How do you avoid bringing the wrong person into your startup?

QUESTION:

How do you avoid bringing the wrong person into your startup?  Entrepreneurs are constantly meeting with new people, and they often start working with someone they don’t know that well. Any suggestions on how to quickly figure out who is trustworthy and who is not?

ANSWER:

This is probably the hardest problem founders face.  Most founders have some of the skills required to start up a company but not all of them, and they need to bring in new talent to help fill the gaps.  To do this, they often have to go outside their circle of friends, family and colleagues.  This means they will be working with people they hardly know.  These may be employees, contractors, cofounders or consultants.  The hard part is knowing if these people will truly deliver on what they promise and be compatible and committed.

Here is our advice:

First, it’s impossible not to make mistakes along the way, but you can minimize the damage with the following approach:

1. Don’t give the person stock in advance.  Have all shares vest over time.  Four-year vesting periods are typical.
2. Don’t be stingy with your stock.  You want these key members motivated.  Give them a lot of stock, but make sure it vests over a long period of time.
3. Check references thoroughly.
4. Don’t rely on the references they give you.   Make friends with them on Facebook and LinkedIn and start contacting anyone you know in common.
5. Drill deep with their references.  Ask really tough questions, and listen carefully to the answers.  Most references won’t say anything negative, but if you’re perceptive, you can read between the lines.  Any hesitation usually indicates there’s more to the story than the reference is telling you.
6. Be upfront with the references and tell them you are starting up a company and you are completely dependent upon this individual to deliver.  Let the references know just how important this hiring decision is.   In most cases, they won’t steer you wrong.
7. Interview lots of people.  Don’t settle for second best.  Spend the time it takes to find the right person.
8. Advertise on Craigs List and LinkedIn, but more importantly tap into friends and colleagues and ask them for recommendations.
9. Lastly test the person out.  Give them a limited contract and see if they can deliver on it or not.  You’ll be able to see what it’s like to work with this person.

I hope this helps!