How to Hire Amidst Uncertainty, According to 5 Top VC Partners

Founders are… still jumpy. A cooling VC market has forced extremely hard choices for early stage companies—now many are struggling to attract once-bountiful capital, possibly at a lower valuation than they previously enjoyed. Most founders we’ve spoken to are going into 2023 with plans that emphasize leanness and extreme focus in every corner of the company. That may be right for go-to-market strategies or product roadmaps. But what about people?

Your team is your most important asset as a founder. Hiring (and firing) tops the list of the most critical decisions an early founder will face. The right people precede every other major milestone, like discovering product-market fit, closing fresh financing, and cracking sales. People are also the greatest expenditure for startups. And although the scale of layoffs has been stunning, it’s no major surprise that cuts would necessarily follow this summer’s tech stock decline.

With this in mind, we spoke with a handful of seasoned talent experts from the world of venture capital who, collectively, are in close touch with thousands of the world’s most successful startups. We asked them a simple question: What’s the biggest piece of advice you’d give founders as they make hiring plans for 2023 amidst so much economic uncertainty?

They literally give this advice for a living, and their answers are a must-read.

Michael Mangini, SignalFire

I’m troubled by giving general advice, as I see building companies as case dependent. Some have clear product market fit and now is one of the greatest times ever to lean into building the industry’s best GTM team. Others are struggling to find PMF, and thus should focus on doing more with less (probably the most talked about advice). Then there are those just getting off the ground. These folks should focus on finding the most incredible folks they know to join their cause—brilliant generalists and problem solvers. 

Don’t try and compete with offers from FAANG.

The irony is that this advice isn’t new, nor is it specific to the current market conditions. The market disregarded fundamentals at the mid/tail end of the last cycle and now it's simply time to hit the refresh button and get back to reality. Don’t try and compete with offers from FAANG. Don’t spend capital resources on egregious perks. Find people as excited to build your company as you are and convert every one of them into a recruiting node.

Annie Wickman, Forerunner Ventures

Now, more than ever, identify the best areas to invest in and double down. Focus and be really deliberate with your strategy. Where do you think you can drive the most growth or leapfrog your competition? Once you know your priorities you’ll be able to figure out the staffing and resources you need to make those successful. 

Before you map out any roles you need to hire, work with your managers and leaders to identify current top talent. Who might be ready for new challenges? See if there are opportunities to give them stretch goals in line with your highest strategic priorities. You will find far greater success in attracting the best possible talent if you focus on your current team’s morale and investment in the company.

Where do you think you can drive the most growth or leapfrog your competition?

Particularly in uncertain times, people are drawn to companies that continue to take care of and prioritize their people and where employees understand the strategic priorities of the company and feel they are directly contributing to them.

To this end, make sure all of your employees understand the company priorities and why you are focusing on certain areas and deprioritizing others. Communicate this with as much transparency as possible. If you don’t talk about this openly, your employees may start to feel as if they aren’t valued or that you no longer care about culture.

Instead, if you bring them into the conversation and help them understand why certain roles no longer need to exist or certain projects are deprioritized, they are more likely to replace their assumptions with clarity and hopefully feel that they’re part of the new path forward.

Liv Price, firstminute Capital

Treat your hiring roadmap the same way you treat your product roadmap: What is the purpose of a hire and do they solve a large enough problem to warrant a full time role? Then when you break the role down to its core can you clearly outline: What are the critical tasks/outcomes, timeframes to deliver, progress indicators?

We’ve witnessed the fallout of a "growth at any cost" attitude.

A hiring roadmap starts with identifying these answers and working backwards from there. It’s then built in conjunction with your product milestones, cash flow management, fundraising targets, and it's reviewed and iterated on a quarterly basis with the leadership team.

We’ve witnessed the fallout of a "growth at any cost" attitude with Peloton, Robinhood, Coinbase & Meta's layoffs. This shouldn’t be the first instinct for earlier, scaling businesses. Instead, remain opportunistic about what you can do: Focus on repurposing excellent talent, leverage performance plans, and reverse engineer the hiring process if you meet amazing people who have been laid off but weren’t roles you factored in the roadmap.

Daniel Morris, NFX

It’s a tough moment for the economy. But ideally, your plan for 2023 shouldn't be driven by defensiveness. This is the year to make smarter hiring decisions. Talented people (like you) with start-up skills double down in hard times. They refocus, buckle down, and solve huge problems, and this next year could be an amazing opportunity for a talent reset. Remember, iconic companies have been born out of recessions—Airbnb, Uber, WhatsApp, EA, Microsoft—and many extremely qualified candidates have recently entered the talent pool after widespread tech layoffs.

With the right team, your brand could be one of this recession’s big winners.

Take time to reflect and use this opportunity to grow. Re-center around your true purpose. How will you realize it? What roles are mission critical? Given the chance, would you put current team members into these roles?

Tech has been hammered the hardest this year, and the best start-ups will have the opportunity to attract top talent in the coming months. Now is the best time for visionary founders to build culture with intention, to refine a compelling recruiting narrative, and to develop a phenomenal recruiting process that leaves candidates wanting more and the company with the right interview feedback to make great hiring decisions. With the right team, your brand could be one of this recession’s big winners. 

Matt Hoffman, M13

One of the most important lessons that any startup founder can learn is when to not do the same thing as every other company is doing—when to zig instead of zag. While there's unquestionably real uncertainty in the macroeconomic environment, and it's always important to be mindful of cash burn, at the same time I'd also say that there might never be a better time to hire and build your team with some amazing talent.

The volume of exceptional people on the market is higher than it's been for quite some time. And if you have the opportunity to get world-class people on board, my experience has been hiring great human beings is a decision one rarely regrets.  Your business will be all the better for it.

Of course leaders should be thoughtful about their hiring process (and in a slower talent market you have the opportunity to do that), and of course you should never add headcount just for its own sake. But at the same time if you have clear lanes to level up the talent bar on your team you should go for it. You may never get the opportunity to build your team like this again.