SaaS Startup Hiring Mistakes, and How to Avoid Them

Hiring mistakes are inevitable, especially when you are scaling fast and trying to fill many open positions at once. Here are a few of the most common startup hiring mistakes I’ve seen and some thoughts on how to avoid them. 

Hiring people who aren’t passionate about your category and/or SaaS.

When SaaS was just getting started it was impossible to hire an entire team of people who lived and breathed SaaS. But now, that’s not the case. Your team should be comprised of people who are totally passionate about what your company does, and the fundamentals of SaaS. This probably sounds obvious, but you would be surprised how many times I meet people in SaaS who just aren’t that into (or who actually dislike) the fundamental aspects of recurring revenue business—like the fact that your customers can just cancel if you aren’t delivering real value. Find people who like SaaS and like your category. You aren’t randomly filling open headcount with quasi-qualified people, you are building a tribe that will help your company grow. Find your tribe. 

Hiring too many people

I usually recommend hiring based on actual need, not on anticipated need.

Especially with funding, there is pressure to hire and fill many roles. In the hiring frenzy, it is easy to make mistakes in who you hire, and how many you hire. I hear founders getting advice to “overhire” all the time. Sometimes, it’s necessary. But it can be dangerous, flippant advice. Guidance here will vary depending on who you ask, but I am a cautious person.

I usually recommend hiring based on actual need, not on anticipated need. If today I need two CSMs and based on customer acquisition I think in 6 months I will need four, I am not going out to hire four today. I will hire two, and try to identify a few others that I want to nurture and stay in touch with so in a few months when I see the trendline taking shape I can start recruiting for the other two (and ideally already have a solid pool of candidates from the last round of hiring).

Hiring too few people

Everyone knows there will be lots of hard work in the early days, but expecting herculean efforts from your existing staff will burn them out, degrade the quality of work, create resentments and impact employee retention. If your team is nearing the edge of their breaking point you need more people, stat. If you can’t afford to hire more people, you need to look at what’s imbalanced (are you not charging enough, for example?).

Hiring the wrong people

When you are hiring for new roles you haven’t hired before, you won’t always know what to look for. Stay laser-focused on candidates with relevant experience and demonstrable success. Look for people who can answer situational questions (“What would you do if X happened, and then Y went haywire…talk me through that…”), and can talk in detail about specifics of their experience. Look for strong fits based on experience and/or aptitude. If you need someone to build an aspect of your business, don’t hire someone who has never built it before. And if at all possible find a partner who has experience hiring for the roles you are filling and ask for their input during the interview process.

Hiring the wrong people and keeping them around too long

Hiring mistakes happen. But when they do, you need to act quickly. The wrong person in a role can really cost you—lost customers, lost opportunities, lost revenue, lost momentum, lost market share, and lost internal credibility. Trust your gut. If you think someone isn’t the right fit, they probably aren’t, and the longer you ‘wait and see’ the more momentum you have lost. In my experience, you always know who’s really an A and B player. Those are the people you want. If you are on the fence about someone, chances are they aren’t an A or a B and they aren’t helping you run the ball down the field.

Not nurturing the talent pool

I mentioned in my first point above that I like to build relationships with potential candidates. This is important, and when you are busy running your company it won’t seem like a priority. But you won’t be able to hire every person who walks in your door. Timing may be off, you may not have an open headcount, or someone else may be a priority for some reason. Nurture good people because you will be able to hire them one day. Stay in touch, keep them posted on your company, stay interested in their career. Build strong relationships with people who you want on your team, so when the time is right you can make it happen. 

Not being patient

If there is a frenzy to hire and ‘fill seats’ it can be easy to jump the gun and hire people you haven’t fully vetted or who you are on the fence about. Be patient. Find the stars. Find the people who can help you grow and achieve your goals. Don’t rush the hiring and recruiting. Which leads to the next mistake…

Not knowing who you want to hire

Know what type of person you need, what type of experience you are looking for. Have an ideal profile in mind before you start recruiting and interviewing. This can evolve and change as you learn more, but it’s always a good idea to start with the end in mind, versus winging it.

Not using a repeatable hiring process

Getting good at hiring will come with time and experience. But you can accelerate your learning if you use a repeatable hiring process. I’ve documented what that looks like for sales here, and you can apply the same concepts to any role.

Hiring people who just don’t (or won’t) understand SaaS

SaaS is a software business. Not a customer success business, not a professional services business, not a “one and done” business. Make sure your team understands the fundamental importance of recurring revenue, and that they understand you are a software business first. You can’t run it without sales, operations, customer success, marketing, and even perhaps services, but at the end of the day, you are a software business. Customers need to receive demonstrable value from your product. Your software needs to make them money, save them money, get them promoted, or help them be more efficient or compliant. They won’t renew otherwise, no matter how great your support, customer success, and services are.

Not being opportunistic when a superstar comes along

When someone comes along who can impact your business in a big way, don’t wait for a position to open up. Grab them and make a role for them. Superstars are rare and they can exponentially impact you & your business.