Hiring the first ten employees is a make-or-break moment for any startup. It is this foundation that determines whether the company will take off or turn into a dreary quagmire that burns through investors’ money.
Founders usually think, “I’ll hire smart people, give them a task, and they’ll take care of everything.” In practice, things are different. The first 10 people aren’t just employees. They’re co-creators of your corporate culture, the bearers of the product’s DNA, and the people who will either save the company in a crisis or sink it due to a simple mismatch.
The cost of a mistake at this stage isn't just half a year's salary. It's lost time (and in a startup, time is more valuable than money), missed opportunities, and demotivation across the entire team.
Here are 5 critical mistakes made when hiring the first employees that end up costing startups millions.
Mistake #1: Hiring "stars" from large corporations too early
You want to boost sales or streamline your processes, so you poach a top manager from Google, Yandex, or a major bank by offering them a high salary and a bonus.
Why It’s Worth Millions: A corporate professional is used to having resources at their disposal: they have budgets, a team of lawyers, marketers, an HR department, and a recognizable brand. In a startup, there’s nothing but chaos, uncertainty, and the struggle to survive. A “star” from a corporation often finds themselves helpless when they have to set up the CRM themselves, cobble together a landing page on the fly, and personally sell the product to their first customer—who has a whole list of objections. Three months later, that employee leaves, taking a hefty salary with them and leaving you high and dry.
Here's what to do: Look for "generators" and generalists, not narrow specialists. You need people who can handle tasks from start to finish and aren't afraid of uncertainty.
Mistake #2: Looking for “clones” instead of complementary skills
Many founders tend to hire people who are similar to themselves: with the same background, the same views, and the same communication style. It’s comfortable to grab a beer with them after work and debate technology.
Why It’s Worth Millions: A startup is like a boat where everyone has to row in different directions (but in sync). If you’re a strong visionary and product owner but hire three other dreamers just like you, you’ll end up with lots of great ideas and zero completed tasks. No one will handle operations, calculate unit economics, or write code.
The Right Way: Hire people who are stronger than you in the areas where you’re weak. If you’re a techie, look for a strong salesperson. If you’re a marketer, you absolutely need a meticulous COO or a strong CTO.
Mistake #3: Hiring Based on Resumes Rather Than Values and Motivation
A common mistake: focusing only on a Harvard degree and the big-name companies listed on a candidate’s resume. The interview follows a “question-and-answer” format, and the candidate perfectly meets the expected skill requirements.
Why this is worth millions: You can hire a brilliant programmer or a brilliant marketer, but if that person is toxic, doesn’t share your mission, or is just there to “ride out the crisis,” they will destroy the team from within. In a team of 10 people, a single toxic leader with destructive behavior can reduce everyone else’s productivity to zero. Toxicity is contagious, and founders are often psychologically unprepared to fire people at an early stage.
Here’s what to do: Check for cultural fit. Ask the candidate: “What will you do if the project fails?” and “Why do you want to join us instead of a stable company?” The person should be just as passionate about the product as you are.
Mistake #4: Lack of a transparent options system (or greed)
A startup doesn't have the money to pay top specialists market-rate salaries. And founders often go to one of two extremes: either they pay out their last bit of cash, quickly burning through the funding round, or they offer a pittance with no equity stake in the company.
Why It's Worth Millions: High-performing people need not only money (which you don't have) but also a future (which you can offer). If you hire a key engineer on a fixed salary with no equity, they’ll leave for a competitor as soon as they’re offered $500 more. Skimp on the ESOP (stock option pool)—and you’ll be left with average professionals who work “from 9 to 5” because they don’t care about the company’s valuation.
Here’s what to do: Set aside 10–15% of the company for an option pool for your first key employees. Explain the rules of the game to them: “Right now, we’re paying below market rates, but if we grow tenfold, your options will be worth as much as an apartment in the city center.” This filters out mercenaries and attracts partners.
Mistake #5: Delaying the dismissal of employees who aren't a good fit
You hired someone, and 2–3 months have passed. It’s clear that they aren’t cutting it, are slowing things down, or haven’t fit in with the team. But you think, “Well, they’re trying,” “Maybe they’ll get the hang of it,” “It feels awkward to let them go—they have a family.”
Why this costs millions: In a team of 10 people, each “deadweight” increases the workload on the rest by 10–15%. The other employees see that poor performance goes unpunished, and their own motivation drops. “If Peter can get away with doing nothing, why should I have to work my butt off?” they think. Keeping a toxic or underperforming employee on a small team is a crime against the business.
The right approach: Hire slow, fire fast. If you have doubts after the probationary period (usually 1–3 months), then there’s no doubt about it. Let them go right away.
Instead of a conclusion
Your first 10 employees aren't just hires. They're the foundation of your future company.
Mistakes are inevitable at this stage, but now you know what to look out for. Look not only at what a person can do, but also at who they are, how they react to stress, and whether they share your pain and vision.
Because, at the end of the day, it’s not presentations or pitch decks to investors that make a business. It’s people who make a business. Especially the first ten.
