When Good Isn't Good Enough

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Once you find great people, you need to work at keeping them. This, too, is an art.

The thing about great people is that they only want to work with other great people. This leaves you in something of a bind once you recruit a few. From then on, you can only recruit other great people or risk losing the ones you have.

No Substitute for Face-to-Face Interactions

Another tip: Great people feed off of each other in person. You read about companies sending operations offshore and doing development from virtual offices. But a distributed workforce is really hard to manage and real innovation rarely happens in distributed environments. There are certainly exceptions, especially with big open-source projects like Linux, hadoop, and Firefox, which were developed by teams of people working out of various locations. But more traditionally, it is very hard to find a highly innovative team based largely on outsourcing and telecommuting.

Google's (GOOG) early employees all worked in its early Palo Alto (Calif.) office. Facebook's people all work together now in Palo Alto (Facebook even provides a financial incentive for employees to live in its home city). Rapleaf's employees are all together in San Francisco.

Big innovation often comes from massive collaboration and rapid iteration, and that can much more easily happen when people work in close quarters and can see each other. (That means no opaque walls or cubicles in the development center, either).

Creativity Isn't Always Required

Of course, not everyone can aim for great with every hire. If you are Google or Microsoft today, you can get away with mainly nabbing good people. The fact is, they hire so many people, often for jobs that require following directions or coding to spec, that most new hires need only be good enough anyway. Creativity isn't always required in a large company. But back when Google or Microsoft had fewer than 50 people, they couldn't afford to hire anyone but those who were great.

So if you're at a startup whose goal is becoming the next Google, then you'll have to attract, hire, and retain great people.

Hoffman is CEO of Rapleaf.