How A Single Bad Hire Took Down A Startup

The impact that a single bad senior leadership hire can have on an org is staggering.

I was chatting with a friend I hadn’t seen in several years this weekend who, when we’d last spoken, was working at a well funded slow growth startup that he loved. (I’m writing this with his permission, on the condition that no names are mentioned.)

Their company began as a small team that worked together as a unit to accomplish goals. Everyone did everything (which is common for startups). They brought in new senior leaders as they grew, all with the same team minded values. People were encouraged to help their teammates succeed and they were celebrated when that help accomplished work that benefited the org. It made for an exceptional work culture. Slowly they began hiring specialists so things got less crazy and people were only doing one job instead of all of them, but the same collaborative culture remained intact across the organization.

Since this mentality was adopted from the C-Suite to senior leadership and pushed down through the org, both the bottom line and the company culture thrived on this model.

My friend said that everything changed when their VP of Product retired and had to be replaced.

He said that the replacement they brought in was relatively well known, but he came from a large company background where individual “rockstar” style hires were celebrated.

People who had been working cross functionally and supporting projects instead of running their own programs were devalued and considered unnecessary.

He watched friends who had been incredibly passionate about the company being let go, or quitting in droves. Their team culture of support and productivity was replaced with a culture of fear. Panic set in and there was an immediate power grab. Team members were worried that if a single project didn’t excel they’d be let go (because many had been), so finger pointing and back stabbing and the blame game took over the previously supportive, team success based work environment.

The new VP hired an army of employees just like him, which further perpetuated the issue—those folks hired people just like them, and that single bad hire spawned a web of toxicity that started choking out the entire department.

As a result, cross departmental relationships began to sour as well. The members of the team were so stressed and feared for their jobs so much that they began snapping at their peers in other departments, which of course caused issues with collaboration. Productivity across the org started to grind to a halt.

People who quit didn’t want to burn bridges or destroy future job opportunities, so in exit interviews they just said they were leaving for pay increases or better opportunities for career trajectory. And I get that. No one wants to burn a bridge on the way out the door, especially people who are in the early or mid stages of their careers.

As a result, the toxicity continued to spread until a group of people who were well established in their careers started speaking up on their way out in exit interviews. The VP was identified as the original source of the culture disintegration and was let go. Unfortunately, his hiring spree meant that he had a team of like minded minions spread throughout the org, and the reign of terror continued.

Eventually my friend had enough and he quit, he just couldn’t handle it anymore. The startup has since gone under.

I wasn’t aware until recently that VC’s keep an eye on social media and industry sentiment when they’re making decisions about funding. Negative company culture can have a very direct impact on your bottom line and future funding opportunities as a startup.

Were there other problems beyond the terrible VP that contributed to the company’s untimely demise? Of course, there were a combination of factors. But the culture crash and decline into a toxic environment set the stage for the havoc that followed.

Protect your team culture at all costs. Even if it means passing on that big name leader that comes knocking at your door.

When it comes to startups, strong leadership, sound financial planning, and positive company culture create a trifecta that sets the course for long term success.

If you’re missing one of the three, you’re in trouble—course correct.