--- title: "Hiring Mistakes in Nigerian Startups: Hiring Ahead of Growth" url: https://planetweb.ng/hiring-mistakes-in-nigerian-startups/ date: 2025-11-23T01:31:45+00:00 modified: 2026-08-29T01:36:01+00:00 lang: en_US --- # Hiring Mistakes in Nigerian Startups: Hiring Ahead of Growth ## Hiring Mistakes in Nigerian Startups: When Headcount Outpaces Revenue A startup can have a working product, growing revenue, and satisfied customers, and still die of a hiring problem. The hiring decisions that felt necessary at the last funding round often become impossible to sustain once the next round does not arrive. Revenue milestones should drive headcount, not the other way around. Vendease proved the point. Despite raising $30 million and growing revenue 600% in naira terms, aggressive hiring built a cost base the business could no longer support once the funding environment changed. Its restaurant customers needed the service, and the model worked. Two rounds of layoffs followed within five months, and by April 2025 a co-founder was recommending the company shut down entirely. This article is about the hiring decisions founders make before someone joins- who to bring on, when, and in what sequence- rather than interview technique or recruitment tactics. Those decisions, made early and often under pressure, are what separate startups that survive a funding downturn from ones that do not. This piece sits within the *[Why Startup Teams Fail in Nigeria](https://planetweb.ng/why-startup-teams-fail-in-nigeria/)* pillar, alongside the founder strain, talent loss, and leadership bottlenecks covered elsewhere in that series. ## The Scale of the Problem Vendease was not an isolated case. It reflected a much broader correction across the ecosystem. Nigeria recorded 2,421 tech layoffs across 2025, a 28% increase on the 1,887 roles cut the year before, according to [TechCabal Insights' State of Tech in Africa 2025 report](https://insights.techcabal.com/sotia-year-in-review-2025/). The pattern is consistent: startups hired aggressively between 2020 and 2022, assuming venture capital would keep flowing, and scaled teams for growth they had not yet proven. When the funding environment tightened, the companies that survived were often the ones that had not over-hired. Several companies that later failed were profitable in naira terms, growing in user numbers, and solving real problems, but drowning under salary costs they could no longer justify. *[Understanding why startups fail in Nigeria](https://planetweb.ng/why-startups-fail-in-nigeria/)* traces this same pattern well beyond hiring alone. ## The Overhiring Trap The typical sequence is familiar. A startup closes its Series A, investors are excited, and the first question everyone asks is when the team will scale. A founder who goes from 15 people to 50 in six months, hiring a CFO from a major fintech at $15,000 monthly and a Chief Growth Officer at ₦5 million, is building a cost structure that requires aggressive growth just to justify itself. The assumption that the next round will come creates salary expectations that are hard to meet now and harder still if growth slows. Vendease followed this pattern closely after its Series A closed in September 2022, scaling to more than 270 employees over the following two years. The senior hires made sense in theory: experienced operators who had scaled similar businesses before. What rarely gets discussed is that expensive talent from established companies often needs structure a startup does not yet have. They are used to clear processes and defined roles, and struggle when they arrive to find the company still figuring itself out. The first Vendease layoff cut 68 people in September 2024. Five months later, [120 more followed](https://techcabal.com/2025/02/19/vendease-second-layoffs/), by which point the CFO had reportedly left because the company could no longer afford the salary. A hire arriving from a larger, more structured company and struggling to adapt is more than a poor-fit problem. It is an early version of the same retention risk *[Startup Talent Retention in Nigeria](https://planetweb.ng/startup-talent-retention-in-nigeria/)* covers in more depth: someone who does not fit the environment they have joined rarely stays long enough to justify the cost of hiring them. Research from the Startup Genome Project, based on a 2011 study of more than 3,200 high-growth startups, found that [74% of high-growth startups fail from premature scaling](https://s3.amazonaws.com/startupcompass-public/StartupGenomeReport2_Why_Startups_Fail_v2.pdf). The finding is more than a decade old, but the underlying pattern, hiring ahead of proven revenue, has not gone out of date. ### Sizing the Team to Proven Revenue Headcount should track proven revenue thresholds, not a funding round's optimism. Proving the model works at a small scale, before scaling the team behind it, is what protects a startup from building a cost base its actual business cannot support. Senior talent from a tier-two company often costs far less than an equivalent hire from a tier-one name, while bringing comparably relevant experience and, often, more hunger. Designing the business for capital efficiency from day one, asking what it would take to reach profitability on current capital alone, forces different decisions about hiring speed and salary levels than assuming another round is coming. ## Culture Fit Disasters While Vendease was collapsing from overhiring, Bento Africa was imploding from a different failure: a governance and compliance gap that let one person's conduct go unchecked for too long. Bento raised $3.1 million and positioned itself as an HR-tech platform for payroll, tax compliance, and employee management across Africa. The company's final collapse in early 2025 is often remembered as a story about a toxic CEO, but the immediate cause was more serious: an investigation by Nigeria's Economic and Financial Crimes Commission (EFCC) and the Lagos Inland Revenue Service (LIRS) into allegations that Bento had failed to remit client payroll taxes and pension contributions, and had allegedly forged tax receipts to cover the gap. That investigation drove client departures throughout 2024, including Moniepoint, Paystack, and Kobo360, well before the company's final shutdown. CEO Ebun Okubanjo resigned in January 2025 amid the mounting scrutiny. This was not the company's first governance failure. In 2022, following reports of verbal abuse and an unpredictable, hostile workplace, Bento's board removed Okubanjo from all people-related decisions. Okubanjo was reinstated only after the co-founder who had taken over the role resigned for personal reasons that September. That episode was a real governance failure in its own right, distinct from the tax and pension matter that ended the company in 2025. By January 2025, the company's entire tech team had quit after a protest over unpaid salaries, and Bento temporarily shut down operations the following month. ### The Nigerian-Specific Version of This Trap Nigeria adds specific pressure to culture-fit failures. People arriving from banks or multinationals expect defined roles and established processes that most startups do not have yet. Family or community pressure to hire a connection- an uncle's friend's son who needs a job- creates a hire nobody can easily remove without personal fallout, and a team that resents the favouritism. Nigerian relational culture also makes firing feel like personal rejection rather than a business decision, which is part of why founders who sense a hire is wrong often wait months longer than they should before acting. ### Screening for Fit Before the Offer A trial project reveals more than an interview ever will: does the person communicate proactively, handle feedback well, and make progress with ambiguous instructions. A 90-day probation with clear milestones, reviewed regularly rather than sprung as a surprise at the end, makes both fit and underperformance visible early. Bento's failure also points to the opposite mistake. Overhiring gets most of the attention, but under-hiring a compliance or finance function can be just as fatal. The tax and pension controls that could have caught Bento's problem before it became a criminal investigation were not overhiring mistakes; they were a function nobody had prioritised hiring for. ## Hiring for Tomorrow's Scale Today A different mistake shows up in startups that hire for scale they have not yet proven. In January 2025, MAX laid off 150 employees while pushing into electric vehicles, having hired ahead of proving the model worked at scale in Nigeria's infrastructure conditions. Chowdeck cut 86 people, 68% of its contract staff, after what it described as operational improvements. Sabi laid off 50 people while narrowing its focus. All three had hired for volumes or scope the business had not yet earned. ### Hiring Specialists Before the Business Is Ready A related version of this mistake is hiring the right-sounding role at the wrong time: a Head of Marketing before product-market fit exists, an HR function for a ten-person team, a data science hire before there is enough customer acquisition data to justify one, or an expensive C-suite assembled because it looks like what a "real" company should have. Each of these roles may eventually be necessary. None of them are urgent before the business has proven it needs them. A founder should be one of the last things a hiring plan tries to replace: hiring should remove operational bottlenecks well before it attempts to replace the founder's own judgement, a distinction *[Startup Leadership in Nigeria](https://planetweb.ng/startup-leadership-in-nigeria/)* covers from the founder's side of the same problem. ### Hiring for Demand That Already Exists The more reliable rule is hiring only once existing customer volume has genuinely outgrown what the current team can handle, not in anticipation of volume that has not arrived yet. Contractors and freelancers absorb variable work without creating permanent overhead: a three-month contractor for a product launch converts to full-time only if the volume that justified them sustains itself. ## The Nigerian Hiring Traps Beyond the mistakes above, a few traps show up specifically because of how relationship-driven Nigeria's professional networks are. ### The Reference Checking Problem Nigeria's professional networks are small enough that most references are friends who will not give honest feedback. A candidate chooses references precisely because they will vouch for them, not because they worked closely enough to know how the person actually handles pressure or ambiguity. A trial project reveals far more than a reference call ever will: whether someone communicates proactively when something goes wrong, whether they ask clarifying questions or simply guess, and whether what they deliver is close to what was actually asked for. ### Overselling the Opportunity Desperation to fill a role leads some founders to exaggerate what is on offer: equity framed as worth millions, a funding round described as imminent, a title implying a division that does not yet exist. It rarely comes from dishonesty so much as a belief that once someone is committed, reality will feel less discouraging than it would have sounded upfront. It works the opposite way. The new hire arrives with expectations reality cannot meet, and typically leaves within three months once it becomes clear the round has not closed and the "division" is one person and an intern. ### Not Being Honest About Constraints The mirror image of overselling is hiding the chaos: not mentioning the power outages, the salary delay last quarter, or the fact that weekends are often working days. The instinct is understandable, since naming every constraint upfront can feel like talking a good candidate out of joining at all. A hire who joins expecting stability and finds none of it quits once reality sets in, and the company is back to square one having wasted the time spent hiring them. Naming the constraints honestly filters for people who can actually handle them, which is a far better outcome than a hire who leaves once the truth becomes obvious anyway. ## A Practical Framework for Hiring Well A few practices consistently separate startups that hire well from those that do not, drawn from reviewing failed Nigerian startups and talking to founders who survived. ### The Trial Project Paying someone a modest amount to complete a real one-to-two-week project reveals culture fit that interviews and references cannot. A good trial project resembles actual work rather than a hypothetical exercise: a real customer problem, a real piece of the product, something with a genuine deadline attached. The cost is small next to what a wrong full-time hire eventually costs, and it gives the candidate a fair look at the company too. Someone who quietly disappears halfway through the project, or delivers something far below what they claimed in the interview, has just saved everyone months of finding that out the expensive way. ### The 90-Day Milestone System Defining clear deliverables for day 30, 60, and 90 before someone starts, with weekly check-ins rather than a single end-of-probation surprise, means both sides know by day 90 whether the hire is working. A day-30 milestone might be understanding the core systems and shipping something small; day 60 might be owning a defined piece of the product independently; day 90 should look like genuine ownership rather than mere competence. It also makes an eventual exit easier to justify if it comes to that, since the standard was agreed in advance rather than invented after the fact. ### Firing Fast, With Dignity Acting within weeks of recognising a hire is not working, rather than months, protects the team and the person struggling in the role more than delay ever does. Waiting rarely changes the outcome; it usually just delays a decision everyone involved has already quietly made. Nigerian labour law requires a month's notice or pay in lieu, and a clear, kind, and firm exit conversation costs little next to the damage a prolonged bad fit does to morale. Dignity means being direct without pretending the decision was mutual, offering a genuine reference for what the person did well, and not dragging out a message that needs to land clearly. ### Hiring Beyond Lagos and Abuja Strong talent in Ibadan, Port Harcourt, Enugu, and other smaller cities is often available at a meaningful discount to Lagos rates, and tends to carry lower emigration risk. Many experienced professionals choose to remain in these cities because the lower cost of living offsets a lower nominal salary better than a Lagos or overseas move would. Distributed teams are now a normal way of working, not a handicap, with the tools to support them widely available. ### Building Equity Structures That Reward Staying Four-year vesting with a one-year cliff, with acceleration reserved for acquisition or IPO rather than resignation, rewards people for staying rather than for simply having joined early. Without this, an early hire who leaves after four months keeps the same equity as someone who stays for years, which is a structural unfairness the rest of the team eventually notices. Sharing regular updates on what a stake could realistically be worth builds a culture where equity feels real rather than abstract, since a number nobody explains tends to be treated as worthless long before it actually is. ### Don't Let Knowledge and Access Concentrate in One Hire Bento's final collapse happened partly because the finance and compliance function sat with too few people who understood it, and partly because when the tech team quit en masse, the company was left with no clear structure to fall back on. The same risk shows up on a smaller scale in any startup where one hire is the only person who understands a critical system, a client relationship, or a regulatory obligation. Documenting how critical functions work, rather than relying on the person doing them, is what makes a startup survivable when a hire does not work out or leaves suddenly. ## The Hiring Audit: Three Questions Worth asking monthly: - Would this person be hired again if the role were open today? - Is this role solving today's problem, or a problem the business only hopes to have? - Could every current salary be covered for eighteen months with no new funding? ## What Vendease Teaches Vendease raised $30 million and ran through two mass layoffs in five months because it hired as though the next round were guaranteed. The team that made sense in 2022 became unsustainable by 2024, once the naira devalued and the funding environment tightened. Startups rarely fail because they hired too slowly. They fail far more often because they hired for the company they hoped to become, rather than the one they had already built. If a business needs help building the documentation and systems that keep critical knowledge from sitting with just one hire, PlanetWeb's [IT Consulting](https://planetweb.ng/services/it-consulting-services/) team can help think it through, as part of our wider [IT support for Nigerian startups](https://planetweb.ng/about-us/industries-we-serve/startups/). Get in touch through our [Contact Us](https://planetweb.ng/free-it-consultation/) page. ## Frequently Asked Questions What is the biggest hiring mistake Nigerian startups make? Hiring ahead of proven revenue is the most common and most expensive mistake. Building a team sized for the funding round that might come next, rather than the revenue already in hand, creates a cost structure that collapses the moment growth slows. How quickly should a founder fire a hire that isn't working? Within weeks of it becoming clear, not months. A 90-day milestone system with regular check-ins makes the decision easier to justify and act on early, rather than waiting for an end-of-probation surprise. Should Nigerian startups hire from Lagos and Abuja only? No. Strong talent in cities like Ibadan, Port Harcourt, and Enugu is often available at a meaningful discount to Lagos rates, with lower emigration risk, and distributed teams now work well with widely available collaboration tools. Why do connection hires cause problems in Nigerian startups? Family or community pressure to hire someone’s relative or friend creates a hire who cannot easily be removed without personal fallout, even when they underperform. The team notices the favouritism, and resentment usually follows. What should a startup do instead of hiring a large team early? Use contractors and freelancers for variable or uncertain work, converting to full-time only once volume genuinely sustains it. This avoids committing to permanent overhead before the business has proven it needs the role. How can a startup avoid becoming dependent on a single hire? Document how critical systems, client relationships, and regulatory functions work, rather than letting that knowledge live only with the person doing the job. Bento Africa’s collapse shows the risk clearly: an understaffed, undocumented compliance function became unrecoverable once the person who understood it was gone.