a month, perhaps because this was too unstable and early for his taste. I felt very bad and down at the time, but in hindsight, he made the right decision because he wasn’t a good fit for us. And in another case, we took a long time to part ways with a talented person who was not a fit. Despite being talented, such people bring down morale if they can’t fit in.

Like most other things, hiring is a skill that can be learned over time. But your first few hires define the culture and the probability of success. They also determine how much fun [2] the team will have when building the startup. In my early days at Razorpay, we were always scrambling, fighting, and facing enormous challenges, but those were also the most fun times I had because of the people we surrounded ourselves with.

–

Notes

[1] Travis posted on X (ex Twitter) for hiring and got a response from Ryan. Ryan was the first employee and initially the CEO before Travis took over and Ryan became the COO.

[2] One of the reasons many founders do a startup is to have fun. This only works out if you can hang out with the initial hires as friends otherwise there won’t be any difference between your corporate job and building a new product.