When to hire at a startup

Startups often hire to keep aligned with cashflows. When we raise money, we hire. When revenues go up, we hire. Or sometimes, it’s for anticipated needs: we think customers are going to come online.

This should be very simple — hire when there’s too much work for your existing team. If you have too many sales leads, hire salespeople. If you have too many customers, hire account managers. Don’t hire for anticipated needs — that’s how you end up with too many people and needing to cut burn. Don’t hire because you raised money — see last sentence.

Raise money because you need to hire people because things are going so well that you need more headcount to service your customers.

Salespeople don’t bring customers in a vacuum, they need leads. Hiring a salesforce doesn’t grow revenues on its own. Account managers with nothing to do are wasted burn.

When you raise money, pressure comes to grow revenues, and to spend that money — so make sure you need to spend money when you raise, make sure you’ve got the right places to put it and — that there’s too much work for your team.

That’s when you hire.

Collin Gutman