April 9, 2012 1 Comment
One of the inevitable truths about startups and building a real business from scratch, is that you rarely get it right from the start. Meaning, most assumptions made in the beginning about the business model, target market, customer profile, product features, etc will change over time as you build, learn and adjust. And this cycle often repeats itself several times over the course of the first few years.
Although the decisions to change the product in a different direction, or to abandon sales efforts in a particular segment or to completely pivot the business model are extremely difficult, especially since the team is so invested in confirming rather than disproving hypotheses, these decisions pale in comparison to the most difficult decision – letting go of good people, employees who are top or strong performers but now have a skill mismatch.
To be clear, I’m not talking about terminating non-performers. If you can’t do this as an entrepreneur within the first 90 days of someone’s employment, then you should try another line of work. I’m talking about terminating, in many cases, top performers in their trade, its just that their trade is no longer a burning, urgent requirement to build your business based on how requirements are evolving.
Why so ruthless you say? Because you won’t have room on the payroll for the skills you really need, you will get marginal contribution from top performers that are skill mismatched, and you are increasing risk that you won’t get the traction you need before you run out of money or a competitor eats your lunch. When you have 5, 10 or 20 employees, every single person must be the best that exists and must gel culturally. Everyone in the company should demand this level of performance and since “like attracts like”, it makes recruiting only the best that much easier.
Listen, I don’t take any satisfaction for decisions like this that impact people’s lives so deeply, in fact I don’t sleep for nights before it happens, but the consequence of inaction is too large. The key is to handle these terminations in a dignified, empathetic way.
One last point. As you look at your team and recognize that there are several folks that unfortunately aren’t cutting the mustard, let go of them all at once. And when you do it, embrace the remaining team and reinforce that they are the foundation for the company going forward. In my experience, top performers recognize when there is a lackluster contribution by others and will have more respect for a tough decision that actually breathes more life into the organization by creating cash runway and room to hire the right people.