Problematic employees: When to hold on and when to fire them

In high-growth startups, learning to assess talent is a critical skill.

A few years into the building of blinkx, a very senior person on my team burned out right before my eyes. This person, let’s call him Dave, was (and is) a legendary contributor and one of our team’s best secret weapons. He led the charge on key products, including two skunk works projects entirely of his own creation that ended up driving tens of millions of dollars of revenue for the company. One night after work, he sent me an email: “Urgent: can we meet early tomorrow morning? Not in the office — the Ferry Building at 8:30?”

As soon as I saw him, disheveled and looking like he hadn’t seen sunlight in weeks, I knew something was wrong. He didn’t waste time. “I’ve got to go,” he said. “I can’t come in today or who knows how long.” Just like that, with zero notice, he quit. I told him he should do what was best for his health and his family, but internally I was reeling in shock. On the walk back to the office, all I could think about was how to pick up the pieces. How would I break the news to everyone else? What would I say was his reason for leaving? How long would he be gone? Who would fill in for him until we brought in a replacement? What if he never came back?

It may be trite, but it is also true that the most important resource for a startup is its people. Moments of hiring and firing can be crucial inflection points in a company’s life. Founding and building blinkx from zero $100 million in revenue involved lots of hiring and team-building, but I quickly learned that knowing when to let people go is an equally critical skill. In fact, one day, you may even have to fire yourself.

There are as many situations as there are individuals, but there are five personas you should learn to recognize and manage: The Burnout; The Amazing Starter; The Toxic Throwback; The Unfortunate Layoff, and The Talented Jerk Everyone Tells You to Fire.

The Burnout

Characteristics: One of the most committed members of your team. He comes up with outrageous, excellent ideas and has the commitment and energy to drive them through to completion. This intensity comes at a cost: an inevitable and massive blow out.

How to spot: Dark circles under the eyes. Wears the same clothes two days in a row. Redbull-and-pizza diet. Occasional emotional outburst, especially if his commitment is in questioned.

How to handle: Don’t let it get so bad that he quits. Force him to take some time off, and find ways to mitigate his work and stress levels.

Burnouts are often your most productive employees. They are drawn to the excitement of launching new businesses, and work is like a drug to them. You need to be careful they don’t OD.

After “Dave” burned out at the Ferry Building, I broke the news to the team and divided his responsibilities among a few of the most capable people. The group rallied, and we made it through the next few months without Dave.

Meanwhile, I kept in touch with Dave. We treated his departure as a no-strings-attached, forced, paid sabbatical. Eventually we worked out a plan so that he could return to work. When Dave came back, we analyzed what went wrong and noticed he had two key issues: He couldn’t say no to new projects, and he always went deep in the weeds on every detail. We worked together to prevent another meltdown. Now Dave has a strict limit on how many things he can work on at once. He can obsess as much as necessary without pushing himself too far. There are ups and downs, but he has been a star player ever since.

The Amazing Starter

Characteristics: Team player. Passionate. Gifted individual contributor but not yet ready to lead large teams.

How to spot: Projects she’s leading are falling behind schedule, and her strategy is unclear. Her team complains of not having enough guidance, and she always looks on edge.

How to handle: Consider pulling her from management and offer her a senior-level individual contributor title.

The Amazing Starter built a business from zero to $10 million in revenue and (rightly) sees that as success. However, you are aiming the business for 100X that size, and you need to get there fast. Often The Starter knows there is a problem, but she is a go-getter and doesn’t want to give up. Instead, she will ask for just a little more time. It is possible that in five-to-10 years she will be ready for the challenge, but you don’t have that luxury. When you lead a startup, you’re building a rocket ship while it is in flight. You don’t have time. You need to discard incrementalism in favor of big, bold leaps in scale. Bring in a more natural leader, and find a new role for The Starter where her talents can shine and she can learn from a mentor. There is a risk The Starter will leave for another company, but that is a risk you have to take.

At blinkx we had a superstar sales guy who closed deals others couldn’t even start. He eventually became our head of sales. After a year or so, we noticed our numbers were growing but not as quickly as we needed them to grow. We dug into the numbers and saw that our conversion rate was strong but we didn’t have enough proposals going out. We needed the sales team to take more meetings, make more calls, and increase activity in every direction. We set team-wide goals and made it the sales manager’s responsibility to ensure the team hit them. After two quarters, it was clear he wasn’t going to succeed.

We told the Starter we valued him as a sales superstar and asked him to stay as a team-wide mentor who would help close big deals. He jumped at the opportunity. It allowed him to focus on what he knew best.

The Unfortunate Layoff

Characteristics: Great worker building a soon-to-die product.

How to spot: You keep forgetting he’s there.

How to handle: Let him down easy and offer a generous exit package.

When you’re running a startup, you need to look to the future and take big bets. Sometimes that means choosing to kill a product or service that is doing just fine in order to put your resources toward something that could accelerate the company’s growth. The longer you keep this redundant group in play, the longer it will take you to build the big bet, and the greater the chances are that your competition will get there first. The best thing you can do for those employees is let them know it’s not personal and has nothing to do with them but that the reality of the market has changed. Offer them a generous exit package and assistance with finding a new job. Remember to treat these people with dignity and grace — they could’ve been future heroes of the company and the reason they are not is rarely their fault.

The Toxic Throwback

Characteristics: Steadfast believer in your business as it was three years or six months ago. Fears change.

How to spot: Talks about the past in romantic terms. Spends a lot of time gossiping. Can be overheard disparaging the new leadership and vision.

How to handle: Fire him. Fast.

Startups change at lightning speeds. In the beginning you hire people because they are gifted believers. They tie themselves to your corporate mission and give it 100 percent of their energy, intellect, and creativity. At that stage you hire people who are attracted to the risk and audacity of a startup. Those people are generally open to juggling 10 different responsibilities, and they create results out of thin air.

The Toxic Throwback is a tragic character. He is someone you brought on in the early days of the company and was once a star employee. However his skills are becoming less relevant, and he can’t let go of the past. He believes so strongly in the mission he is pursuing that he can’t imagine or buy into a new vision. A lot has been written in the last year or two about the value of the pivot, but little of it focuses on what I believe to be one of the toughest things about it: getting the team psychology around it to be positive.

The first thing you want to do is help him understand the reasons behind the new move. If he cannot come along quickly and with enthusiasm, you need to get rid of him before he has enough time to poison other members of your team.

People are often aware of the Toxic Throwback, but his past brilliance and high standing may make you nervous about firing him. Do not fall into this trap. If you’ve noticed his toxicity, he is likely already poisoning others. Once you let him go, people will likely come up to you and thank you for doing it. I’ve had to fire a few Toxic Throwbacks and, as tough as it always was to make the decision, I have never, ever regretted doing it.

The Talented Jerk Everyone Tells You to Fire

Characteristics: Makes magic on a regular basis. Entitled and demanding.

How to spot: Multiple employees have come to you in tears and/or shouting expletives because of something The Jerk said or did. Likewise, The Jerk spends a lot of time complaining about everyone else.

How to handle: Do not fire her. Find a way to make it work.

Cliff Oxford, a contributor to The New York Times’ “You’re the Boss” column, recently wrote a post about “The Brilliant Jerk.” In it, he said “coddling the Brilliant Jerk … consoling him, giving him special assignments — does not work. It just kicks the can down the road.” I couldn’t disagree more.

Your instincts will shout at you to let go of The Jerk. So will most of your colleagues. Managers at large companies often suggest firing The Jerk, but they have the luxury of slow and steady growth. In contrast, startups appear out of thin air and require massive speed. Steve Jobs said software developers could have a dynamic range of 100:1, whereby an outstanding developer might be 100 times better than a poor one. If you have one of those 100x performers and she happens to have a few personality issues, learn to live with them.

If you fire The Jerk, you may spend years trying to find someone as talented or productive. Hiring a hundred others won’t work. By the time you find her replacement, your competition will have released three new products that are better than yours.

Blinkx had its share of Talented Jerks. Some of the most awkward conversations I’ve had involved counseling people who have been hurt by The Jerk. While the bad behavior can exhibit itself in a plethora of symptoms, the common thread I find with Talented Jerks is that there tends to be a self-esteem issue at the heart of things.

The key to managing the Jerk is identifying the demon. Whether it’s the hyper-successful sibling, the demanding parents who wanted them to follow a traditional career, or a history of being bullied as a geeky kid, it often translates into a desperate need to be respected. You’re never going to remove the core self-esteem problem, but you can help by recognizing her hard work and good results. Hold a launch party so the Jerk can invite her family and show off what a strong performer she is; when a product is launched, get a quote from the Jerk into the press and give her a framed copy to send to her parents. Continually link good performance to external factors. Over time, as the Jerk becomes happier about progress, she can become an inspiring leader — fearless, leading from the front and ferociously protective of her team and products. I’d take genius with edge over pleasant mediocrity every time.

Suranga Chandratillake is Partner at Balderton Capital. He previously founded internet media platform blinkx.