Key startup skill: Check references WELL

Hiring great people is one of the most difficult challenges for any startup. Especially if your venture is small, you need people who will have a big impact and will get along with the team. If you hire someone very capable who is terrible to work with, your startup will cease to be fun.  Your startup will not be successful if you hate coming to work.  If you hire someone who is great to work with but doesn’t contribute, you’ll be wasting a valuable spot on your team.

It’s difficult to really understand what it will be like to work with someone just from an interview process. Checking references is an essential activity to supplement interviews when building a team. Many entrepreneurs don’t do it at all, and many more don’t do it effectively. There is one key rule for checking references that most founders ignore:

Check at least three references that the candidate did not give you

I cannot stress this enough.  Candidates tend to choose references who will say the best things about them. Almost everyone can find three people who like them.  If they can’t, that’s a big red flag.  If they can, that’s not nearly enough to validate that they are a good candidate.  The primary purpose of the references a candidate gives you is to find other people who can shed light on the candidate. Therefore the most important question you can ask of any reference a candidate gives you is:

Who else do you recommend I speak with about this candidate?

It’s better to get permission from a candidate before you start asking around about them.  Irv Grousbeck, a professor in the Stanford MBA program, once recommended in a management class to tell candidates that you need to ask around to determine if there is a good fit, and they are welcome to dig around on you too.  Alternatively you can ask candidates if there is anyone they prefer you not speak with (could be people at their current job that they don’t want to know they’re leaving).

Here are some other rules for checking references well:

  • Check references on everyone you work with.  Everyone.
  • Don’t rationalize that you don’t have time to check references because you have more important things to do. Nothing can save you more time than avoiding hiring a bad candidate (or worse, bringing him/her on as a founder).
  • Use references to confirm positive impressions from an interview process, not to help tip the balance on someone you felt lukewarm about
  • Don’t only speak with direct managers – reach out to subordinates and people at the same level as the candidate
  • Recent references who worked with the candidate for a long period of time tend to be most valuable
  • Don’t avoid contacting a reference because you think he/she might be too prominent. If the candidate is great, anyone will be willing to discuss them
  • Use reference checking as a networking opportunity. I’ve worked with several people who were initially references for another candidate.

Hope this helps!  And remember the most important rule:

Check at least three references that the candidate did not give you

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