Startup Staffing - How to get it Right!

A friend of mine asked me to given him some advice last week about responding to a job offer from a startup which he felt was too low. I was happy to do it and he just wrote to me saying he was able to get the cash side of the offer increased by 13% using my advice. One of my better returns-on-investment after an hour's work! Which got me thinking yet again about startup staffing, some of the challenges and how to get it right. In my friend's case the start-up was getting a good software QA manager but for a while really looked like they might blow it.

I've written many times about how this is a great time to start and staff a new tech business. Here are a few tips about how to get it right, culled from my own experience and talking with many entrepreneurs and investors. In no particular order:

• The right skills at the right time are important. But above all make sure who you hire is a great cultural and personality fit. In a startup there is no question that the whole is greater than the sum of the parts. Someone who is not a good fit can be toxic to the team dynamics and I can't think of anything that makes that worthwhile. The tone of the business and it's culture will be set by the initial team, so make sure that dynamic works well from the get-go.
• Even if you attract a founding team working for equity only to start with, you'll eventually have to start paying cash. These days, yes, you can get people for less cash than before. Whatever you're offering, make it equitable with other team members and pay people what they're worth (to the company - if there's a mismatch there then you're not right for each other anyway). Even if you think they will never find out, in a small company its not worth the risk of losing a good person who is inequitably compensated. Of course, thinking someone will never find out is the wrong philosophy anyway. Some (very few) companies post the compensation of every person in the company for all to see. Even if you're in the majority that don't, think about how people would react if they knew this information. Would they thing so-and-so was worth it or someone else was underpaid?
• A top notch software developer is worth 10 average developers. Unless they're not a good fit. On the other hand the really good developers will cost you - because among their many alternatives is the choice of working for themselves on the Next Big Thing, rather than for you. Of course you don't pay them 10x an average developer - but you do want to recognize your stars and, frankly, get rid of the average or below-average people. No, this is not contrary to my advice above. Done properly, recognizing stars can still be done in an equitable manner with the rest of the team. Don't confuse equitable with equal!
• Make everyone part of the team and incent everyone with equity via stock options. In one of my prior startups I found that the office admin in Prague was the only person in the company without stock options - so I got her some options as soon as I discovered this. Another executive said to me "she's just an admin, so why bother?" Well, I tell you, everyone plays a part in success. They cash compensation reflects the level of value but (in the long run) you would never dream of not paying them cash. Why wouldn't options work the same way? By the way, that executive I mentioned - prime example of the toxic employee ...
• If you have multiple locations, particularly outside your home country, then work hard to make everyone feel like members of the same team. At that same prior startup above I would insure that I made regular visits to Prague and each time I would do a presentation to the entire team (about 40 people) about the company's development, how their work was helping, etc. And we'd usually have a teambuilding event as well. That same toxic executive I mentioned wouldn't even join those meetings when he was there at the same time. What kind of message is that?
• Share information with everyone. The goals of the business. The key metrics and how you're doing. The issues. The more people know, the more they can take the initiative to fix things.
• Sales. If you don't get customer traction eventually you're dead in the water - you won't raise money or attract good people. Marketing is creating awareness and sales opportunities. Selling means closing deals. Getting the transaction over the goal line. In a startup everyone has to be selling and know how to sell. But be sure you have closers on the team. That could be the CEO or anyone else ...
• Outsource the stuff that is not core to your value proposition. Check my prior posts but, again, don't bring things like accounting, HR, etc. in-house unless you've exhausted the the capabilities of good outsourced services.
• Don't think that because you don't have cash you can't hire anyone. You'd be amazed at what a few founders and equity-based employees can achieve over a very short space of time if they truly believe.
• Finally, address problem situations quickly. That could be anything from compensation to work environment to a toxic employee. Yes, if I'd been CEO I'd have fired that executive I mentioned above - even if I was to lose the experience and other contributions I'd be gaining immeasurably in many other ways.