When you’re building an organization from the ground up, your first hires set the foundation upon which you can scale.
Sequencing early hires is no easy task — you have to strike the delicate balance between planning ahead and not hiring too quickly before you find product-market fit.
Our data shows a clear-cut pattern on how startups build out their organizations. And if you’re wondering when to hire your first engineer, product manager, or account executive, you might want to prioritize them in that exact order.
What the data reveals
Unsurprisingly, the first hire at an average startup (after the founders, of course) is a software engineer. After all, they’re the ones building out the product and making it a reality.
The first product hire, like a product manager or even a product engineer, is typically employee #8, after the company has a few engineers on staff who’ve put the building blocks of the product into place.
Sales comes later — and there’s a good reason for it
On average, the first sales hire at a startup is the 9th employee. And while that might seem late, there’s a good reason behind it.
The top priority of early-stage companies is to find product-market fit. It takes a whole lot of testing and tweaking to get there. Founder-led sales are more effective at getting the process into motion when navigating the product-market fit maze.
“You can't avoid doing sales by hiring someone to do it for you. You have to do sales yourself initially. Later you can hire a real salesperson to replace you.” — Paul Graham, co-founder of Y Combinator
Once startups find product-market fit, they’re better equipped to bring on a sales hire that can hit the ground running and build out a powerful and resonant sales strategy.
Waiting to bring on a sales hire can make the compensation structure process more frictionless, too. Most companies aim for a 50/50 compensation structure for their sales teams, but early-stage startups tend to go for a 70/30 compensation structure for a host of reasons.
Bringing on a sales team a bit later in the process can help a startup get to that 50/50 sweet spot a little more quickly, allowing it to both stay competitive and retain top talent.
Where do executives come in?
Figuring out when to hire executives is a bit of a trickier process, and one we’ll dive deeper into in a future blog post where we’ll not only break down when tech companies usually bring in executives, but what order they bring them in.
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