03/12/2013 05:36 pm ET | Updated May 12, 2013

Great Hiring - Nothing is More Important

I remember back to when I started at Electronic Arts, in 1987, when the company was a small video game publisher no one had heard of. After several interviews (close to 10) I was then interviewed by the CEO, Trip Hawkins. The company at that time was around 100 people and the CEO was the last interview before anyone was hired. And he interviewed everyone. I remember that continued for several more years, until the company grew to hundreds of employees and started to have multiple offices around the world. I was starting at the bottom of the organization, and I will admit, at the time he interviewed me I thought it was odd. A CEO taking time out to interview EVERYONE the company hires? How could he have enough time? Doesn't he have better things to do? Is he a control freak? But now having been involved as a CEO or board member in several early stage companies in the 30 to 200 employee size I can see the true value and dramatic impact of this strategy.

Early on, especially during the first 100 employees or so, there is nothing a CEO can do that is more impactful than hire great people. Strategy, product, business planning, marketing, etc. are all secondary to hiring great people. Early stage companies change strategies, they pivot, they change products, they change business models, and more, but once they get to a certain size it is very hard or even impossible to wholesale change the people and the culture those early hires have established. Without those great hires early on in the organization's history the CEO cannot effectively make the changes that the vast majority of early stage companies need to go thru to eventually find their business and scale to success. More about this point later, but first a couple basic truths.

Great people attract, inspire, hire and retain other great people. This is one of the key reasons venture investors are so fixated on the CEO. If he is great, the thinking goes, then he will hire great people around him and inspire them, and thus the startup will have a chance to navigate its uncertain future. A great leader is worth more than a great idea. That is why you often hear venture capitalists say "we invest in people". While hiring great people is pretty obvious, the reverse of hiring great people is not as obvious and is almost always catastrophic. Mediocre or low quality people tend to hire more mediocre and low quality people and thus the negative impact scales exponentially to the downside. Beyond that, once you have a group with a mediocre baseline it is very hard to hire stellar performers. It is highly unlikely that a truly high quality candidate would be willing to work for or with a bunch of average contributors. There are far too many great opportunities at a variety of early stage companies with great leaders and great teams that are competing for their talents. So the stakes are high, as the effect of hiring or not hiring great people early on in a young company ripples thru as its culture and overall DNA are established. And it is very hard if not impossible to change after that point.

A dedication to hiring great people also has another benefit; it enables the CEO to "scale". If the CEO hires a great set of managers as his direct reports at the level just below him then he can spend a significantly less time micro managing or fixing problems in the organization. This allows him to focus more on the other activities of the business, that he should be focusing on, like strategy, customers, the product, and hiring more stellar people. And this works similarly on the layer of executives and VPs the CEO hires. If they hire well then they can scale and not be distracted by problems of their direct reports and they are free to do their own jobs. Again, it has a rippling effect. Also, the failure to hire great people can then create a quagmire for the CEO that traps him in a cycle of low productivity and limited effectiveness. If a CEO gets dragged into doing the job of the executives that he has hired, then who is doing his job? Now two jobs are not being done, and for an early stage company with a limited team, limited resources, and fast moving markets, that can be catastrophically detrimental. Early stage companies are many times in a foot race to outrun competitors, capture market share, as well as innovate and iterate quickly. And without a scalable team that can easily take on additional responsibilities as the company grows the company will likely be in the back of the pack.

The last point is based around flexibility and scalability of the overall organization. Great hires are more often than not able and willing to take on different roles over time and they have an attitude of flexibility and "whatever it takes". Maybe this is a unique quality of talented people or a byproduct of stellar performers, I am not really sure. But one of the attributes of great hires is their confidence in their ability to scale their careers and to be less dogmatic about their silo in any one specific job title or role. In fact they seem to relish new challenges and the diversity of the changing and fluid organization. Again, great hires with this attribute are of extreme and significant value to an early stage company where changes, growth, and fast pace are the norm.

Being a CEO of an early stage company, whether it is 15 people or 150 people, is far from easy and there are many pressures and requirements. But if there is one single skill and activity that the CEO can do well to increase his chances of success it is a relentless focus and effort to hire great people, especially early on. The initial core group of key hires and executives can carry the company thru to multiple hundreds or even thousands of employees and the company's ultimate destiny in the market place. These early hires define the culture, the work ethic, and attract like minded people, and have a significant and overall positive rippling effect as the company grows. The bottom line is that products, strategies, business models, and more will likely change, sometimes several times, in an early stage company. But assembling a truly great team, that then attracts the best possible talent into the company, almost always makes all the difference.