Early Facebook investor Marc Andreessen says one of the biggest mistakes that startups make is hiring an HR leader too late
- Marc Andreessen says most companies put off hiring a HR leader too long.
- The delay makes the company more at risk of "catastrophic failure through self-inflicted wounds," according to Andreessen.
- In an interview with tech industry veteran Elad Gil for his new book "High Growth Handbook," Andreessen says companies should hire a HR leader when it has somewhere between 50 and 150 employees. There's a reason for that figure.
Marc Andreessen knows a thing or two about building a successful company.
The legendary Silicon Valley investor made his name as the co-creator of the first popular web browser, co-founded Netscape, and then went on to make big early bets on Facebook, Twitter, and other high-growth tech companies at his venture capital firm Andreessen Horowitz.
One of his best tips was on the topic of when to hire a human resources leader.
"If you don't start layering in HR once you've passed 50 people on your way to 150, something is going to go badly wrong," Andreessen told Gil in the interview.
Andreessen said that most tech companies will focus in the beginning on building a great product and distribution channel before doing what he calls "everything else."
That includes finance, HR, legal, marketing, PR, investor relations, and recruiting, according to Andreessen. But the longer a company delays those activities, the higher the risk of exposing itself to "catastrophic failure through self-infliced wounds."
He went on:
"The number of companies in the Valley that put HR off to the side and decided it wasn't important and are now dealing with some level of catastrophe - either a public catastrophe or one that's in the making - that's a pretty high percentage of companies right now.
"And it's totally unnecessary. If they had taken HR seriously at an earlier point, they probably would have been able to fight a lot of their issues. But for whatever reason they decided it wasn't important. So HR has to be taken seriously."
Andreessen doesn't name any company in particular, but there are plenty of real-world cautionary tales.
Uber, a direct competitor of the Andreessen Horowitz-backed Lyft, had a spectacular meltdown in 2017 that culminated in the departure of cofounder Travis Kalanick as CEO. The controversy stemmed from a series of HR-related scandals, kicked off by an infamous blog post by former Uber engineer Susan Fowler.
When should you hire an HR leader?
In his book, Gil points out that a lot of founders, especially first-time founders, struggle to figure out when they should actually hire a HR leader.
Andreessen recommends adding HR into the mix when a company has somewhere between 50 and 150 employees. There's a reason for that figure.
A researcher named Robin Dunbar once suggested that human beings can hold only about 150 meaningful relationships in their heads, and that they simply can't get to know any more people than that. Dunbar found that hunter-gatherer societies all over the world put this cap on their communities. Some tech leaders follow the same rule.
"Somewhere between 50 and 150 people, everybody doesn't know everybody. There are people running around who other people have never met. When you were five or 10 or 20 people, it was one big happy family and everybody knew everybody - well, maybe it wasn't, but at least everybody knew everybody. And the CEO had direct one-on-one relationships with everybody in the company.
"Once you get to 50-plus, that's just no longer the case. At that point there's a necessary impersonality of the professional relationships in the company. And then HR catastrophes emerge, because people trip the line from proper professional behavior in a workplace to improper."
You can read the complete interview with Andreessen - as well as interviews with tech luminaries Sam Altman, Patrick Collison, and Reid Hoffman - in Gil's book "High Growth Handbook."
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