Early Joiners and Startup Performance

59 Pages Posted: 1 Feb 2021 Last revised: 25 Aug 2022

See all articles by Joonkyu Choi

Joonkyu Choi

Board of Governors of the Federal Reserve System

Nathan Goldschlag

Center for Economic Studies, U.S. Census Bureau

John Haltiwanger

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

J. Daniel Kim

The Wharton School

Multiple version iconThere are 2 versions of this paper

Date Written: January 2021

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.

Suggested Citation

Choi, Joonkyu and Goldschlag, Nathan and Haltiwanger, John C. and Kim, J. Daniel, Early Joiners and Startup Performance (January 2021). NBER Working Paper No. w28417, Available at SSRN: https://ssrn.com/abstract=3776985

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Nathan Goldschlag

Center for Economic Studies, U.S. Census Bureau ( email )

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