Decisions

When to hire your first employee as a founder

The signs it's time to make your first hire, how to check you can afford it, contractor vs employee, and which role founders should hire first.

3 min readPublished By Benjamin Morin

Your first hire is usually the biggest single cost decision you'll make. It can double your burn overnight. Hire too early and you shorten your runway without moving the business. Hire too late and you become the bottleneck that stops it growing.

Signs it's time to hire

  • You're turning down revenue because you can't keep up: leads not followed up, customers waiting, features you've promised but can't build.
  • The same task eats a big part of every week, and it's work someone else could do well with some training.
  • You've done the job yourself long enough to describe it. You know what good looks like, how long it takes, and how to tell if someone's doing it well.
  • Your time is worth more elsewhere. If an hour of your time on sales brings in more than an hour of a hire costs, freeing that hour pays for itself.

Signs it's too early

  • You want to hire for something you've never done and can't explain.
  • The hire is meant to "figure out" growth, rather than do more of something that already works.
  • Revenue isn't growing, and you're hoping a hire will change that.
  • The salary would cut your runway below a level you're comfortable with.

Check you can afford it

A hire costs more than their salary. In many countries, total cost with payroll taxes, benefits, equipment and software is roughly 1.2 to 1.4 times salary, sometimes more. Use the full number.

Then recalculate runway and check whether you're still default alive:

A useful rule: after the hire, you should still have enough runway to reach your next milestone if the hire doesn't increase revenue at all for six months. New people take time to become productive, and planning as if they won't is the honest assumption. See how much runway do you need.

Contractor or employee?

Contractor or freelancerEmployee
CommitmentLow, easy to stopHigh, harder to reverse
CostHigher hourly rate, no extrasLower hourly rate, plus taxes and benefits
Best forClear, scoped work: design, a specific feature, bookkeepingOngoing core work that needs context and judgment
RiskLess loyalty, may leave mid-projectWrong hire is costly and slow to fix

Many founders hire their first person as a contractor for a few months, then convert them to an employee once both sides know it works. Check local rules on classification: if someone works like an employee, many countries treat them as one, whatever the contract says.

What role to hire first

Hire for the thing that most limits growth right now, not the thing you dislike most:

  • If customers want more than you can build: an engineer.
  • If the product works but you can't sell it fast enough: someone in sales or customer success, often someone who can do both.
  • If you drown in support and operations: an operations or support generalist.

Early hires should be generalists who are comfortable with unclear roles. Specialists are better later, when there's a well-defined job to fill.

Make the decision deliberately

Write down why you're hiring, what you expect the hire to change in six months, and what you'll do if it doesn't. Then check back at six months. Founders rarely do this, and it's the only way to learn whether the hire, and your hiring judgment, worked.

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