Team and hiring

Executive summary

Co-founder choice is the most important early decision — worse than a bad hire. Prefer people you already know; hire only when desperate early; never compromise on the first five to ten people. Give early employees generous equity.

When to use this page

• Forming a founding team.
• Making first hires.
• Setting equity and vesting norms.

Co-founders

YC’s #1 cause of early death: co-founder blowups. Yet founders treat co-founder choice more casually than hiring.

Choice	Track record
Known friends / long history	Best
Solo founder	Better than a random co-founder; still disadvantaged (top YC companies almost all multi-founder)
Random “co-founder dating”	Historically disastrous (e.g. batch where 9 random add-ons all blew up)

Look for relentlessly resourceful people — tough, calm, decisive, creative (“James Bond,” not domain expert only). Prefer technical co-founders for software companies. Target 2–3 co-founders (1 weak, 5 bad, 4 sometimes).

Same location early — remote co-founding kills cycle time. Vesting is mandatory (typical: 4 years, 1-year cliff). Decide equity soon and near-equal; reluctance to share fairly is a warning.

Hire as little as possible

Employee count is a vanity metric. Small teams: low burn, less politics, faster decisions. Airbnb: months interviewing first hire; few hires year one; wrote cultural values first (“bleed Airbnb”).

Cost of a wrong early hire is often fatal. Hire when desperately needed; later learn to hire fast for scale.

When you must hire

• Make hiring #1 priority (≈0% or ≈25% of time — not 50% of theoretical management books).
• Best people join rocket ships — get product working first.
• Never hire mediocre early; one bad hire in first five can kill you.
• Best source: personal referrals (stretch past awkwardness). Look outside the Valley.
• Early roles: aptitude and mission belief ≫ experience.
• Filter: smart? Get things done? Want to spend time with them? Prefer work trial over brain teasers.
• Call references hard (“top 5%?”, “would you hire again?”).
• Communication skill correlates with success; risk-tolerant + maniacally determined.
• Zuckerberg frame: spend time socially and comfortable reporting to them if roles reversed.
• Animal test (PG): they should be an “animal” at what they do.

Equity and retention

Guideline: ~10% of the company to the first ten employees (earned over four years). Founders are often stingy with employees and generous with investors — backwards.

Retain with fairness, praise, autonomy / mastery / purpose (Pink), one-on-ones, clear feedback. Fire fast when it is not working — including politics and persistent negativity. Occasional mistakes ≠ fire; consistent wrong decisions do.

If forced to choose suboptimal early hire vs losing customers: for first ~five seats, lose the customers.

Key takeaways

• Known co-founders; vesting; near-equal equity early.
• Stay small; raise the hiring bar until it hurts.
• Generous employee equity; fire fast when clear.

What to do next

1. Execution — how the team operates day to day.
2. Culture — how values scale beyond the founding trio.