What's the difference between skills and values when hiring?

When hiring, it's essential to look beyond just the skills needed for a job (e.g., closing a deal). Core company values and mission alignment are equally crucial. A candidate might have the skills but lack the values that are fundamental to your company's identity and how it operates.

What are common early hiring mistakes startups make?

Common mistakes include not vetting for values and mission alignment, leading to hires attracted by the startup's perceived 'sexiness' rather than its mission. Another error is hiring individuals passionate about the mission but unwilling to perform the actual job duties, such as sales calls or coding.

How can companies avoid bias in hiring, particularly with 'culture fit'?

The concept of 'culture fit' can be a significant source of bias, especially for inexperienced interviewers. Instead of asking if someone would 'hang out with,' founders should define specific company values and assess candidates against those values. This approach reduces bias towards people who are similar to the existing team.

Why is values alignment important for investors and clients?

Shared values are just as critical with external partners as they are with employees. The Muse has even fired clients who did not align with their values or treat people well. Maintaining strong values alignment helps ensure ethical business practices and positive working relationships.

What is a common blind spot for founders as their company grows?

A significant blind spot is realizing that the founders' personal weaknesses can replicate and become systemic weaknesses within the company as it scales. For example, if a founder struggles with giving direct feedback, the entire company might develop a poor feedback culture, which is much harder to change later.

Can I build a company differently from industry norms?

Yes, you can and should build a company that reflects your unique vision and values. While it might be harder at times, staying true to your principles attracts like-minded employees and creates a refreshing work environment. Don't feel pressured to fit a pre-existing mold, especially if that mold is defined by outdated or problematic practices.

Key Moments

Fireside Chat with Kat Mañalac, Kathryn Minshew, and Alex Cavoulacos

Y Combinator

Science & Technology5 min read21 min video

Jul 11, 2018|5,391 views|31|2

YC Y Combinator Co-Founders The Muse Kat Mañalac Female Founders Conference Kathryn Minshew Alex Cavoulacos

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Key Moments

TL;DR

The Muse's co-founders learned that aligning hires and investors with core values is crucial, as seemingly small missteps in hiring or partnerships can snowball into company-wide problems.

Key Insights

The Muse serves over 50 million people annually, connecting them with hundreds of companies like Facebook, Dropbox, and Slack.

Early hiring mistakes at The Muse included a YC engineer demanding co-founder status after seven weeks and hiring passionate individuals who didn't want to perform sales calls.

Culture fit interviews can be a significant source of bias, especially for founders who haven't clearly defined company values beyond personal comfort.

The Muse fired a client for unethical behavior, demonstrating that values alignment is critical for external partners as well.

One co-founder shared a deeply personal story of rejecting a significant seed funding offer due to an investor's sexual proposition, highlighting the importance of ethical conduct.

Founder personality and values disproportionately influence company culture, even in organizations with 120 employees, making self-awareness crucial for scaling.

Hiring for culture and values alignment is paramount

Kathryn Minshew and Alex Cavoulacos, co-founders of The Muse, emphasize that hiring the right people is fundamental to a company's success, especially in startups where each individual's contribution is critical. Beyond skills, aligning with core company values is essential. They advocate for a structured hiring process that moves beyond gut feelings to systematically assess both skills and values. This approach helps attract individuals who genuinely resonate with the company's mission, rather than just seeking association with prestigious programs like Y Combinator. The Muse itself has grown to employ 120 people and serves over 50 million users annually, partnering with major companies like Facebook and Slack, underscoring the importance of their hiring philosophy. This focus on alignment over superficial 'ratings' or 'best places to work' lists is key to finding individuals who will thrive within a unique startup culture. Founders must clearly define their desired culture and broadcast it to attract aligned talent and deter those who aren't a good fit.

Early hiring mistakes and their lessons

The co-founders shared candidly about significant hiring missteps in The Muse's early days. One critical error involved hiring an engineer who, after just seven weeks, demanded co-founder status and more equity, threatening to withhold code crucial for their upcoming Y Combinator Demo Day. This individual was primarily attracted to the 'sexiness' of a YC startup and not the mission itself, a sign that values and mission alignment were overlooked in the hiring process. This experience was painful but taught them to vet candidates more thoroughly for genuine commitment to their values. Conversely, they also hired individuals who were overly passionate about The Muse's mission but unwilling to perform essential tasks, such as cold outreach in sales roles. These experiences highlighted that passion alone is insufficient; candidates must also possess the skills and willingness to do the actual job required.

Avoiding bias in culture fit interviews

Kat Manialek raised the crucial point that 'culture fit' in interviews can be a significant source of bias, particularly for inexperienced interviewers. Often, 'culture fit' is conflated with personal comfort or the desire to socialize with a candidate, rather than an objective assessment of alignment with defined company values. This can unfairly disadvantage introverted candidates or those from underrepresented backgrounds who may not immediately appear similar to the existing team. The Muse's approach is to challenge this by asking interviewers to pinpoint which specific company values a candidate may not align with, rather than relying on a vague sense of 'not fitting in.' This distinction is vital for building diverse and inclusive teams from the ground up, which research shows is a competitive advantage. Founders committed to diversity and inclusion from day one will find it easier to integrate these principles as the company scales, avoiding the much harder task of changing established organizational norms later.

Shared values extend to external partners

The importance of shared values extends beyond employees to external relationships, including investors and clients. The co-founders recounted a previous startup failure stemming from a lack of shared values and ethics with a co-founder. For The Muse, they've even fired clients who did not uphold their standards of treating people well, demonstrating that values are only meaningful when they lead to difficult decisions. This commitment to ethical partnerships is a crucial aspect of their company ethos.

Navigating investor relationships with integrity

Raising seed funding presented significant challenges, with one co-founder detailing a year-long process to raise $1.2 million through numerous small checks. A particularly harrowing incident involved a seed investor who, at the eleventh hour, propositioned one of the co-founders for sex. Despite being critically low on cash and having a term sheet ready, they ultimately rejected the investor, highlighting an extreme example of prioritizing values over immediate financial necessity. This experience reinforced their dedication to working with individuals who share their ethical compass and led to them finding new investors within five weeks. They also noted that by speaking openly about such experiences, they aimed to foster industry change.

Founder's personal flaws shape company culture

As The Muse grew to 120 employees, the co-founders realized that their personal strengths and weaknesses significantly influence the company's culture, for better or worse. They found that personal challenges, such as struggling to give candid feedback early on, can be replicated and magnified across the organization as it scales. This realization emphasizes the critical need for founders to engage in continuous self-awareness and personal growth, as addressing these flaws at the individual level is far easier than rectifying them in a large team. Actively seeking feedback and collaborating with others to counteract personal blind spots are essential for building a healthier company culture at scale.

Building a company that reflects founder vision

The founders encouraged aspiring entrepreneurs, particularly female founders, to build companies that reflect their unique vision, rather than adhering to a prescribed, often male-dominated, industry model. They highlighted their own decision to implement a 'baby-at-work' policy, which was met with skepticism but ultimately contributed to their company culture. The message is clear: while learning from others' mistakes is valuable, founders should trust their own instincts and build the company they believe in, even if it means forging an unconventional path. Authenticity in building the company culture can be a refreshing and attractive quality for both employees and partners.

Mentioned in This Episode

●Companies

●Organizations

●Books

●People Referenced

Hiring Best Practices for Early-Stage Startups

Practical takeaways from this episode

Do This

Clearly define both the required skills and core company values for each role.

Establish a structured hiring process to compare candidates systematically.

Conduct thorough reference checks.

Identify and articulate the desired company culture early on.

Focus on alignment rather than generic 'best places to work' rankings.

Assess skills, desire for the role, and value/mission alignment.

Actively promote diversity and inclusion from day one.

Challenge the notion of 'culture fit' and instead assess alignment with specific company values.

For investors and partners, seek individuals with a similar moral compass and shared values.

Be aware that your personal weaknesses as a founder can become the company's weaknesses at scale.

Build a company culture that reflects your authentic vision and values, not industry norms.

Consider unique policies like a baby-at-work policy if it aligns with your values.

Avoid This

Do not rely solely on gut feeling when hiring, especially in the early stages.

Do not hire candidates who are only attracted to the 'sexiness' of a startup or accelerator program without genuine alignment.

Do not hire people who love the mission but do not want to do the actual job.

Do not allow bias to creep into interviews by using vague 'culture fit' criteria.

Do not be afraid to let go of employees who do not meet performance standards (aim for one out of ten hires to be managed out or fired).

Do not assume that external stakeholders like investors and clients don't require values alignment.

Do not ignore the impact of your personal flaws on the company's culture as it grows.

Do not feel pressured to conform to industry standards if they don't align with your company's values.

Common Questions

Company culture and values alignment are critically important for both individuals and companies. For companies, especially startups, having the right people aligned with the culture is key to success. For individuals, aligning with a company's values and mission enhances job satisfaction and identity.

Topics

Mindset & Self-Improvement Business & Entrepreneurship Company Culture Investor Relations Startup Funding Startup Hiring Diversity And Inclusion Values Alignment Career & Skills Hiring Process Founder's Influence

Mentioned in this video

Companies

Y Combinator

An accelerator program that The Muse went through in winter 2012. Kat Manialek is a partner there.

The Muse

A company co-founded by Kathryn Minshew and Alex Cavoulacos that helps people navigate careers and connect with companies. It went through Y Combinator in 2012 and has 50 million users.

Dropbox