The Most Expensive Hiring Mistake I Ever Made (and What It Taught Me)

I had to fire one of my best friends…

It cost me a valuable employee, a great friend, millions in lost revenue, and worst of all…

…it was all my fault.

Today, I want to share what I learned and what I do now to avoid repeating this same mistake.

Just for context, this friend started working with me in the early, early days of my business.

I ran the company.
He helped with marketing and general “project stuff.”

So, I made myself CEO and made him CMO/COO.

(Horrible mistake. Never do this.)

As we scaled, we needed to add people to the team. Specifically, people with more experience than he had.

The Problem: Experienced “A-Players” don't want to report to somebody who's clearly less experienced than they are, especially if that person has a “Chief” or “VP” in their title.

They know they can’t learn, and worse…they know they’ll be capped.

So we built a team of B and C players.

Things bogged down, because my friend…very smart, very motivated…got overwhelmed managing C-player “helpers.”

And this wasn’t just bad for the company, it was bad for my friend because it meant there wasn’t any time for him to learn and grow anymore.

Payroll increased.
Sales stalled.
Margins squeezed.

But I couldn’t afford to hire anyone else to support him, nor would he allow anyone to be hired “over” him.

I sat on this problem for well over a year.

I knew I'd made a mistake.
I knew he was in the wrong role.
But I was scared.

Because I knew making this change would likely end the friendship.

And that's what happened.

Eventually, things reached a breaking point where I had no choice…

I asked him to take a demotion.
He was angry.
There was a falling out.
We didn't talk for years.

I’m happy to report that (a decade and a half later), the friendship was restored.

He found a great role at another company where he could learn and grow.

He was amazingly successful and eventually started his own businesses, where he made far more money than he would have earned as my CMO.

But the damage was done, and it could have been avoided.

So, here are three lessons you can take from my first big leadership failure that will help you whether you’re hiring friends or total strangers:

If you must give someone a title, make it "Head of" (not CXO or VP) because “Head of” is descriptive and temporary…not status-based and entitling.

But it’s far better to just give them a title for the actual role they’re performing, not one based on the fact that they’re currently reporting to you, the CEO.

If I'd had this conversation 12 - 15 months earlier, it would have gone smoother. It might not have saved the friendship, but it would have been better for all involved.

My misplaced “loyalty” to my friend held him back every bit as much as it held the company back.

He was stuck in a job where he couldn’t grow…where I was his “best option” because I was his only option…all because I was unwilling to have the tough conversation.

To be clear…

This wasn’t a bad hire.
And it wasn’t “mixing friends and business.”

It was a role-identity mistake, combined with a failure to fix the problem the moment I knew it was a problem.

Titles don’t create leaders.
Timing doesn’t create leaders.
Experience, capability, and clear expectations are what allow leaders to develop.

And when you avoid the hard conversation, you don’t protect the relationship…

…you just delay the inevitable damage.

⚡️ Action Step: Write down your leadership team. No titles…just names. Then, ask one question for each person: “Is this the right role for their current skill level?”

If the answer is “Not yet,” don’t wait a year like I did.

Have the conversation now. You don’t have to fire them or even demote them, but you do have to get on the same page with what success in their role/title should look like…before it’s too late.

Ryan Deiss
Co-Founder and CEO, The Scalable Company

P.S. I’m looking for 5 business owners who want to work 1-on-1 with my team and me to install a custom “operating system” in 2026, so your business can scale and so you can exit the day-to-day. Click here for the details.