5 Things you Need to Know BEFORE hiring Employees [watch before you interview]

What is up? Welcome to my channel. My name is Leila Formosi, co-CEO of Acquisition.com, which is a portfolio of businesses that does about $85 million in period revenue. And my goal with this channel is really to help you get from wherever you're at to between $3 to $10 million in revenue for free. And so that being said, what I want to talk about today is something that has been really top of mind for me because it's been top of mind for our portfolio companies, which is hiring and specifically having trouble hiring. And this is something that we at Acquisition.com, we put a lot of time into. It's probably where I spend honestly like most of my time. Like I am heavily, like I consider myself an operator CEO and I am heavily versed in HR and customer success and probably more HR right now than even customer success because I think it's actually more of a struggle for people. And the reason for that is, you know, if you hire the wrong customer success person, it's going to make customer success suck. And it's like you basically have to be the one determining who's above all the departments. And so it makes it a function I think is more important by nature. That being said, basically the struggle is like this week, I think I've had, you know, 3 different CEOs come to me, CEOs and COOs, you know, just struggling with hiring for certain positions in the companies right now. And I wanted to share this because, you know, I was actually going to give personal feedback in a video to one person who specifically was feeling down about not being able to hire a pretty high-level operational role that they were looking for. And they just continued to send us candidates that, you know, we weren't impressed with at all. Because we, a lot of times what we do with the portfolio companies is we actually help them, you know, recruit and then help interview with especially like a managerial role in their company. And the reason we do that is because like, they don't know what good looks like, we do know what good looks like. And so we want to help, you know, kind of mitigate and lessen the mistakes and the pain that they have to pay by, you know, inserting ourselves in the hiring process. So like, I like, you know, hiring, helping people hire COOs, operators, customer success, sales, like all those roles because we know how pivotal they are if you get the right person to where the companies are at. You know, if you're between $3 and $10 million in revenue, it's usually the issue is that you don't have enough leadership and the leadership you do have either has to go or has to get trained up or they're not really aligned with the culture and where it's going. And so it's a lot of moving parts with the people stuff. And so that being said, I put together this list because I was going to share it in a video with one of the CEOs and I felt like, shit, I should just make a YouTube content on this because it's obviously helpful for anybody who's at this stage. And really it's my— what I would say is like untraditional, or like these are just my authentic thoughts about like where I see people messing up in hiring that I know I've experienced. Because like, guys, like the reason that I'm so good now at hiring, and like I'd say I'm so good, like just statistically the people I hire now, it's like I have way less churn, turnover, false starts, whatever you want to call them, now because I've hired hundreds and hundreds and hundreds of people and I've interviewed thousands of people. So like, and I did that because— and I became so diligent about it because, you know, you've seen my other videos, like I've made so many mistakes in my first company, Gym Launch and Prestige Labs. Like, you know, I just completely fucked that up. If you look at my video, that's my biggest mistake, I talk about it in there. But that being said, you know, I've made it a mission to like really keep up with this stuff and make sure I'm doing it correctly. So I wanna share just the top 5 things that I've seen be the biggest reasons that people aren't able to hire the right kind of talent. And it's usually, these aren't like tactical things as much as they are thinking frameworks. And these are specifically businesses between $3 to $10 million in revenue. Um, it could probably be less than that. It could probably be more than that. This is just typically what I see around that size. The first one, and this is absolutely the worst culprit possible, is that people let likeness blind them. I don't remember where I heard this. It was a very long time ago. And basically I had hired somebody who I thought was awesome. He was super cool. I really liked talking to him. Amazing guy. I hired him because I liked him, because I wanted to be friends with him, not because he was qualified for the job. And I see this so often in our portfolio companies, and it's super dangerous because here's the thing, likeness blinds you from all of the bad parts, the downsides of these people. And so like, yes, you wanna be able to like the person, but that shouldn't be why you hire them. And so that's the first piece is, are you letting likeness blind you? Are you letting it taint your perspective of this person? Are you letting it manipulate in your own mind so that you think this is the right hire and you're gonna be more lenient on your requirements because of how much you like this person? I think a lot of people do that, and I'm seeing it right now, like specifically with this one CEO, you know, like, why do you not like these people? I'm like, because you like them too much, dude. They don't even fucking qualify for the role. Like, they don't even have any of the skills required. They don't even have full culture fit. They're just cool. That's great, you want cool people, but like, they need to have the other stuff too. So that's the first one, is you don't want to let likeness blind you. Now the second one is that a lot of the times in businesses that are smaller, you're entrepreneurial, etc., you know, You know, you wanna hire experienced people, but what you don't want is you don't want to hire people who are coaches, not player coaches. Okay, so what I mean by that, most people that come from larger companies and you're gonna bring them into your entrepreneurial startup or you scale up startup, whatever you wanna call it, they come and they've been just sitting in a seat coaching people for a very long time or for years or whatever. They've gotten into the habit of not doing and coaching, but just coaching. In a company that's doing less than $10 million, and I will even say that in some companies doing less than $20 million, and even $30 million, and even up to $50 million, you can't just sit on your ass and tell people what to do. You've got to get in there and get your hands dirty. And a lot of the times I see is, you know, someone brings a candidate to me and they're like, Leila, I'm so excited, this guy's like this operator from this huge company and this and that. I'm like, amazing, he's got a great resume, let's talk to him. I talk to him like, what do you do on a daily basis? And it's like, I check the KPIs and I make sure people are doing what they need to do. And I'm like, okay, but what projects are you leading? And they're like, well, I mean, I lead the change management. I'm like, We don't fucking even have a change management protocol. We're doing $5 million a year. Like, I need you to like do all this shit over here, do half this person's job, and somehow build this team. And so that's something you can't compromise on. It's like if you're an entrepreneurial business and you're at that point where you're, you know, not an enterprise yet, you can't compromise on that. You cannot. You cannot. There's no room for someone who's purely a coach, not a player coach. A player coach is someone who's like, you know, okay, a coach in traditional football, for example, he's never going to get on the field because a player's hurt. That's not how it should work in business. It sounds crazy, like in small businesses, the coach has to go in when the player's hurt, and they also sometimes need to be in the game no matter what. And so that's something that can't be compromised. And a lot of times when first-time founders are interviewing more experienced people— and I've made this mistake, guys, I'm telling you this because I've literally done this like 10 times— you know, I interview someone, I'd be like, you sound amazing, this is great, you have all this experience. And they come in, I'm like, here's what I've been doing that I need you to take over. And they're like, oh, I'm going to need to hire 3 people to do that. I'm like, What? You know, like, I'm doing it. Why the fuck can't you? If there's people like that, you know, it kind of— it's a lot of times if you set the expectation on the forefront and you're like, I'm gonna need you to do all this shit. So like, if you're not gonna do it, like, you know, you're just not gonna stay here, you're gonna end up getting fired immediately. Then they're like, oh, okay, you know. And like, they get it, you know. But it's just that a lot of times we don't have the perspective to realize that we need to even say those things to people. And so that's why I'm making this video, is like, that's the second thing, is that people often hire a coach, not a player coach. The third thing, and again, this is probably for any size business, but it's more— it's, it's like a muscle you have to train. Ignoring red flags. Here's the thing, I used to interview people and, you know, they'd say something that bothered me, or like there'd be something in the interview that I was like, oh, I feel like that's gonna become an issue. But I'd be like, oh, but everything else was so good. Like, just because I sensed one thing wrong doesn't really mean anything. The interview is the best you're gonna get from this person. It's like the absolute best you're gonna get. That is, that is the 120% trying. And so like, if you've got red flags in the interview and they're saying things that are throwing you off, then what do you think it's going to be like when they come in? It's like you can't ignore that instinct that you have to like flag those things they say. You've got to either dig in and find out what the heck is going on, or you've got to say, hey, this doesn't seem like it's a fit, this— we're going to pass on this candidate. And so it's just It's really a mindset of understanding the interview is the best it's ever gonna get. This is the hardest they're ever gonna try for you. So if you've got red flags in the interview, I would say that either they're not a very good, you know, interviewee, or it's just not the right person for the role. And so that's the third thing is like you just, you cannot ignore these red flags. And it's almost like a muscle that you have to continue to train. Like I know that over time mine becomes stronger and stronger, which is really just not letting my need to fill a position override my instinct that it's not the right fit, or that there's something else there, or that it doesn't feel right, or that I need to dig more into that red flag. And oftentimes when it's like we're so eager to fill that position, I totally get it because like I feel that way too, that we just like put ourselves in more pain by hiring somebody who's not great for the role. So that's the third thing. Now the fourth thing is something that is just the absolute worst in my opinion, and I would say is probably like it's number 4, which makes no sense. That's not number 1 or number 5, but I put it as number 4 when I was writing things down. So here we go. Is hiring from the same little incestuous pool of people. Guys, this is literally what kills businesses, is that you hire people from the same friend group, the same pool, the same community, and everyone has the same fucking ideas and perspective. There's no diversity of thinking. And I have, like, the reason I'm so passionate about this, guys, like, I specifically have one friend hires every single person from the same community of people and their business, they're like, I don't understand why it's not gonna grow. I'm like, yeah, because every single person in your business, including you, only values marketing and sales. Even the people in customer success, in finance, in HR, they're all just sales and marketing people. It's because you're hiring from these communities that are sales marketing. And so like your business is just stuck because of all these people, because you're hiring from the same pool. It's like this incestuous pool of people that you're hiring from. And this happens a lot. Our portfolio companies come to me and they're like, I need to hire for this role, I need to get this person, etc. I'm like, cool, we're gonna go post here and post here, and then we'll get a recruiter for this one. And they're like, no, but like I have communities, I can post in these groups, I can find— I'm like, just stop. Seeking to control. It's like this need for control over like knowing that at least you know what you're going to get. And I think that's why people do it. Like, I think it's this need to know. It's like, well, at least I know that this person will be like a 65%, like a 6 out of 10. But like, I'm sure they're 6 out of 10. They're not a 1 out of 10. They're not a 10 out of 10, but they're 6 out of 10 if I get them from this community. And it's like, but they're not a 10 out of 10. And so because of that, you're just setting your business up for shit in the long run. It's like maybe in the short term they might work and they might plug the hole, but they're not going to set you up for success in the long run. Everyone— it's just going to be groupthink. And this goes for if you hire from within your community. This is super common nowadays. There are certain roles it makes absolute complete sense to hire from your community. I would say the two that are probably most relevant are sales and coaching. Like, especially if you're watching my channel right now and maybe you have an e-learning or coaching business. Coaches, yes, hiring from your community, that makes sense. They have to fit certain criteria, of course. But that probably makes sense. Sales as well, they're convicted in your product, they've used your product, that makes a lot of sense. Finance, HR, executive admins, you know, controllers, no. This is one that I just bang my head against the wall and that's probably why I'm angry is because there's two people particularly that I'm working with right now, it's like they just, despite my advice, despite my begging, they continue to hire from within the same communities and the same little cesspools of people. And because of that, they're setting the business up for disaster in the long run. I've seen this play out so many times. I've had it play out on my own. We've hired too many people from our communities. It's like, you need to go out there, and even though it's harder in the short term to hire from platforms, to hire from recruiters, you have to spend more money, you have to take more time, you don't know how to do it, you've never done it before, it is all learnable. And the great thing about it is once you learn the skill of cold hiring, which is almost the same as marketing, then you can literally get any kind of talent you ever need. And so you don't have to just say like, Who's the best in this community to hire? It's like, who's the best in the fucking world to hire? Because you have the skill of acquiring talent. And that is probably the hardest thing for people at this level, between $3 and $10 million. And especially, even at $10 to $20 million, I see people do this because they're bringing the habits from $3 to $10 to $10 to $20. And they just continue to pull and pull and pull from these communities and never learn the skill of talent acquisition until one day the founder looks up and says, nobody in this business has an idea that is outside of my own brain that I haven't thought of. Nobody has thought anything that I haven't already thought of. And that's why I'm really passionate about that one. Just really making sure, guys, like, when you're hiring, it's so important to have diversity of thinking. Like, I can't tell you, like, friction is good. Having different opinions is good. It's— studies all over have been done about this. Like, the more opinions put on a decision and a team, the better the outcome. But if they're all the same opinion, then what's the difference? Why even be there? Why are they even filling the role? They're just going to tell you what you want to hear. And the thing is, is that it's so hard and yet so necessary to have people on your team who tell you what you don't want to hear. You're not going to get that from people who are just kissing your ass all day because you've changed their lives or because you're the kingpin in this community you're hiring from. It's really hard. And so I'm not saying it's 100% of the time, but I'm saying much of the time this is a huge issue for companies, especially nowadays. And then the last one, number 5, is hiring for potential, not for practical experience. And so again, it's, I think what happens is we get into the interview cadence and we're interviewing someone and we just like, we're like, I know you haven't done this role before, but you have so much potential. Here's the thing, that's okay if you have time and expertise in the thing that they are filling the seat of. If you're hiring for somebody to fill a role that you are currently doing, that you are currently an expert in, and you have the time to train them, then maybe it does make sense to hire somebody who has the potential to fill that seat. But 99% of the time, you do not have the time and you don't have the expertise. So you're hiring someone for potential without the know-how of how do I train them and without the time for when do I train them. And so you always want to think like it is preferable to hire for practical experience, somebody who's done the job, somebody who can tell you what their first 30, 60, 90 days looks like, not the other way around. And so I hope that these 5 tips were useful for you. Like, if you're hiring right now, I say this, guys, because like, it was such a painful thing for me, and it continues to be, to watch people fumble with this because of these— it's almost like biases in our brain, right? It's like we're so used to doing things the way that we have when the business is small, and the reality is, in order to make the business a good functioning big business, we just can't keep the same habits. We can't hire the same way, we can't recruit the same way, we can't pay the same way. And so I hope this video is useful for you. I have learned this lesson the hard way. Again, like I said in my video, my biggest mistake, I have done this and I have messed it up. And I just, I would like that somebody can learn from my mistakes. And so let me know what you think in the comments. I hope this is useful for you and I will see you on the next one.