Why Hiring From Your Direct Competitors Usually Doesn’t Work Out

Screen Shot 2013-04-21 at 7.46.40 PMThe time will come when you are first tempted to hire someone from your competitor.  They must know so many things we don’t.  Have so many skills.  It’s pretty tempting.  People will tell you about the risks in litigation, trade secrets, etc.  I don’t think any of those are necessarily a big deal or a showstopper if you do it right — and if the ROI is there.  But let me tell you – it usually isn’t.

Hiring from your Competitor.  It may sound great.  But it’s usually not really worth it.  At least not from one direct competitor SaaS start-up to another.

Why?

1.  First, they probably aren’t that good.  Why leave one start-up and go to a competitive start-up?  Because you got fired, or underperformed, at the first company.  It’s the only logical reason.

2.  Second, they aren’t loyal.  Something happened.  Why weren’t they loyal to your competitor?  Did they really treat him / her so badly?  I’m not sure.  They won’t be loyal to you either.  The great ones from your competitor — they won’t join you, if for no other reason, that they’ll know how this looks and will be perceived.

3.  Most importantly, you will overvalue their domain expertise and knowledge, and gloss over their lack of other key skills.  You can’t have it all in an employee.  If you are post-Traction, the easiest thing to give on is domain expertise.  You can train someone in that, if you have it.  You can’t train someone to be a rockstar engineer, a great product manager, an innate sales wizard, etc.  You’ll overvalue their seemingly “perfect” domain expertise and underweight what it really takes to be a great employee.

It really doesn’t work out the way you’d hoped.  Interview them, learn from them … but generally, stop there.  The one exception, the big one, is when a competitor goes under.  Then, sure, hire all the great ones there.

Published on April 25, 2013

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