The first employee outside your founding team is like a founder, but not quite. Many times you luck out and get a great person who steps up to be a founder emeritus, but you will most likely get a very good employee.
From my observation of the 72+ companies I have personally observed at Microsoft Ventures Accelerator over the last 3 years, if you hire your first employee outside your known “network”, it is very likely you will not succeed as a company.
There is a direct correlation between the first hire and the caliber of people your startup attracts.
Let me say that again differently. The first person that joins your startup as an employee, sets the tone for the entire set of next 5-10 people and then the next 11-50 and finally the rest of the people.
I developed a system to figure this out, which I use as a benchmark to evaluate companies who get accepted to our accelerator program – I usually ask to speak to the first hire in most cases, rather than the founders alone.
Many times, founders dont have a first hire. I ask them to name the first person they’d hire if they were to hire in a week and I ask to speak to them.
Why does the first hire matter the most?
Simply because they will be the manifestation of the “company culture”. It is a test, of whether the founders have given enough thought to what kind of company they want to build.
Based on my interview with the first founders over the years, I have developed a pithy – Individually proficient, collectively efficient.
In most large companies, the “team” looks really good because 1 or maybe 2 people carry most of the load and the rest are “bit players”, who come in for cameo roles, but are largely coasting. A large company has the ability to scale since there are so many people, so even in an organization of 1000 people, 10 people’s (1%) collective work is a lot of momentum.
To compete as a startup, you will need to build that momentum, but with fewer than 10 people. Which means, your 10 people are competing against the larger company’s 100’s. In most cases you really are competing with the larger company’s 10 people, but lets say for the sake of argument, you have to compete with a larger team at a large company.
The 10 people you have to go to battle with have to be wedded to your vision and view of the world. The only way that happens is via constant communication and reinforcement.
Which comes back to the first employee. The first employee is the reinforcement of your culture and you need to not only make sure that your first employee is competent and a superstar contributor but also makes your team collectively rise up the scale.