Should startup founders hire friends?

Excerpted from From Start-up to Grown-up, by Alisa Cohn

Most founders hire friends, certainly at the beginning. It’s natural. You’re comfortable with each other, know something (but maybe not enough) about your work and your habits. That doesn’t mean you don’t face all the problems of any hire and in fact, you face a few more. Noam Wasserman, author of The Founder’s Dilemma and a professor who has researched the field of entrepreneurship extensively, says that you can hire a friend, but you have to accept that you will probably end the relationship as friends. It may not end up being that extreme, but be aware it’s a possibility and you may have to decide between your friendship and your company. The other things to think about as you hire friends are:

Have a formal interview process. Just because she’s a friend, don’t skip the basic steps that go into hiring someone. Make the job requirements concrete and specific to the job, get the evidence in a way you can present to your team. This is crucial when you’re hiring friends, because you want to make sure the team is bought in to the value you can bring, not just that she’s your friend.

Discuss with your friend how you’re going to give him feedback if he’s working for you. You have to be as straight with him as any other member of the team, and he has to be able to deal with this input the way he would in any other job.

Have the success conversation in the beginning. You should do this with everyone, but especially with your friends. It goes like this: “I think you’re great. I’m so excited that you’re joining the company. If we’re successful, which I hope we’re going to be, there’s likely to come a day when I’m going to tell you that I want to bring in someone more senior above you. At that point, I’m going to make sure this is someone you can learn from and I hope you’ll see this as a good thing, because it means we have grown to the point that we have outstripped your experience level and have gotten into a whole new well of success.” People will have trouble with it, but at least you’ve said it and you both understand what the deal is when the time comes.

An extra on your checklist for friends is have the conversation about how the relationship is going to change when you hire them. If you’re used to hanging out together, that may still be fine, but be aware that others may see it differently. People see that you two are buddies. They’re going to think you will defend your buddy and protect your buddy. They won’t want to tell you what’s really going on with your buddy. A good check is to make sure you have somebody in the company who will tell you the truth about your friend. And you should be aware that the truth may not be what you want to hear.

So yes, you can hire your friends. And if you do, make sure you put these safeguards in place to maintain your relationship and the smooth functioning of your company.

Alisa Cohn has been coaching startup founders to grow into world-class CEOs for nearly 20 years. A one-time startup CFO, strategy consultant, and current angel investor and advisor, she has worked with startup companies such as Venmo, Etsy, DraftKings, The Wirecutter, Mack Weldon, and Tory Burch. She has also coached CEOs and C-Suite executives at enterprise clients worldwide.

Her book From Start-Up to Grown-Up: Grow Your Leadership to Grow Your Business provides start-up owners with effective and practical ways of maximizing their strengths, defusing their triggers, controlling their self-doubt, and building on their motivators.