Justin Yoshimura of 500friends: 3 Secrets to Hiring Top Talent

500friends founder Justin Yoshimura dropped out of high school at 16 to start his first business. The secret to his success? Knowing how to hire top talent.
March 15, 2013

At age 24, Justin Yoshimura has already racked up plenty of boast-worthy accomplishments: He’s a serial entrepreneur who dropped out of high school to start his first company at age 16, after persuading his friends to invest their bar mitzvah money. He sold CellsWholesale.com, which he describes as an “eBay for cell phones,” to private equity investors three years ago, when it had grown to more than $9 million in revenue. Yoshimura's latest startup is 500friends, which he started in 2009 to help retailers incentivize customers to write reviews, post pictures on Instagram or download a mobile app to earn loyalty points.

Yoshimura is pretty clear on the secret of his success. Sure, he works hard and has a keen eye for market opportunities, but what he’s most proud of is his ability to hire and retain top talent. "Most people who work for me are much smarter than I am,” he says. The key to success? “I hire the best people I can and trust them to do their jobs.”

As a result of Yoshimura's hiring prowess, 500friends has raised more than $10 million in venture capital, posted revenues of $2.8 million and projects $6 million this year, all with a team of only 22 employees. Its growing stable of customers includes Hotels.com, ShoeBuy.com, L’Oreal and American Greetings.

Here are Yoshimura's three secrets to hiring well:

Be self aware. “I’m good at building products and building a team, but I’m not a fabulous writer or a great engineer," Yoshimura says. "And I don’t have any insecurities about that.” He persuaded his co-founder, Hong Hu, who he calls “the best engineer that I’ve ever met,” to drop out of a UC Berkeley masters program to join him at 500friends. Next came a CTO from Digitas, then a head of sales from Webloyalty, all filling needs Yoshimura knew he couldn't master by himself. 

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Value trust above all else. Because Yoshimura gives his employees a lot of autonomy, trust is key. “We will actually pay people to do a test project for us,” he says. He looks for signs that candidates won’t let their egos get in the way of doing a great job. “If you tell people the problem you’re trying to solve, the good people will ask a lot of thoughtful and diligent questions to really understand the business, and what’s been working and not working. And that’s a good sign that they can be trusted.”

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Fire fast. “If someone tells you they’re not making hiring mistakes, then they’re probably letting B-players remain in their organization,” Yoshimura says. 500friends makes its share of hiring mistakes. Big company execs who don’t fit into a startup environment, folks with great resumes who can’t execute quickly or need too much handholding—they sometimes land at 500friends but they never last very long. “We typically rectify our hiring mistakes within 60 days,” Yoshimura says. Particularly at a startup, getting a sub-par employee out the door quickly is important, since every team member heavily affects company culture and performance.

Ultimately, says Yoshimura, every time the company makes a great hire, it exponentially increases its ability to retain and hire more great employees. A-players want to work with other A-players, and at 500friends, those are the only kinds of employees who will keep the company on the kind of growth trajectory that will satisfy its founders and investors.

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