Team comes first. Your team is directly correlated with the valuation of your startup. It is your team that will save you, the entrepreneur, from a disaster.
All of the above is true, but it is also true that many startups have failed because they hired too early, too fast, or fired too late.
Many of the points below can be found among the best hiring practices for startups and there is nothing wrong with them in general. The devil is in the detail – there are some ‘’innocent’’ hiring mistakes that can lead to a failure.
It all starts with the founders. They are sufficient at the very beginning as hardly anyone else can craft the strategy, the vision, and the early project execution plans. In some cases, the founders may even build the MVP themselves. Then the hiring begins. The enthusiasm to have their product launched to the market as soon as possible normally results in filling in the roles fast. Their investors may push them into that direction too, as the high burn rate is often seen as a prerequisite for high growth.
The downside? You don’t have the right people on board, you are burning cash and the work is not done, at its worst, your product is already live and you are losing clients due to software bugs and poor user experience.
The Solution: Continious recruitment with the clear perception that the best hires are probably employed and you will have to entice them to join a startup that may disappear tomorrow. Start with the roles that are not so difficult to fill in, but are taking too much of your time. It could be a digital marketing assistant to take charge of your social media accounts, a virtual assistant to organize your schedule across different time zones, or a SEM expert. You will have more time to focus on the strategy and sales while looking for the right project/ product manager, etc.
Outsource the development of your MVP
This could be the right move as the software development companies have well-trained teams which mitigates the risk. The cost could be lower as you usually pay on a ‘’time and materials’’ basis vs paying a full-time salary. Also, once your MVP is tested, if it appears that there is no good product – market fit, you can cut the cost easily as there are no employees that need to be fired.
The downside? Many software development companies take more projects than they could handle which results in delays and poor quality.
We have been there. While developing Transformify’s MVP, we first contracted a software development company which promised to deliver in a month, but after 4 months was nowhere close. The quality was also far from our expectations and the next company we contracted had to redo a major portion of the work.
The Solution: Collect as many references as possible. Has someone else in your circle used the services of this software development company? Is there any particular area the company is really good at, and if so, is this the expertise you need? Set clear goals and KPIs and monitor them closely. Having a specific clause in the contract that allows you to terminate it immediately in a case of poor performance is key. Also, make sure that you have access to the code as there is always a risk to be denied access when the things go wrong.
Hire full-time employees
You are building a team and hiring full-time employees seems right. However, you can’t utilize their time as you are still at an early stage. A startup needs marketing, business development, branding, PR, IT, and a myriad of other experts as there is no single answer to the question ‘’How to start a business and do it right?’’. The thing is, the startups can’t afford to pay big salaries and hire top experts full-time, unless this is the newest startup of Elon Musk or someone of his rank. The expertise is much needed and the startups usually compromise and hire people not experienced enough assuming that it is still better than nothing.
The downside? You have probably seen many startup jobs titled ‘’Marketing Guru’’, ‘’Experienced Growth Hacker’’, etc. Unfortunately, most startups are highly unlikely to end up with the people they are looking for. These people are happily employed, well paid, and enjoying the comfort of their spaceship- like offices. The compromise results in failed market entry strategies, lost clients, high burn rate, etc.
The Solution:Hire consultants and pay on a time and materials basis. This allows access to top level experts worldwide on a tight budget. Most strategy related tasks could be completed remotely via video calls and e mails. At the beginning you need help with your marketing and business development strategies, right? Once you have nailed them, you can safely hire a more junior person to execute the social media and e mail campaigns.
If you can’t afford consultants, there are live webinars hosted by big names such as Neil Patel which are free from time to time.
Enthusiasm, loyalty, willingness to learn, and shared values are key
The statement is true if these people happen to have the minimum skills set required to perform the job. Otherwise, you are more likely than not, to face an enthusiastic group of people driving your business in the wrong direction.
For God’s sake, don’t hire interns in your early days! An intern takes 1-2 years to develop on-the-job skills and meanwhile you will have to rely on someone else to do the job, coach, and train the intern. It’s not the best way to spend your limited budget, too.
The downside? In our early days, I was really impressed by the enthusiasm of an intern who was determined to become a QA engineer. He had tech background and I decided to give him a chance. 4 months later, I was still chasing bugs in our system and it was clear that at least a year will be needed to bring him up to speed.
The Solution: Hire people who share your values and have the minimum skills needed to perform the job. It is not easy to assess the learning speed of a candidate during the interviews, but if after a few months it appears that s/he is a slow learner, it is better to start looking for a replacement. Time is key for the early stage startups and you can be sure that your competitors will not be slow to take an advantage of the situation.
Well, we are human after all and it is not easy to fire a charismatic team member who fits in well with the team, but is underperforming.
Our first business development executive didn’t sell anything in three months. He was always soooo close and chasing that promising lead. Had I relied on him, we would have gone bankrupt. Still, it wasn’t easy to let him go as his enthusiasm was contagious.
The downside? I gave a chance numerous times to a great person who was not right for the job and we lost revenue and didn’t grow as fast as planned.
The solution: Some people need more time to get up to speed and may not reach their top performance level during the first month. However, if during the second month there are still no signs of improvement, it will be best to start looking for a replacement.
Lilia Stoyanov is the CEO of Transformify, a CSR recruitment platform backed by Virgin, ranking in Startups 100 Index, and a member of the Digital Coalition of the European Commission.