Last time I wrote an article about what makes an irresistible team for investors. If you’ve impressed investors enough and successfully raised some cash, the pressure now really starts.
Investors will be expecting you to accelerate your growth and demonstrate some proof points before your next round of funding. So you may be thinking about how to gather more talent around you.
These questions might help you make decisions about talent and team building.
#1 – What are we good at, where are we stinky and what are the gaps?
Discipline yourself (i.e. find some uninterrupted time and be objective) to write down:
- Where the real value for the business is generated, where is the value for (potential) customers and what will create a higher valuation with investors at the time of your next round
- Other activities that must get done to keep the lights on
- Talents that the founders and those already in the business have, and which talents they lack
- Where can you develop skills versus where you have no choice but to hire?
This should flush out what valuable skills and talents are missing from the team. A third party, such as an investor director, advisor or friend can add valuable objectivity to this process.
A while ago I was one of the first seed investors in payasugym.com (now rebranded as Hussle). With two super bright ex-management consultants as founders, they were all over the product design, strategy, finances, projections and governance. But critical to the business was selling their new concept into gyms and marketing to consumers. They decided that one of them could skill-up quickly in B2B selling, but neither of them were intuitive consumer marketeers – so that skill set had to be their first hire.
#2 – What roles do we need and what can we afford?
While talent, skills and aptitude are the first considerations, unless you are some ridiculously funded Silicon Valley start-up, you are going to have to get pragmatic with the number of people the business can afford. So now think back to where the real value is created in the business and the team roles that are therefore needed.
Do some research on what salary the roles will need – and get creative about the mix of salary and performance-based equity options that could be used to attract the best talent. The main consideration here is not to skimp. Worse than having a vacancy is having someone that is a drain on time and energy and is eating up budget whilst not delivering what is needed.
Pull together the budget of what is needed and compare against the cash burn that can be afforded before fund raising again. Reconcile these, and now you have your recruitment hitlist.
#3 – Where do we find what we need?
There are three types of people working in start-ups: (a) founders that are taking the big risks (b) those that have actively sought out a business (for the thrill of the growth journey and sharing in some of the success and (c) those who are not good enough to work for a large established business with lower risk and more stable employment.
Clearly you want to find b’s not c’s. So, it is helpful to hang out at where they hang out – at start-up events and in online groups. Or there are now online recruitment sites specifically for the start-up community. When you start to scale up, an employee referral system is the most direct way of getting more people like the people you already have.
‘With the current soaring unemployment crisis, there is plenty of talent available’
With the current soaring unemployment crisis, there is plenty of talent available. This is generally good news for growing businesses. But you do want to be very careful that corporate refugees have the mentality to work well in a small, fast growing, ambiguous environment. If they do, then it will be possible to snap up fantastic experience.
#4 – How do we avoid compromise?
The first rule of recruitment I ever learned as a young manager was “if in doubt, don’t hire”. While someone you are 100-per-cent convinced by may not always work out, unfortunately where there is any doubt about talent or cultural fit, that person never comes good. However much you think you are desperate for hands-on-deck and to complete your recruiting, it is better to have a vacancy and carry on the search than have the wrong person. Better to find short term stopgaps – like a freelancer, intern or temp – or to find ways around the activities needed.
#5 – How do we welcome new talent?
It is never too early to deliberately build your culture – what your business stands for, how everyone behaves and how you go about getting stuff done. The easiest way to build culture is to indoctrinate new hires as they arrive. One business I joined had an iconic way of doing this. Every month half a dozen or so new starters would board the “magic bus” with the founders and do a tour around the important places and milestones that contributed to the growth of the business. Whilst explicitly about places, it was valuable time to chat, get to know the founders and hear about what they valued. The trip ended in the pub where the established team were ready to continue the conversation (and give the unburnished story).
#6 – How is everyone working out?
Unfortunately, none of us get hiring 100 per cent right all the time. Fortunately, we usually know quickly when we have made a clanger. If so, it is important for both the business and the misfit individual to act decisively. Zappos (the big online shoe retailer) were brilliant at this. After 14 days all new recruits to the team were offered $2,000 to leave the company – clearly only those who were confident they were a good fit decided to stick around.
You can do something similar and cheaper by making sure you sit down and have frank review conversations with all new hires after 7, 14, 28 days and each month after to make sure the fit is working.
Matthew Cushen is co-founder of Worth Capital
Are you interested in equity investment?
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