Early Joiners and Startup Performance

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.