My company lost $450K because we didn't fire 5 wrong hires quickly enough. It's important to 'fire fast' — even though it's difficult.
Melissa Kwan
- Melissa Kwan is the CEO and co-founder of eWebinar.
- She says that it may seem simple, but it's a struggle to "hire slow, fire fast."
- Kwan writes that you need to trust your gut and learn to separate emotion from decisions.
My biggest challenge in building companies hasn't been product, sales, or marketing. It's been hiring.
It is so difficult to hire great people. In the past, I found myself working with someone just because it was easier than having to find someone new, even when I knew in my heart they were not the right fit for us. After spending too much time and money because I'd rather avoid tough conversations, I finally learned the importance of "firing fast".
The concept of "hire slow, fire fast" has been popularized by startup culture, referring to the agility required to grow a company in a competitive environment. While this concept may seem simple and obvious, it requires confidence, clarity, and maturity to put it into practice. Even as a 3X founder myself, it's a constant struggle.
I'm the cofounder and CEO of eWebinar, a webinar automation solution that helps companies run hundreds of webinars without needing to be there to host them live.
I've bootstrapped three startups over the last 13 years. Bootstrappers like me are entrepreneurs who found startups without institutional capital, such as venture capital or private equity.
In our first two years, we made five wrong hires that ended up costing $450k because we didn't "fire fast".
"Fire fast" doesn't mean literally removing someone on the spot at a moment of doubt
It doesn't mean you don't try your best to work with the person for a reasonable amount of time or that you didn't have multiple conversations leading up to that decision.
It means having the awareness and conviction to know when you need to move on because it's not working out. Sometimes it's us, sometimes it's them, sometimes it's both.
You need to have the courage to have that hard conversation with someone you like because it's the right thing to do for the company and their career.
And you need to listen to your gut, separating your emotions, and being honest about missed expectations.
Here are the five companies or people that we should have parted ways with much sooner than we did and what it's cost us:
1. Dev shop that underestimated our project: $250k over 10 months
A "dev shop" is a software development agency that offers services to tech companies for building software. I had hired a dev shop to be my "CTO" because I didn't think I needed a cofounder. They were supposed to build our version one before we outsourced the product development to another team. They didn't have enough experience building platforms from the ground up at the time and unintentionally underestimated the project size and capabilities required.
Since it was a friend's company, I didn't question things as early as I should have. I realize now how naive it was to attempt building a startup without a technical cofounder, and that's how my CTO/Cofounder and I came together. All things considered, this was a happy ending.
2. Convenient person we could afford: $5k over 2 months
Because we were bootstrapped, we thought we needed to make concessions by hiring who we could afford instead of the best person for the task. Every time we compromised on quality, we had to do it again. Now, we only hire people who are best for the job, we never negotiate on their fees. If we can't afford them, we either move on, or we have a discussion to reduce the scope of the project such that we both benefit. Someone else's worth should not be dependent on our ability to pay.
3. Agencies hired to fix the pain we knew nothing about: $50k over 11 months
None of us knew marketing and we were desperate to "fix our SEO", so we hired companies and gave them free rein. We wanted it to work so badly we convinced ourselves that we needed to give it more time. Most agencies can get you from 1 to 2 but not from 0 to 1. I learned that you can't hire someone to take away your pain when you don't have a basic understanding of the job to be done. We decided to learn it ourselves and now own our content strategy.
4. Paid ads consultants we were too early for: $15k over 9 months
No early stage startup should be spending money on paid ads because the product is too immature and the company doesn't have credibility yet. I didn't know that, coming from a sales-led background (where sales are made through face-to-face meetings). We wanted to drive trial sign ups so we thought we'd give paid acquisition a try. Consultants told us it's never too early and they can experiment with very little and charge a retainer on top. Lesson learned: when your product category is immature and people can't immediately grasp how your product drives value for them, paying for ads is a waste of money. It's going to take a lot more than shiny taglines and catchy copy to convert prospects.
5. Executive who only worked for big companies: $130k over 12 months
We brought someone on board who had a lot of success in big, well-resourced, slow-moving companies. Working for startups requires scrappiness and agility that people from corporate typically don't have. Because he took a 50% pay cut to join our team and was a friend, I felt personally liable for his success and tried too hard for too long to make it work. This one was most painful because it also cost me a friendship.
The most expensive thing about wrong hires is not money — it's TIME (and sadly sometimes friendships, as mentioned above).
While not all costs can be avoided — because you don't know what you don't know — they can be mitigated by "firing fast."
Firing fast lets you to do two things:
1. Cut your losses, change strategies or find someone more suited.
2. Let the person go and find another role that's better for them.
It doesn't make you ruthless — It makes you discerning
In light of massive layoffs, this is a sensitive topic as that phrase carries a negative connotation. It reinforced the idea that employers are evil and leaders don't care about their people.
Yes, there are CEOs making millions while their employees are on strike just to fight for fair wages.
Yes, there are CEOs on the world's richest list who are allegedly not paying and treating workers well.
Yes, multiple bloated startups over hired to hoard talent because they could, then mass fired when they failed to build a business to support them.
All of that behavior is appalling. But most companies in this world are NOT those companies.
Most companies, like mine, are small businesses. Regular people working hard to make a living by building something valuable.
In order to compete against those juggernauts, we need to inspire people to join our team by treating them like family and giving them everything within our power to make sure they're happy because we cannot compete on salaries.
When someone doesn't work out, the pain is felt deeply. It's not just money for us. It's the emotional investment we put into every single team member.
As a bootstrapped company, every dollar we spend is precious because we are constantly making concessions somewhere else. Every dollar going to the wrong thing is a dollar not going to the right thing.
This is what everyone needs to understand about working with a startup, especially non-venture-backed ones. This is why "firing fast" is important.
We've learned to focus on hiring slow, and only hiring the best person for the role, or we don't hire at all
Before we onboard a new team member, we ask that they tell us the moment they're thinking about "firing" us so we can have an honest conversation about it immediately.
"Firing fast" carries a negative connotation because it sounds dismissive and brutal. But the reality of those two words is often the opposite because it's likely that we fought long and hard for that person before coming to terms with the difficult decision.
It's painful. But it's a concept we needed to learn because what makes a business successful is the team behind it.
Melissa Kwan is the CEO and co-founder of eWebinar.
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