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.

2 comments

  1. Jason, you are so wise!

  2. F.C.H

    Jason,

    I utterly disagree with you a 100% on bullet item 1 and 2, they are “cookie cutter” unfounded and bland explications.

    For example, I founded a division based on technology developed from company a., in conjunction with company b, who spearheaded a large portion of the development. Company a. would go on to inadvertently take market share from company b., who at that point ceased to cooperate with company a: the companies were now competitors. What did I do, after being handpicked by the president of company a., since I knew the technology from company b.? I further developed this technology and further expanded the company a.’s service offerings. I pursued this opportunity based on the pursuit of technology and nothing else (said technology broke world records): not because I was fired, or under-performed. That said, technology at its purest form does not care for perception. Thus, to not go to work for a competitor because of how this is perceived, as you mentioned,demonstrates insecurity and a lack of conviction for the betterment of technology.

    And what was my reward for working for a competitor? I advanced my career by 10 years, and my decision has led to great loyalty and mutual respect between my employer and I, and competitors as well,for going on a limb for his company. My employers reward? Operating in niche markets, on projects with high remuneration.

    Lastly, I made it a point to not violate any confidentiality or non-disclosure agreements. That said, I strongly ask that you reconsider your stance.

    Note: I can submit to you, via email, an interview that highlights the aforementioned, by way of a peer reviewed Journal.

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