Once a founder has a great story and a strong founding team, it’s time to figure out who will be the first hires. Founders need to find people who not only have a passion for the mission, but can also play an impactful role alongside the team.
There are a number of steps to consider: where do founders meet their first employees? What kind of compensation should they offer? How can startups compete with larger companies for talent?
Before any founder can assemble a winning team, they first need to identify what’s missing.
How to Identify Gaps
Founders need to evaluate their own skills so that they know what’s effectively missing from their one-person team. For example, they may have the technical chops for coding on the blockchain, but no experience managing people or fundraising. Or maybe they’re great storytellers, but they have less experience in finance or marketing.
The founding team of Non-Fungible Labs’ FLUF—Alex Smeele, Jesse Metcalfe, Aaron McDonald, Brooke Howard-Smith, Andrew Beatson and Matt Hunter—envisioned a non-fungible token (NFT) collection that granted holders all the commercial rights associated with a particular NFT. They had all the legal, creative and business experience amongst them, and the mission united them.
There are also some traits that just can’t be easily trained. First hires need to be autonomous people who can confidently navigate their way to a solution when they encounter obstacles. They will also acknowledge their own limits and know when to ask for help.
Most importantly, they need to have an unbridled passion for the mission. Whilst skills and experience are necessary, the drive to achieve the startup’s goal will propel the company to success (or at least to the next milestone).
A founder’s shortcomings will provide a great starting point for hiring, but that won’t be enough to find the best people for the job.
Where to Find the Right Talent
Founders need people who will align themselves with the mission and whole-heartedly dedicate themselves to its success. Oftentimes, the mission speaks loudest to those who are searching for purpose (see Jamie’s previous comparison of cult leaders to founders).
The best bet is to start the recruiting process from within an existing network, and then expand outwards from there. Founders need to convince people to take an irrational risk, and it’s often easier to sell an idea to people who already know and (hopefully) trust them.
As a student out of university, founders can look to friends or even clubs and interest groups on campus. In addition to the built-in commonality, it’s also a great time for graduates to try something new.
For founders who have worked for a few years, their professional network is a natural place to start. Fellow colleagues and associates will also be most likely to hop on the bandwagon if the idea addresses a problem they experience, too.
If a founder’s connections are not interested in joining the startup, those connections may be able to introduce founders to other people who are interested in either joining or advising a startup – always ask if there is someone else in the network that might be interested!
Finally, founders should also attend networking events where they can expand their circles even further. It’s a good idea if the event targets specific groups of people, whether it’s people interested in web3, founders looking for co-founders, or maybe the local startup ecosystem.
In order to find their first employees, the Non-Fungible Labs team hosted their own happy hour for devs in New Zealand. That’s how they met Joey Kheireddine, the Chief Technical Officer of FLUF. The mission resonated immediately with Kheireddine, and he worked on a couple projects with the team before agreeing to join.
<Why we invested in Fluf World>
When a founder realises someone may be a great fit for their company, they should start planting seeds for collaboration. Flattery goes a long way in building relationships! A founder can recognise and appreciate their work ethic, or mention how a person’s skill sets complement their own. Then, when the time comes to make a new hire, that conversation feels like a natural progression of the relationship.
How to Hire above Your Weight
Early stage companies also aren’t like big, established businesses. However, people from those big, established businesses can bring their experience and network to your startup.
I joined Outlier Ventures for a number of reasons, but one of which was because I believe in the vision. I didn’t have as much experience with blockchain technology, but I do have experience scaling companies, and a passion for the future of Tech.
The opportunity for a fresh challenge is another unique advantage of startups. On a traditional career path, new hires expect to learn from their seniors and follow a linear path to promotion and growth. But at a startup, new hires bring their history and knowledge to the business, and they have an opportunity to be a bigger part of a solution. This is why it’s important to find self-starters and people who share the founder’s vision!
Jamie offered me the opportunity to work in a growing industry with founders to overcome their obstacles and scale successfully. For me, this job is less about forging my career path and more about navigating a fresh, new challenge—something only startups can really offer.
How to Compensate Early Stage Employees
The details of the “what’s in it for me” perspective will vary from person to person, but for any early stage hire, it should include contributing to a mission that they connect with. Ideally, they will also want career growth and equity in the company which can lead to significant upside in the future.
When a startup doesn’t have much budget for salaries, they usually have two things to offer: A C-level title and equity.
Most candidates will already understand that startups have lean budgets if they’ve expressed interest in joining an early stage company. Whilst there’s no perfect formula for calculating who gets how much based on what experience, there are certain guidelines or common practices.
For example, according to Balderton Capital’s study on early stage startups, founders should anticipate granting up to 1% equity to each early hire. As the company grows, that distribution will evolve into an employee stock ownership plan (ESOP).
Equity and shares can foster a powerful dedication to the mission because employees feel a true sense of ownership in the company. It also communicates a level of gratitude and trust to the early “believers” in the founder’s vision.
For those who want to play a significant role in the startup’s story, a C-level position may be an equally attractive benefit. The authority and responsibility that comes with those roles will also give people the power to write their own chapters.
What about Scaling?
In order to scale successfully, a strong team in the beginning will lay an equally strong foundation for years to come.
The early employees will shape the company culture and processes, and essentially create the blueprint of the type of people the startup wants to hire. Even if it’s not part of their primary responsibilities, those first employees will contribute to the principles and behaviours the company will attract and foster. Later stage hires will look to them for guidance and mentorship within the company.
The early stages of startup life lack structure, and so documentation will lay the groundwork for accountability and hierarchy. At some point, it can’t be everyone’s job to fix a problem. Founders and early employees need to be clear on who is to take ownership of actions and decisions (as well as blame or credit for outcomes).
All these aspects of early operations and culture will be shaped by who is on the team. Founders don’t have to do all of this on their own—that’s the purpose of hiring people who fill in the gaps and have a diverse array of strengths. Once they’re on the team, founders need to trust them to do their jobs.
As the company scales, not everyone will stay with the company, and that’s to be expected. The only people who will likely need to stay through the growth of the company are the co-founders, which is why finding the perfect fit is crucial.
Everyone Needs to Find Their Best Role
Hiring is about finding the right people at the right time. Founders need to find people who can complement their skill sets in order to achieve the startup’s mission together.
Building a company is a team effort. Whether they come from the same background, a different industry, fresh out of university, or a large corporate, early employees should be ready to take the big leap into the startup grind.
In this section, you learned about what makes a good founder team. Here are some key takeaways.
- How to identify gaps: by understanding their strengths and weaknesses, a founder can determine which skill sets the next hires need to have.
- Where to find the right talent: The best option is for founders to start with their existing network and expand their search from there.
- How to hire above your weight: Operators and C-suite level employees from big, established businesses can bring extensive experience and a strong network to a startup. In return, founders offer an opportunity to do something new and play a big role in the startup’s growth.
- How to compensate early stage employees: C-Suite titles and equity are usually the two biggest offers a startup can make.
- What about scaling? Whilst not all early stage employees will stay through the scaling process, they will shape the company culture.
Balderton Capital report: https://www.balderton.com/build/the-balderton-essential-guide-to-employee-equity/
Elad Gil’s book High Growth: https://growth.eladgil.com/