We hired only from our networks

My biggest mistake: Maziar Darvish, 25, is the chief executive of the Internet Business Group, a professional services company that floated on the Alternative Investment Market last year, valued at about £21m. He took a degree in computer systems engineering and worked for Intel before founding IBG

We made a huge mistake in our first two years of operation because we recruited people we knew, as opposed to the right people. We were aware of recruitment consultancies but viewed them as hugely expensive. A consultant will charge 25 per cent of a first-year salary so, for someone on £30,000, that's £7,500 we had to pay.

We made a huge mistake in our first two years of operation because we recruited people we knew, as opposed to the right people. We were aware of recruitment consultancies but viewed them as hugely expensive. A consultant will charge 25 per cent of a first-year salary so, for someone on £30,000, that's £7,500 we had to pay.

That was going to really impact on our cashflow and as we weren't a funded company, we didn't see it as an option.

It wasn't a one-off error in judgement. We were going through the networks of the people that we knew and thought this would ensure that we would get people to fit the company's culture, which was very informal, very relaxed. However, it was a mistake to think that we couldn't recruit outside that circle.

We realised that this policy hadn't been a good thing when we tried to expand our technical side, and found it was going nowhere fast. We had two or three people writing software but, before we started using recruitment consultants, that number remained static. We were having to turn away paying work because we didn't have enough manpower.

In most businesses, the difficult bit is the selling and the easy bit should be fulfilling the orders. Conversely, we were finding there was no selling involved, and the knock-on effect of fulfilling orders was that it was taking up all the management's time.

When our chief internet architect joined us as a senior developer, the effect of that on my workload was immense. It was fantastic because it meant I could focus on trying to move the business forward strategically. What we did was to hire a recruitment consultant in-house to take us through a ramping-up period, when we went from 25 or 30 people to 60. We came to the conclusion that the recruitment side of things was a problem that didn't just affect us in the new media space, and so we have started offering a recruitment service.

The key lesson I learnt is that people who fit into a culture don't necessarily have enough experience of things such as management to be able to cope in a company that's growing very fast. Another limit, given that most of the founders of this group are very young, is that our network didn't include people with five years' experience in anything at all. The upside is that you get a hell of a lot of energy and enthusiasm. The downside is not just a limitation on management, but a certain amount of reinvention of the wheel, which affects efficiency.

On the surface, recruitment costs look prohibitive and it's tempting to go through a network of contacts, trying to find the magical "right person", but we found this led to a high turnover of staff and that, again, has implications on the company's culture as a whole.