At Gem, we did something pretty different to hire our founding engineering team. We used contract → hire to recruit 9 out of 10 of our first engineers.

Using contract → hire to evaluate candidates

Essentially, candidates would come work with us for anywhere from a few days to a few weeks as “contractors” to see what it would be like to work together. After all, there’s no better way to see what it’s like to work together than to collaborate on a real project.

Tactically, here’s what that meant:

Contract → hire got us really great signal on a ton of aspects, including coding velocity, code quality, ability to learn quickly, product intuition, collaboration, and receptiveness to feedback. It also helped us avoid at least three costly mis-hires that would have been bad culture fits, signals that would have been very difficult to uncover during a normal interview loop.

Selling the candidate

But the biggest reason why we did contract → hire was that it was a great way to “sell” the candidate. Joining a startup is such a risky move and startups can be higher-variance. They’re less of a known quantity compared to larger companies (like Facebook and Google) where you generally know what you’re getting into. From the candidate’s perspective, this was a great way to learn about Gem and “interview” us. And of course, we incorporated these points into our “pitch” to candidates when asking if they’d be up for it:

This approach has worked phenomenally well. When it came time to close the candidate, we had a very high offer accept rate (I’d guess 30-50% higher), because the candidate already knew what it was like to work with us. In fact, they felt like they were a part of the team.

Contract → hire is not for everyone

Note, this only worked because many of our founding engineers were former colleagues from Dropbox / Facebook / MIT, so we had pretty strong signal that they were good (either by working with them or by reputation). If you don’t have a strong network or you don’t have strong signal on a candidate, I wouldn’t recommend this approach, as contract → hire can be a big waste of time if the candidate isn’t a good fit.

I also wouldn’t recommend contract → hire for companies where it’s difficult to ramp someone up (e.g. hard tech). It’s important to pick projects that are well-scoped and off the critical path. If you’re struggling to think of projects like this, contract → hire may not be the right strategy for you.

Finally, it’s important to note that not every candidate is going to be up for contract → hire. Taking a few days to work with you is a lot to ask if they don’t know you very well or if they’re actively interviewing at a bunch of companies. If you’re going to ask a candidate to spend a substantial amount of time working with you, it’s important to pay them (more on this below). It can be a nominal amount, but it’s important to show that you value their time. And for those who aren’t up for contract → hire, make sure to have a plan B for interviews you can fall back on.

Still, many candidates were excited to try working at a startup, even those with full-time jobs or lots of interviews. For candidates with full-time jobs, some of them took a day off work or came in on a weekend (or two). We made sure to pick a weekend when our whole team could be there and gave our team a day or two off to make up for it.