Stephen Forte, managing director for a global early stage VC fund, shares an interesting story in a post on e27. He tells the story of a friend he recommended for a project management post at a startup company. This friend was highly qualified but the startup company decided to choose somebody else, somebody who could brag of having project management experiences at big companies. His friend spent most of his professional life at startups. Forte is wondering if this was a good decision on the part of the startup.
You, too, are probably wondering if it was indeed the right decision although many may automatically assume that choosing somebody who has worked at big companies is a no-brainer. What’s wrong with choosing someone whose experiences have been with the likes of Facebook, Google, and Amazon? Well, Forte basically has two main arguments worth examining.
The kind of experience matters.
Forte argues that project managers who have worked at giant companies like Amazon and Facebook are extremely qualified. This is a good thing. However, he is wondering if these project managers actually know anything about managing a startup. They may have the best experiences in working at successful big companies but how would those experiences translate to the startup environment? People who have worked at big companies tend to bring with them the experiences and knowledge of the processes, procedures, and culture they had at these bigger companies. It’s contentious if these knowledge and experiences can be useful in growing startups.
A startup is not a smaller version of a bigger company.
Another very sensible point Forte raises is the idea that a startup is not just a small version of a bigger, more established company. He quotes Silicon Valley serial-entrepreneur Steven Blank in arguing that a startup company is like an experiment in looking for a business model. It is not a shrunk down version of a corporate giant. As such, the expertise of someone who has worked at a highly profitable company, with hundreds or thousands of people, may not be useful in growing a startup. There are major differences that simply cannot be ignored, from the income to the structure, corporate culture, and procedures.
Forte confesses that he once committed the “mistake” of hiring people with the “wrong” experiences in his stint at startups. He experienced instances when their startup was made of just a dozen people but the HR manager they hired (who came from a big company) imposed encumbering red tapes. He experienced that executives or talents who have been recruited from bigger companies tend to be not keen on rolling their sleeves up. They are not used to building a product from scratch. They don’t seem to have a sense of what a startup really is and how it’s supposed to grow. While you are trying to lower operating costs by renting hot desks instead of getting a full office, they could be busy drafting plans that require more people and resources than what your startup company can pay for.
But then, is it wrong for a startup to prematurely scale up?
Generally, yes. Prematurely growing an enterprise can lead to unnecessary procedures and policies. It can bring about inefficiencies. Also, short-term and long-term goals or objectives may become too ambitious that they could lead to disappointments and even induce failure in the process. It’s not every day that startups experience abnormally abrupt humongous growths that they may already require the expertise of people who have worked at bigger companies. Most startups start small and gradually grow. Besides, why should you spend more money hiring “high-spec” people when you can pay less for someone who has the more appropriate experience or track record?