7 Ways to Avoid the Biggest Hiring Mistake Most Entrepreneurs Make

What’s the most costly mistake you can make in your business? Picking the wrong market? Building the wrong product? Not supporting your customers’ success? Yes, these mistakes are painful but none of them are as dangerous as hiring the wrong people. So when I set out to help my students in our Company Formation classes, I always emphasize hiring as our most critical workshop. I’ve written profusely about it too because it’s just SO critical.

Group of unrecognizable business people. Human resources concept

So, where to begin? Even if you’ve done all the right things in your recruitment and interview process and you love the candidate and are ready to hire them….

Stop! (Seriously, stop.)

Don’t pull the trigger. No matter how much you may think you’ve gotten to know someone during the interview process, you can’t know them as well as people who have already worked with the person before. Step back and figure out who you know who has had direct experience working with your prospective hire. References are great, but blind references are gold (click to tweet). They will prove invaluable, because even if all your instincts turn out correct and she’s a great hire, you’ll gather a wealth of other information in the process — how best to mentor her, how to get her up to speed faster, and how to complement her in the workplace. And if you turn up troublesome information, you’ll avoid making that costly hiring mistake.

Here are some key tips for running a great reference process:

  • Look for real, unprepared or so-called “blind” references where you can. Blind references are those beyond the obvious ones that your candidate will give you and usually, therefore, ones that will offer an unvarnished view.
  • Qualify who is giving you the reference. If they are not an A player themselves, you’re not going to get as valuable a reference as you need. So, where possible, ask people who you already know are A players. Alternatively, meet references via known A players who you know will have the quality bar you want.
  • Seek a 360 reference from their peers, their boss, and whomever worked for them — bonus points for a customer or external person they served. (This can be hugely informative for sales, services, or other externally facing people. For example I once called a journalist about a PR person I was about to hire and quickly realized that he didn’t have quality relationships with the people I’d depend on him being able to pitch.) Regardless, each person and their viewpoint will bring a different and important perspective from which to evaluate your candidate.
  • If you can, prepare the person you’re taking the reference from with an overview of the job you’re hiring for. It gives them context, and allows you to ask specific questions of what your candidate’s experience for the job has been.
  • Ask as many questions as you need of the reference to get comfortable and don’t be shy. Be real. Ask the hard questions and ask for raw unfiltered answers, not sugar coated platitudes (click to tweet). Tell the person you’re asking upfront that you want them to be real, raw and unfiltered and ensure they know you are going to hold this in the strictest confidence — which you must absolutely abide by.
  • Always offer to reciprocate and return the favor for people you reference from, on any future reference they may need. And when you give a reference, reciprocate by being raw and real.
  • Remember to start with the basics. Always check under what circumstances the person left the job and whether the person would work with them again and why. And dig to find out what’s behind that. If you hear all positive feedback about a candidate, you’re probably not getting a “real” reference. No one is perfect. Even if I’ve decided to hire someone, I like to know where they have weaknesses, because it’s then an opportunity to team them up with others who complement them or to learn how to coach them. Get the facts, including their weak or blind spots, and at least be prepared to work with those if you hire them.

It’s probably politically incorrect, but the old saying was, “you can never be too beautiful, too smart, or too rich!”. My version has always been, “you can never be too healthy, too knowledgeable, or too humble”.

But when it comes to hiring people it’s even more specific:

“You can never take too many references, be too well informed, or too well prepared.”

Human capital is your biggest and most impactful investment by far. Invest in it like it’s your only capital (click to tweet). Don’t make hiring your most costly mistake, make it your most profitable investment. Read 3 Steps to Making A+ Hires that Fit for more detail.



Michael partners with entrepreneurs from inception to market leader. As a former entrepreneur turned VC, Michael has backed and built teams that have created billions of dollars of value focusing on large, market-changing technologies such as Cloud Computing, Mobile and Big Data as well as disruptive business models such as Open Source and SaaS. Current representative investments include Acquia, Cazena, Demandware (NYSE:DWRE), and Salsify.

Follow Michael on LinkedIn, Twitter and in his Harvard Innovation Lab class, Startup Secrets.