Experience is the Mother of Wisdom
In October 2011, I started working on my startup. By March 2012, my co-founder and I felt we were ready to begin hiring. As ex-bankers, we had a lot of idealised notions of how things ought to be done but we were way too leveraged for that so we tried to mix and match, hoping to arrive at a utopian best of both worlds scenario. How naive. We succeeded in creating a frankenstein of top-heavy bureaucracy and low level zombies, all clocking their way to a paycheck and us into the poorhouse. Needless to say, that startup failed. These are the lessons we learned along the way and what we have applied at PushandStart.
One for sorrow, two for joy. . .
Perhaps the most deceptively tricky part of building a startup is selecting co-founders. It used to be that you had an idea and you grabbed the first friend who did not laugh in your face when you described the idea to her. What is she thinking about you though? Is she at all interested in growing the idea into a business or is she merely being polite? Say she is interested, does she have the skills to complement you? Does she have any sort of interest in the startup life? If you value your friendships, you will think through these issues before making a co-founder of a friend. True motivations are revealed, not declared.
Threesomes End in tears, Foursomes in Competitors
I really think two founders is the golden number for a startup. Think Herbert and Aig (Access bank), Fola and Tayo (GT Bank), Erastus and Raymond (Intercontinental Bank). Wale Tinubu and Mofe Boyo of Oando. Come to think of it, even Jason and Bastian of Iroko Partners. Two just works. With two founders, interests are less burdensome to align, making unanimity possible. It also helps when you do not have to split the equity pie too many ways. If you must have over two founders in your startup, understand that for your odds of success to be unimpaired, control must lie with no more than two. In such situations, I have to ask, why the deadweight?
The 90 Day Rule
In the book Act Like a Lady, Think Like a Man, bestselling author Steve Harvey insists that a woman should wait 90 days before she sleeps with her man because by then she should know his intentions, what kind of man he is, short term vs. long terms goals, and his perspective of their relationship and where it is going. I am proposing something similar for selecting co-founders, despite the time constraints of methodologies like Lean Startup. As Nivi of Angelist would say, “delay decisions until the last responsible moment”. And no, it is not as simple as picking the kid you grew up next to. It is not necessarily the person you like the most. It is definitely not the developer most willing to work for free. The best founders share some standout qualities – energy, high intelligence and integrity among others. Look for these and a certain complementariness in your skill-sets. Business vs. Technical, Coder vs. Salesman, Visionary vs. Operations Maven, and so on.
Do not be afraid to ask for guidance
Non-technical business founders are prone to use poor proxies for choosing technical co-founders (“I am told he is a Ruby Ninja!”, or “He says people who use WordPress themes are lazy”). Technical founders who do not sell also use bad proxies (“He has got an MBA!” or “He is an ex-banker!”). Learn enough of the other side to form an informed opinion. If you can not, have someone you trust run the rule over the prospect.
Skilled workers: In-house or Outsourced?
In building my first product, I came up against this dilemma – find and hire talent or outsource development. Before I say anything else, you must know one hugely important thing – you simply should not outsource your core competence. As a tech startup outsourcing your product development, you still need someone in-house who is technically savvy enough to understand what is being done and supervise your remote team.
Speed is one of the only advantages you have over your better-funded competitors when you are a startup. What method helps you move the fastest? In my opinion, outsourcing is better short-term value. There is no real point thinking too long-term if you are not sure the idea has legs. Once you see a real demand for your product and continue to see traction, you can then take over the development and maintenance in-house. Get the horse first, and then build a cart. If you are already VC funded and money is no object, still consider that by outsourcing, you will be leveraging the experience of folks whose very livelihood depends on keeping their skills sharp. If you are still unimpressed, remember that developers are human and they get bored with one project after a while. They like variety and it is tough to offer the variety a developer craves while focussing on one product/project. Some of the most popular sites and products today were initially outsourced, for example, Skype, Alibaba, Fab, and Digg.
Outsourcing is not problem-free. In addition to needing your own in-house tech to make sure everything is copasetic, you will need to invest the time in preparing a standard Products Requirements Document to avoid irreconcilable problems down the road. You simply cannot be Lean and Agile with outsourced labour. If you lack the skills to create this document, pay someone to sit with you and create one. In my experience, the absence of this document is the single biggest challenge newbies encounter when using Asian developers. You schedule a few Skype calls and presto, they knock out an SRS (if you are lucky) and the project commences. You assume they will create what you have buried in your head even though you lack the vocabulary to describe it. E.P.I.C. F.A.I.L.
If you are looking to build a platform or tool that is the core of your company, it is ideal to have in-house talent that aligns with your big vision. Do note that opting for an in-house team will make certain strategic decisions such as pivoting or rightsizing that much more difficult emotionally.
Identifying Gaps in Your Team
As a startup founder, you need to understand what skills you require, now and in the future. The first step is to understand the functional, business, and leadership requirements of your startup. Next, determine what skills your team possesses. Tally up the difference and you have worked through a quick and dirty skill gaps analysis. If the skills are not in areas your team can readily learn, you need to hire to compensate for those deficiencies.
If you look closely, a few thing will quickly catch your eye. For one Mr Black is living dangerously, earning his place through his customer orientation skills alone. Mrs White is the techie and Mrs Red is the leader. Mr Blue has some middle management ability. We also see they have no one who can knock out prototypes. This is an identified gap.
Defining the position
No matter how awesome your hires are, if you defined the wrong position, you may still end up hiring people who can not add value to your startup. A job description is a super-useful document which serves the dual purpose of clearly setting expectations (deliverables, roles and responsibilities) beforehand and refining your thinking with respect to the economic value of hiring for that position as opposed to divvying the tasks among the existing team members. If you are struggling to come up with a clear job description which has minimum overlap with existing positions, it may be a sign that role cannot fully engage a full-time employee.
The smart money says hire generalists first and domain experts later. It makes a lot of sense, especially if your business model is still a work in progress. Beyond that, you have to decide if you are either going to hire people who have major strengths or those who lack major weaknesses. From my experience, you should know that those who have major strengths usually have major deficiencies too.
Hiring: The Pitfalls, the plan
Interviewing is hard work, we all know that. Interviewing when you are a two-person-and-their-dog startup is ridiculously difficult so brace yourself. A lot of what you know about interviewing is turned on its head when you are a startup founder. To think you have the same pull as Jumia or Iroko is arrogant. I admire that. After all, arrogance and ignorance in small doses are powerful tools that help entrepreneurs focus and execute against overwhelming odds. In larger doses they are a double edged sword that maims startups.
You are being interviewed also
As a founder, you need to face up to the reality that the best potential employees are people who are not easily convinced. They will have doubts about your technology, your market focus, your monetisation strategy, your runway and above all, you. By being a founder, you have already demonstrated that you are a little nuts. You are fearless and you embrace risk. These qualities will ultimately make you great but it is also seen by some as a character flaw. The truly great employees are going to be cautious, and rightfully so.
First acknowledge that this person has an entirely different risk tolerance than you do. They will have other options if they are the real deal and you need to convince them you know what you are doing. That it is exciting enough to afford them valuable learning experiences and viable enough to ensure they are not left behind by their peers for taking the road less travelled. It is easy to get caught up in the moment, absorbed by the magic of creating your dream that you fail to appreciate and acknowledge the import of asking others to join you on what may turn out to be an ill-advised caper.
Do not get cocky or sound braggadocious. This simply is not the time for it. In this situation, you are subservient to them. You are their concierge walking them through your dream and signposting their place in it. You are Cassanova wooing them with promises of a bright future together. Show that you have thought through their concerns and put their minds at ease. Show them there is more to you than a TechCabal or TechAfri.ca story. That there is substance behind the hype. Be the man with the plan.
The best ones may love you and leave you
People talk a lot about how everyone else is bent on doing his or her own startup, leaving precious few who are willing to be employees. This is said like it is a really bad thing for the ecosystem. Ecosystem things again. Puzzling, if you ask me. Why is it OK for you to do a startup but not your senior developer? We will revisit that in another blog post so suffice to say that really smart people have plans. They are ambitious and they enjoy challenges. When you ask where they see themselves in five years, do not feel insecure when they say they hope to be working on their own startup.
Do not be a softie either by sidestepping such uncomfortable questions during interviews. Embrace it. Discuss it openly and honestly during the interview. You will ﬁnd that not only will you increase the respect the candidate has for you by having the liver to bring it up, but you will also increase your chances of getting that person to join you. Craft your pitch along these lines: “Let me rent you for 4 years and in that time you will learn a truckload of stuff firsthand about building a startup from me, on my dime. What better way to prepare for your own startup?”
The brass tacks
Your interviews should be structured to aid comparability. Prepare an interview checklist and ensure you ask the same core set of questions but remain flexible enough to allow answers take unforeseen paths. I highly recommend reading this interview of Neil Roseman, former Technology VP for both Amazon and Zynga. It is very well written so even though it is oriented towards hiring coders, it is packed with useful tips which are applicable in most cases.
Below are excerpts:
Starting out, there are a few key organizing principles to acknowledge in interviewing, even before you start collecting resumes or asking for referrals. These can be used to craft a clear protocol around interviewing and hiring.
- You should come out of every interview with a clear sense of whether the person could improve the probability of your company’s success.
- Great interviewing is work. It takes time to prepare, conduct the interview and then debrief in an effective way. If you do not want to do the work, do not interview.
- Once you form an initial impression of someone – which usually happens within the first 60 seconds – you should spend the rest the interview trying to invalidate that impression.
- You should always take copious notes during interviews so you can make a cogent argument for or against a candidate.
- In most cases, the “best and the brightest” already have jobs, so you are really just on the lookout for the best available. Plus there is no way to prove that your hiring process resulted in the right people because you can not A/B test hiring decisions.
- Always strive to hire superstars but realize that not all hires need to “walk on water.” This person should be better along some dimensions than a majority of the current staff and have the potential to have a long-term impact.
- You want to hire people who are smart, that get stuff done and have the functional set of skills you need for the role.
Roseman goes on to share, “I look for past projects and accomplishments that seem to have enough weight and depth that I can apply STAR questions — STAR stands for situation, task, actions and results.” Roseman subscribes heavily to an approach called Behavioral Interviewing, in which STAR questions are a staple. They include:
- What was the background of what you were working on?
- What tasks were you given?
- What actions did you take?
- What results did you measure?
In addition, when reading resumes prior to interviews, it is a good idea to suss out whether the projects or products listed were significant to the company, even if they did not succeed. Roseman uses Microsoft as an apt example. “It’s such a big company, you want the employees that worked on important teams,” he says.
Here’s a distilled list of Roseman’s Rules:
- Don’t forget to introduce yourself to help work out everyone’s nerves.
- “Tell me about your background” is not a useful question for a tech interview.
- Pick specifics out of a resume to determine what the candidate actually did. Remember, you want people who get stuff done. Period.
- Probe when you see a resume with a long list of skills. Separate the truth from filler.
- Don’t “try out” new questions on candidates. Know what a good answer sounds like.
- Make sure you have them write code! This is too often skipped.
- Dig into algorithms, data structures, code organization, simplicity.
- Use some questions that are vague and open-ended. See if they ask you questions to find out more.
- Ask a design question. See how people think about a bigger picture problem.
- Create core competences for your company.
- Make sure candidates measure up well. Make it tough but fun. Good developers want to know they’re talking to smart folks.
Remuneration and Benefits
Here it pays to be transparent. I have never hidden the salaries of employees and I do not try to make it a crime punishable by death for people to discuss how much they earn. I have also never been the highest earner in my startup and I freely share this.
The Cleaners is where you send laundry, not where you get taken to
Do not bankrupt your startup in the vain attempt to pay market rates. If you cannot afford to do so without drastically shortening your runway, you have a decision to make. You either negotiate a lower salary and make up the difference in stock options (with minimum 4-year vesting) or you hire less well-polished candidates as they should be cheaper. Remember, you do not need a ninja for every role. Sometimes it makes economic sense to hire a diamond in the rough and cut her to your specs. If you are still tempted to break the bank to hire that rockstar, do it consciously, acknowledging the sacrifices you will need to make in order for the arrangement to work for your startup.
Make the office a fun place to be
Practice MBWA: While I was still a banker, I learnt about MBWA which means Management By Walking Around and I practice it always. As the founder, make it a point to visit people at their desk and just talk. This process will give employees permission to stop and talk during the day and understand that relationships matter.
Get everyone involved: Involve employees in investigating, planning and executing an idea and watch relationships grow from the shared experiences.
Mentoring: Not only will mentoring help the professional development of employees and demonstrate the dedication of the startup to its people, it is also a great way for people to get to know more about each other.
Cross-training: It makes business sense to train employees so they can cover for the responsibilities of their co-workers. The training process can also foster relationship-building all round so long as there is no implied threat of replacement. Time spent together builds bonds between peers and encourages a supportive team environment.
Sharing views: As the founder, you have to stay open to feedback and even criticism. Encouraging employees to share their thoughts and opinions can bring out new insights.
All work and no play . . .: It is great for employees to make time to socialise together. This does not have to be elaborate. The gatherings could be as simple as organising a five-a-side match between departments or with other startups if you can not make up the numbers in-house. As a professional indoorsman, I am more like to play Scrabble than football though.
Startup hiring is a delicate balancing act. If Microsoft and Google still make the odd mistake with hiring it may be premature for a relative noob like me to sit here dispensing advice. On the off chance that you were unable to extract any value from this post, I apologise. By placing my mea culpa at the end of the article, I am merely following the time-honoured advice “ask for forgiveness rather than permission”. Leave me a comment.
Finance guy, volunteer teacher, unsigned blogger, and high functioning recluse. Interested in business strategy, new ideas and capital formation.