Always Hire an 11

In 1982, I co-founded a software company called Persoft, Inc. I had been a software developer for many years at that point (since 1964) and had my own consulting business when we started the company. Persoft was a rapidly growing, very successful company during the 80s. We were continuously ranked as one of the top software companies in the US based on revenues and in 1988 we were ranked number 97 on the Inc. 500 list of fastest growing companies in the US. Our entire startup capital was $2000 cash each plus the donation of an IBM PC XT to the business, although in 1986 we raised venture capital from Frontenac Company in Chicago to launch a new software product.

Like many entrepreneurs starting a software company back then, I had no idea how to run and grow a business. (Ironically, I had never planned on running Persoft over the long term, but that’s another story.) I had never heard of a business plan but had to figure out how to write one when we decided to raise venture capital.

Persoft was a very successful business but also a very fun place to work. I am still in regular touch with some of my former employees and without exception they indicate that Persoft was the best place they worked at during their entire careers.

I attribute the success of Persoft to two key factors:

• A hiring philosophy I call “Always Hire an 11”
• Chocolate

Here is a link to the article on chocolate: Synnovation.com/chocolate.

When you first start a software company, you do everything yourself: write the program, write the user manual, answer the phone and take orders, make the product, ship the product, do tech support, etc. If the product sells and things get busy, you start hiring people to take over activities like answering the phone, making and shipping the product, doing tech support, and so forth, so you just stick to the things that you do best. In my case that included programming and technical writing.

Eventually, however, you reach the point where you have to let other people take over some of these key activities since you just can’t do it all yourself. Here is where many, if not most entrepreneurs, make their first, often fatal mistake. They start hiring 9s.

Let me explain what I mean by this. Suppose you are (or at least think you are) a really good (insert activity here) and this is a major reason for your company’s success so far. But now you finally have to let somebody else take over this very important task. For the sake of discussion, let’s assume that on a 10-point scale for this activity, you consider yourself a 10. What a lot of entrepreneurs do is hire a really good 9 to take over the task. That is, someone who is very skilled at the task, but not quite good enough to “show up” the boss.

But there is a fundamental problem with this approach. While you know this person is very good, you always know that you are a little bit better and have a very strong desire/tendency to closely oversee them to make sure that there is no loss in quality compared to what you could do yourself. So there is a constant mental drain as you try to stay closely involved overseeing all of these activities that you were forced to give up because of lack of time. And, over the long run, if the company continues to grow, the 9s that you hired start to hire their replacements and they hire an 8 for the same reason. This often leads to a company that loses what made it successful in the first place and helps to explain why 90% of entrepreneurs fail.

For me, the first task that I had to give up that I considered myself very skilled at was technical writing. And that was when I realized that what I needed to do was to not hire a 9 but rather hire an 11! That is, someone who was better than me at technical writing. This ultimately meant that I didn’t have to spend any of my very limited time worrying about whether the quality would drop if I wasn’t personally doing it.

My first 11 was a very skilled technical writer named Becky Holmes. Once I saw that technical writing was now in better hands than mine, I could focus more on other activities, for example, programming, that I was still mostly doing myself back in those days. Eventually I had to give up almost all my original activities, including programming, and followed the same philosophy. And, as we grew, the philosophy continued – the 11s eventually hired 12s!