Early Joiners and Startup Performance

Abstract

We show that early joiners-non-founder employees in the first year-of a startup play a critical role in explaining firm performance.We use administrative employer-employee matched data on all US startups and utilize the premature death of workers as a natural experiment exogenously separating talent from young firms.We find that losing an early joiner has a large negative effect on firm size that persists for at least ten years.When compared to that of a founder, losing an early joiner has a smaller effect on firm death but intensive margin effects on firm size are similar in magnitude.In contrast, losing a later joiner yields only a small and temporary decline in firm performance.We provide evidence that is consistent with the idea that organizational capital, an important driver of startup success, is embodied in early joiners.

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