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1 Trait the Most Successful Startups Have in Common–It’s Got Nothing to Do With Funding

If you don’t hire your first staffer early in your business life cycle, you might not ever hire.

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BY Kris Frieswick - 08 Nov 2017

PHOTO CREDIT: Getty Images

Recent research shows if you don't hire an employee early in your startup's lifespan, you probably never will. Among startups that launch with no employees, "the bulk of hiring occurs in the first few years of existence," says researcher Robert W. Fairlie of the University of California, Santa Cruz. "After a few years, the hiring rate of these companies drops off very fast." Fairlie and Javier Miranda of the U.S. Census Bureau analyzed 2,460 startups in the Kauffman Firm Survey that launched without employees. (The survey, which followed the same batch of companies over seven years, didn't include company types that were likely never to hire, such as independent consultants.) According to these researchers, by three years after startup, 54 percent of firms had hired at least one employee; four years later, that had increased only slightly, to 59 percent. The chart below shows how those hiring trends break down by industry. Increasing percentages after year one are skewed as the pool of surviving companies shrinks and is increasingly dominated by companies that hired at least one person, an effect that becomes more pronounced after year two.

The hiring gender gap:

Female-owned firms in the survey are 10 percent less likely to hire their first employee, even after seven years, than male-led firms, according to Fairlie and Miranda.

Money matters:

Researchers found that after adjusting for other variables, assets (not including IP) increased the chances a firm would hire more than revenue.

Job creators:

Over 70 percent of Asian American-owned firms had hired at least one employee by the end of year seven, the highest rate of any ethnic category studied.

If you own a:

Copyright, you are 5 percent more likely to hire your first employee in your first seven years than a company that doesn't own this IP.
Patent, you are 9 percent more likely to hire your first employee in your first seven years than a company that doesn't own this IP.
Trademark, you are 13 percent more likely to hire your first employee in your first seven years than a company that doesn't own this IP.