Are Hiring Challenges Preventing Startups From Reaching Their Full Potential?

Every startup begins as a set of plans, and plans look brilliant right up until somebody asks who is going to build the thing. A founder can have the plot, the drawings and the confidence of someone who has watched a lot of property programmes, but a building only goes up once people with the right skills turn up on site and stay there.

Those people usually already work somewhere with a bigger budget, better benefits and more job security than a young company can promise. That leaves founders trying to recruit builders for a site that hasn’t got a roof yet. Hiring is where plenty of good ideas stall and the people who have been through it have a lot to say about why.

 

A Startup Can’t Win A Bidding War

 

Adam Bowles, CEO of ACT360, describes the problem quite simply: “The challenge is finding experienced people who will choose an unproven company over an established one.” Larger employers can offer higher salaries, benefits and job security, leaving startups to find other reasons for candidates to take a chance on them.

Boris Kolev, a serial entrepreneur and startup investor, points to perceived security as another obstacle. At an established company, people generally know what their role involves and what their career might look like. At a startup, the role and even the business model may still be evolving, which is a lot to ask of someone who could be sitting in a finished office somewhere else.

Matt Schreier, founder and CEO of Kuvoo, says startups need people with the right experience who are also comfortable working without established processes or a large support team. The ideal candidate has seen enough to know what good looks like but is also happy being handed a spade and a plot instead of a finished site office.

 

 

What Startups Can Offer Instead

 

Without the budget to win on salary, startups need to make the work itself appealing. Kolev highlights ownership, autonomy, quick decisions and a clear mission as ways to compete. Roman Oliinyk, founder and CEO of PayCore Media, also argues that candidates should have real ownership and a direct say in decisions.

Jess Munday, co-founder and People & Culture Manager at Custom Neon, says smaller companies can offer something that larger employers may struggle to replicate: a chance to make a visible contribution. “You’re too valuable to be just a number in a small operation and successes get noticed.”

In a small team, a new hire may have more influence over the product, closer contact with the founder and a clearer view of what their work achieves. None of that replaces a competitive salary, but it gives candidates another reason to consider the offer.

 

A Wrong Hire Is Worse Than An Empty Seat

 

An empty seat is at least honest about what it is. When a key role remains unfilled, Bowles says the founder often absorbs the work, including tasks they should be delegating. But hiring the wrong person can slow down everyone else, leaving the founder with the same workload and a new problem to manage.

The pressure to fill the seat quickly is understandable. Munday saw her husband’s online business grow by more than 10 000% in two years, then hire reactively to keep up with demand. The result was that operations buckled. As she puts it, “Rushed hiring can stall growth as badly as having no one at all.”

Most founders would gladly swap their problems for that kind of growth, and it still managed to wobble the floor.

The comfortable option is hiring people you already know. Brooke Tessman, a startup adviser for the University of California, says many founders begin with roommates, classmates or close friends. Building a house with your mates sounds great until somebody has to do the electrics. Trust helps, but it can’t replace the professional ability, willingness to learn and ethical behaviour a role requires.

 

The Wrong CV Can Look Better Than The Right Person

 

Small teams have little room to absorb mistakes. Kolev describes the effect as “enormous leverage”: one exceptional hire can accelerate a company, while a poor one can slow product development, consume management time and delay growth.

Oliinyk describes just how costly the wrong hire can be: “A bad hire costs a big company a quarter. It can cost a startup the company.”

A known name on a CV can feel like the safe choice, but it says little about what someone actually contributed. Heather Krueger, Chief People Officer at Engine, says her company looks beyond where candidates have worked to what they did there. Someone who helped a business through a difficult period may bring more useful experience than someone who joined a well-known company during its successful years.

Krueger sums up her view: “At the end of the day, logos are context, but it’s the people you hire.”

 

Hiring Without Betting The Company On It

 

One way to avoid betting the building on every hire is to try before committing. Bowles recommends using consultants or freelance specialists for work that doesn’t yet require a full-time employee. Custom Neon also used freelancers in its early days, committing to permanent roles only once demand was proven.

Max Elk, founder at Status MGMT, took a different route. Instead of competing with larger companies on salary, perks and brand name, the business adopted a commission-only model. Elk says Status MGMT scaled to 37 managers in eight months using this approach, recruiting widely and letting performance do the filtering. Around a third of recruits leave, which he accepts as part of the process.

That model won’t suit every startup, but it highlights a cost that founders need to consider. Traditional recruitment can involve a substantial commitment before a company knows whether someone can do the job. For a business watching every pound, the way a role is structured can matter as much as the person who fills it.

 

Hiring Quickly Can Open The Wrong Doors

 

Hiring quickly can also create security risks, especially when recruitment takes place remotely. Oliinyk warns that fraudsters can exploit rushed hiring processes by using stolen or fake identities to secure jobs.

He cites a US Justice Department report on North Korean IT workers who had obtained jobs at more than 100 American companies. At one Atlanta blockchain company, about $900,000 in crypto was stolen.

For a small business, the risk goes beyond the cost of replacing a bad hire. A new employee may gain access to sensitive systems and information almost immediately. Oliinyk recommends checking identities before making an offer and granting access in stages. It’s a bit like handing the new starter one key at a time instead of the master set.

 

Filling Seats Isn’t The Same As Building Something

 

A startup rarely ever wins a salary contest against a big employer, so it needs a convincing pitch and a careful hiring process. That could mean using freelancers until demand grows, looking beyond the impressive CVs or checking identities before handing over access.

Tessman highlights adaptability and the ability to work when the path is not straightforward. Kolev says strong candidates need to believe they will have “a meaningful influence on what the company becomes”.

A startup needs people who can help build the business, but that doesn’t mean filling every gap as quickly as possible. Sometimes the better decision is to leave a seat empty until the right person comes along.

 

Our Experts:

 

• Adam Bowles: CEO at ACT360
• Jess Munday: Co-founder and People & Culture Manager at Custom Neon
• Roman Oliinyk: Founder and CEO of PayCore Media
• Brooke Tessman: Startup Adviser,University of California
• Heather Krueger: Chief People Officer at Engine
• Max Elk: Founder of Status MGMT
• Boris Kolev: Serial Entrepreneur and Startup Investor
• Matt Schreier: Founder and CEO of Kuvoo

 

Adam Bowles, CEO at ACT360

 

 

“The challenge is finding experienced people who will choose an unproven company over an established one. The larger companies can offer higher salaries, benefits and job security that a startup can’t usually match. So, the startup has to compete on culture (young, dynamic), on the possibility of ownership, and on the challenge to build something, to be involved in more interesting work initially, work that might only come after a time in a corporation.”

“Getting things wrong slows growth. If a key role remains unfilled, the founder often absorbs the work, and usually it’s work they should be delegating. A bad hire is even worse though, in a small team, one wrong fit slows everyone down. The stakes are high in startup recruitment.”

“I think it helps to be transparent and be honest about these trade-offs. Pragmatism is important – hire for attitude and a desire and ability to learn when experienced hires are unavailable. Using consultants or freelance outside specialists, such as IT or marketing, for tasks that don’t need a full-time employee yet, is also a good idea.”

 

Jess Munday, Co-founder, People & Culture Manager at Custom Neon

 

 

“The hardest hiring problem for a start-up is budget. In our early days at Custom Neon we just couldn’t match the salaries bigger employers offer, so we built with freelancers and only committed to permanent roles once demand was proven. I’d watched my husband’s online business grow more than 10 000% in two years, then hire reactively to keep up, and operations buckled. Rushed hiring can stall growth as badly as having no one at all.”

“What a small business can offer is the chance to leave a real mark. Our people get genuine autonomy over their work, with room to be creative. You’re too valuable to be just a number in a small operation and successes get noticed. Flexibility comes faster too, because a request about hours, doesn’t have to climb a huge hierarchy for approval. When you pitch it this way, the right people say yes.”

 

Roman Oliinyk, Founder and CEO of PayCore Media

 

 

“For a startup, “securing talent” should be read literally.

“Startups can’t match big employers on salary or job security, so experienced people choose certainty, and founders make up for it by hiring fast and remotely. That speed is exactly what fraudsters count on. Last year the US Justice Department said North Korean IT workers using stolen and fake identities had landed jobs at more than 100 American companies. At one Atlanta blockchain company, they stole about $900,000 in crypto.”

“In a ten-person team, every hire gets the keys to something important on day one. A bad hire costs a big company a quarter. It can cost a startup the company.”

“So compete where big firms can’t: real ownership and a direct say in decisions. And hire like a security team: check identity before the offer, not after the breach, and give access in stages.”

 

Brooke Tessman, Startup advisor, University of California

 

 

“Many founders begin their startups with people they already know, and for many of us, this makes sense – roommates, classmates, or close friends. While trust and friendship are important, they are not enough in the long run.”

“Competitive hiring with larger employers can also stall startup growth when it comes to salary, benefits and resources. However, the people you want on your team want to work with a startup and have the required skillset and mentality – adaptability and the ability to operate when the path isn’t straight forward and the desire to build and create.”

“Many founders instinctively hire quickly. One poor hire can damage morale, slow progress, and disrupt team dynamics. Instead of rushing, founders should look for people who show: technical or professional ability, willingness to learn, positive attitude, and ethical behavior. In early-stage startups, skills matter – but character matters more.”

 

Heather Krueger, Chief People Officer at Engine

 

 

“Hiring based on pedigree can be tempting, especially early on. When you’re just starting out, every hire has the potential to make or break you, which makes big-name resumes feel like a sure thing. But more often than not, these flashy logos don’t tell the whole story.”

“At Engine, we hire people from big companies all the time. The difference is that we focus less on where they were and more on what they did while they were there. For example, did they join after a big break or did they build through hard times? These are two very different hires.”

“The bigger risk isn’t losing candidates to established employers, it’s landing someone great who doesn’t have the appetite to build again. This is a risk that can cost startups months.”

“At the end of the day, logos are context, but it’s the people you hire.”

 

Max Elk, Founder at Status MGMT

 

“Startups lose the hiring battle when they compete with big companies on the big companies’ terms: salary, perks, brand name. We stopped competing on those entirely. Status MGMT scaled to 37 managers in eight months with a commission-only model, which flips the risk. Instead of betting big on a few expensive hires, we recruit widely, onboard in days rather than weeks, and let performance do the filtering.”

“Around a third wash out, and that’s fine, because the people who stay are proven earners, not good interviewers.”

The real challenge for founders isn’t a talent shortage. It’s that traditional hiring is slow and front-loads all the cost before you know whether someone can actually do the job. Startups win by restructuring the offer so the business only pays for results.”

 

Boris Kolev, Serial Entrepreneur & Startup Investor

 

 

“One of the biggest recruitment challenges for startups is not simply competing on salary – it is competing on perceived security. Experienced professionals are often being asked to leave established companies, predictable career paths and well-defined roles for an environment where the company, the role and even the business model may still be evolving.”

“For a startup, however, hiring the wrong person can be far more damaging than it is for a large organisation. Small teams create enormous leverage, which means that one exceptional hire can accelerate the company significantly, while a poor hire can slow product development, consume management time and delay growth.”

“Startups therefore need to compete differently: through ownership, autonomy, speed of decision-making and a clear mission. The strongest candidates are rarely attracted by a job description alone – they need to believe they will have a meaningful influence on what the company becomes.”

 

Matt Schreier, Founder & CEO of Kuvoo

 

 

“One of the biggest hiring challenges for startups is finding people who have the right experience but are also comfortable working without established processes or a large support team. Bigger companies can offer higher salaries, better benefits, and more predictable career paths, which makes it harder for smaller businesses to compete.”

“From my experience in operations, construction, and building Kuvoo, I’ve learned that hiring isn’t just about finding someone with the right technical skills. You also need people who can take responsibility, communicate clearly, and solve problems without waiting for someone to tell them what to do.”

“When you’re building a startup, every person has a direct impact on how quickly the business moves forward. Hiring the wrong person can slow down product development, create communication problems, and take time away from growing the business.”