Never Hire Your Friends or Family at Your Startup

As a founder of a startup company, entrepreneurs know the challenges involved in growing the startup. Things might look rosy from the outside, but founders know that they are on thin ice.

Even if your startup has survived for a few years, you are always in constant threat of the business failing. Market changes, competition, government regulation updates, changes in the management team and many more threats are just around the corner ready to kill your startup.

However, friends and family see you differently. As soon as you have a startup with an office and more than five employees, people see you as successful.

Maybe by their definition, quitting a job, starting a startup and giving employment to people is seen as a success. As soon as you reach this stage, they start asking for favors.

Friends might want to work with you or become business partners. Family and extended family will start asking if you can give a job opportunity for them or for someone they know. It might be tempting to say yes, and sometimes difficult to say No.

I’ve made the mistake of hiring friends in the past. This almost always never works. Though I am very good friends with my team members, all of us understand that business comes first and friendship second. Even my co-founder Sanjay Shenoy is my business partner first and a friend second.

You can always have friends outside of work and spend time with them. In fact, your best friends should be outside the scope of your work to really enjoy time with them. If you hire friends and family in the workplace, they will put the relationship first and the work second.

If someone is really intelligent and has put in the hard work required to grow some professional skills, they would be in demand and probably would be working somewhere else. They might be getting paid more or even be earning more than you.

Only people who do not have the required skills to be in demand in the job market will be looking for opportunities among friends and family.

You have no obligation for their careers and no pressure to hire them. If you do, they will always be performing sub-par and this will not only spoil their career but also your friendship and relationship with them.

If they do not perform up to the expectations, it is going to be very painful to fire them or let them go. They almost would never understand that they are costing you money and they are not contributing enough revenue to your business.

People behave in weird ways when money is involved and you don’t want to see their other side. Apart from the unpleasantness of having to let them go, you might also get into some ugly scenes. This is an opportunity cost to your business.

Having to deal with a painful team member who you cannot strictly deal business will soon take up your mind-space and become the top idea in your mind. You cannot afford to let a trivial matter become the top idea in your mind.

If anyone in your friends or family network requires help, you can always give them career advice, or connect them with the right people who might be able to give them opportunities. Just tell them politely that you are not hiring right now.

You have an obligation to make your startup work, for yourself, for your team, and for your customers. If you ever let one thing that derails from the focus of your startup’s growth, you will be paying the price in terms of opportunity cost.

In rare cases, people might contribute and be a great asset to your business. Sometimes brothers start a business, and that’s different. People have created billion dollar companies as brothers. If you have someone in your company that is a friend or family and things are working well, you don’t have anything to worry about.

If you have already made the mistake of hiring someone, and if you are now not too happy with it, make a decision soon. If the thought of letting go of a team member has crossed your mind, it is very unlikely that it will go away.

If you are thinking of firing someone, then you will eventually end up firing them. People do not magically turn around and become productive overnight. There is no point in giving them more time to turn around. You will be able to smell their attitude from far and you need to make a decision sooner or later.

The sooner you let go of a team member, the easier it is going to be for both the parties. If you let people be unproductive in your team for a while, you will end up making them comfortable. You are going to send a false signal to them that that’s all that expected of them.

If you have decided to let go of someone, do it yesterday. You are going to help their career take shape sooner than later. They can move on to other things, find out what’s working for them and they are going to thank you for it later on. Even a 3-month head start for someone in their career is going to help them leaps and bounds a few years down the line.

If you already have hired friends and family and if you think it was not a great decision, cut your losses fast. If you have hired someone who is really bad, they might even throw the friend/family card on you if you let them go. Some people might just want to take rest in your shadow as you grow. You cannot afford to have such people in your team.

Even if financially it is not a burden for you to have a friend or family in the team, it could still cost you. If someone is not contributing at their best capacity, it sets a wrong tone with other team members who are working hard.

It morally draining for one team member to work hard while others are getting paid similar renumeration and are not working THAT hard.

Your team is going to work as hard as the laziest person in the company. If someone is working at 50% of their potential, all team members will synchronize themselves to that level of productivity and potential. It destroys your company culture. You need to guard your culture the most.

Your startup’s culture is your invisible co-founder powering your business. If you lose money in your business, nothing is lost. If you lose your customers and brand, something is lost. But if you lose your startup’s culture, everything is lost.

With your team and your culture, you can bring your startup back up from dead, but you need a team for that. And the culture has to encourage it.

So pay very good attention to who you make part of your team. Think twice before you hire someone.

And always say No to friends and family.