Growing startups face the question of who to hire and how much to compensate the new hires. Simultaneously, prospective new hires ask which startup to join and how much their salary will be. We explore these questions using a novel method that tackles the mutual selection process. In the context of five technological manufacturing industries, we find that having industry experience within founding teams may not be necessary to attract new hires with high quality if the startup can signal its own quality through other means such as having a larger founding team. Our results indicate that startups prefer employees with industry experience for which startups offer a wage premium. Thus, employees seeking startup employment benefit from gaining industry experience prior to joining a startup.
Lean startup methodology has rapidly become one of the most common and trusted innovation and entrepreneurship methods by corporations, startup accelerators, and policymakers. Unfortunately, it has largely been portrayed as a one-size-fits-all solution—its key assumptions subject to little rigorous empirical testing, and the possibility of critical boundary conditions ignored. Our empirical testing supports the key assumptions of the method, but points to business education of team members as a critical boundary condition. Specifically, MBAs resist the use of the method despite being in a strong position to leverage it. Results from a post hoc analysis we conducted also suggest that more engagement with the method relates to higher performance of the firm in the 18-month period following the lean startup intervention.
We examine the effects of founderteams' firm- and industry prior work experience on startupgrowth in the context of high technology industries. Westudy these effects both on the early growth of startupsand on their growth, after accumulating experiential knowl-edge. Integrating the literatures on human capital, imprint-ing and competency traps, we develop a typology of fourcombinations of founder prior experience: founder samefirm and same industry experience, founder same industrybut other firm experience, founder same firm but other-industry experience, and founder other-industry and otherfirm experience. Using data from 153 Israeli high technol-ogy startups, we find significant variations in the effects ofthese combinations on startup growth, which also varybetween the early and later years of these startups.