Employee selection in Start ups: A few useful pointers

Entrepreneurship is often considered the pursuit of a goal without being restricted by the limitations imposed by resources. The goal could be limited only to financial gains, but could also include larger gains. Invariably, each of these goals has an end customer who benefits the most from the action of the entrepreneur. Often, if one doesn't think of the customer right from the beginning as suggested in the earlier post, one realizes this extremely practical learning at a high cost!  

Translating the idea into a product/service without being restricted by the resources currently under control would imply seeking support from other sources. While co-founder (read about benefits/drawbacks and implications here) is definitely an option considered there are many other who do not like to cede control over their business and attempt going for an employee who could help realize the idea/concept into a product/service on offer.  

My interactions with the start up ecosystems have helped me find some better approach that some entrepreneurs prefer. Here are a some of the pointers I believe would help lot of other entrepreneurs:

What role am I hiring the employee for?

Often the lack of structure could confuse the founder about the skills that one is trying to look out in his employee. Would it be apt to choose an employee for the IT development involves or for the sales side?

My personal advice in this is to keep the business aspect with the founders always - not because it could be a business secret, but because there could be important decisions that need to be taken on the ground and direct customer interactions could help this process.

The need to hire an employee begins from the need to accelerate the production to revenue cycle of the business. This gives a complete spectrum of activities and the notion of job-description wouldn't make any sense here. Recollect the notion of uncertainty again here - would you prefer some one who is a sort of specialist in one area or a person with generic skills adaptable to the surprise scenario that is so common in the entrepreneurial journey.

Clearly, independent of the dominant role for which you are hiring. looking for some one who is flexible is better - lets call them Jack of All Trades (JoAT). 

Note:JoATs are better as long as there is no significant specialization that is to be needed in the product/service development. [We are still in the survival phase]. Working would JoATs for too long could in fact begin limit the growth of the business. Switching over to specialists at the right time is important as one navigates the growth stage.

What am I looking for in the new employee joining?

Flowing from the above aspect of preferring a JoAT to a specialist what needs to be understood is that ability to learn quickly is important. If you employee is not willing to bend his/her back and put in the effort with you in your pursuit it better stay away from the candidate. Many candidates come in with the notion of a fixed working time - if one are fixated with a notion of rigidity, it definitely an indicator of the inflexibility that is so essential to live through the survival phase.

And remember to take note of the thumb rule - attitude is more important than aptitude - this is the ground on which any recruitment has to be based. 

Reading this blog and thinking about it, is surely a precursor to the large issue of organization culture that is often ignored in start ups - this is definitely an issue for another blog!

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Co-founder selection

An entrepreneur when starting off his venture typically tries to on-board a co-founder, and the most co-founders are friends. On-boarding a co-founder is an interesting junction in the start-up's journey. Here are possible benefits and drawback one would need to think of in choosing co-founders:

Clear Benefits:

Having a co-founder is an indication that the ideator has been "sold" the idea to someone other than himself/herself, and that someone has joined the pursuit - this is an interesting signal to the outside world (primarily investors & employees). Resource pooling clearly emerges out as a very tangible benefit from such an approach - thereby de-risking to a limited extent.  

- "I am not alone believing in an idea!"

Teams enable the entrepreneur pool in some essential "factors of production", in the classical terminology - land, labor, capital. Definitely, this process has added resources as a result of accumulation from more than one of the founders. In the contemporary world we could possibly look at some more dimensions to the classical factors - network, intellectual capital etc. 

- "I am possibly better off!" 

For start-ups, whose first challenge is survival this means: on-boarding a stakeholder would enhance the survivability of a start up; a greater breather space, and potentially a greater growth prospect. 

- "I survive to fight another day!"

The benefit is not just in terms of physical resources the idea sounding, check and balance mechanism, emotional support etc are all packaged into this. 

Other implications:

 

In addition to selling the concept of idea, the ideator is also responsible for the firm that gets formed. In many ways the identities of the two - the firm and the founder overlap when one starts off. However, realizing that these two could be separate over a longer period is important - the founder mindful of the distinguishing between the firm and the founder, the founder would need to make a decision that is beneficial for the firm which could continue perpetually. The co-founder decision one makes should be thought out in this light, and with the benefits to the firm be predominantly greater than the personal needs of the founder. Ask the question:

- "Would the person be the right fit for the firm?"

The ideator when on-boarding a co-founder would also have to note that the initial idea could also undergo a change. In addition to accessing new resources (means) there are new goals that the firm would need to adjust itself to. Ask yourself:

- "Am I willing to change he goal? will the joint effort of the co-founders make the firm better off?"

Many of the co-founders shared personal friendships - this could potentially be the source of the on-boarding, rather than the idea.  We are all emotional being, and encouraging friends in their entrepreneurial pursuit could be but a logical extension of the friendship. The ideator would benefit from reflecting on what each individual in his network could get to the table and relate it how the potential exploration could be helped by the individual. Ask yourself:

- "Is it the idea or is it my relationship alone?"

Few words of caution in selecting friends co-founders:

If the common interest is not the idea, and only limited to the social relationship - the firm wouldn't benefit as much from from such an alignment of the founders. An obligation cannot be the source to a long term commitment; periodic incentivization is needed for one to sustain such a relationship.

 

Last but not the least, co-founder conflicts are extremely common. There are many who do go to the extreme step of saying - be ready to loose friendship if you want to get into a partnership for venturing out into a business. Distinguishing what would form the professional space and what the personal space is important - this ability to separate the issue from the actor would be extremely helpful for founder.

The call to add on a co-founder is one that could have significant implications on the firm and the ideator. So think through before you on-board your co-foudners.

Prioritizing Stakeholders for your start-up to reduce uncertainty

Murphy's Law seems to follow entrepreneurs more than anyone else - Yes! anything you believe wouldn’t happen, will most possibly happen. So the challenge is really of being able to live through all these experiences and eventually be able to get the business they intend to create see the light of the day. 

The notion of such unpredictability in what one does is generally called - uncertainty. There is really nothing certain about the entity that entrepreneurs are trying to create. They have a thought about the need for something they believe would be required by someone... Yes! It is only a thought when it starts like many other thoughts! The entrepreneur chases the thought and attempts to create value - economic, social etc out of the thought by manifesting the thought into the realm or reality.

In the process there are numerous challenges that come in - beginning with the thought - the entrepreneur would need to really see if the intended product/service is something that would be found valuable and useful for people. The second question is really to see if someone could pay for the same! I have mentioned multiple times about the need for early customer engagement in earlier blogs [read here and here]

The maximum uncertainty would definitely be on the customer's end of the chain. The thought that the entrepreneur would have initiated invariably would have come from his/her prior experience/ability/capacity - essentially - the response to the questions: who am I? What do I know? Whom do I know? She/he would also have attempted evaluating what would it take to create something of value and how someone could and then figure out a way to reach out to the person who could not just use but also pay for the same. 

This mean the maximum uncertainty for a business is not on the customer's side of activities and would progressively reduce in the following order - investors, suppliers and employees. The following diagram indicates the same:
 

High Uncertainty                                                     Least Uncertainty
Customer    >    Investor      >    Supplier       >        Employee

The uncertainty in the above context could be understood as containing two components - the predictability of the behavior of each of the stakeholder and second, the effective control on that the entrepreneur could have on the behavior of each of these. We could visualize the spectrum of predictability and controllability to be as below.

Least Predictability                                              Most Predictability
Customer    >    Investor      >    Supplier      >        Employee 
Least Controllability                                             Most Controllability
Customer    <    Investor      <    Supplier      <        Employee

An effective approach for an entrepreneur to be able to leverage and grow his/her business would be to reduce the zone of maximum uncertainty and steadily build the other stakeholders commitments to effectively handle the reduced uncertainty. 
(click on the stakeholder link to be directed to some best practises in finding a better stakeholder)

Looking at an entrepreneur as a farmer!

Many aspire to be entrepreneurs and start firms that eventually become part of their "identity", i.e. an entrepreneur acts as if there is no distinction between the firm and the individual running the firm. You might have possibly guess where I am heading to in this blog...So just hang on...

While an entrepreneur is the one who grows and manages the firm/enterprise, it is very important for an entrepreneur to be able to distinguish oneself from the firm. 

As an analogy, we could look at the entrepreneur as a farmer who passionately tills the soil, sows the seed, takes sufficient care to see the crop grow and finally harvests the crop. An interesting question to ask here - what would happen if the farmer begins to think that the crop he grown and (s)he is one? Yes, you may not be willing to harvest what you have grown!

A sense of attachment to the firm, with the ability to detachment is a key to being able to act in the best interest and with the right spirit. It is the attachment, which is the passion aspect of an entrepreneur, helps put in all the energy and enthusiasm one holds towards the hopeful dream into action; but the detachment enables one takes an arms length view of the venture at hand and decide with potentially the best interest what is to be done.

The key, thus is really to look at the process of venture creation and growth with a "farmers" mindset than being the crop itself!!! What say?

There are interesting extensions of this attempt of being able to equate the firm one sets up to plants; I would love to explore this aspect over the next few blogs. Stay tuned is your are interested in thinking about this.

Choosing your first employee - Attitude over Aptitude

The first employee of any start up plays a crucial role. It is in fact a process by which the culture of the organization begins. Navigating this challenge is not easy for start-ups!

Co-Founders typically are seen to be friends or colleagues and it is very often the employee whom they hire that turns out to be the first external person joining the team. While it is possible that the employee might not really be a complete outsider, but someone in what I could call as the latent network (one which we do not access frequently in the course of our work) and pull him into the active network (that which we access very often).

As someone who has helped a few start ups in their hiring, and seen many others make their choices, I find there are two broad requirements that emerge out as the most required in my opinion:

1. Willing to push and attempt to think beyond what he/she already knows
2. Hungry to work hard if need be

In addition to this, possessing the knowledge and the skill would only add up to the person as positive points.  But the real deal breaker would be hiring a person who is not willing to think knowing his/her limits and having no enthusiasm to learn if it takes. Simply put, I am looking at the right attitude fit before I look at the aptitude fit.

Knowledge and expertise of an individual could come with a well defined self-image; the start-up founders would need to know, to what extent these would be beneficial for the company and at what level it would be detrimental to the company's prospects!

If the employee is one who would take up additional responsibility beyond what is expected of him and executes this it would be an added positives, the founders however should be willing to give this freedom to the employee to explore and work with them.

Balance Product Development with Communication

Many startups work too much on a product but spend little time communicating about their product/services; there are other start-ups which do the other extreme - over communicate but spend little time on product development. As mentioned earlier, working out the communications to synchronize with what you intend to deliver through your product is quintessential.  It is crucial to find a balance in this activity of really doing the work - and talk about the work. 

In addition to the hard work put on the product the entrepreneur could at a minimum need to have the following as part of his communication activities:

1. Elevator Pitch - short pitch that covers what the business does and addresses. Ensure it is catching the attention of the listener! Yes, it takes time to perfect this and its only by practice that this gets better.
2. Short Business Summary - I would prefer a super short summary in a hard copy format - say around A5 size or even the hind of your visiting card that helps communicate what you do really precisely sharply. There are like like hook to the communication exchange done - people could look at this and find use at a later date.
3. Business Presentation - this is an ever-evolving document. The more time you spend understanding your audience and the more presentations you make - this one only gets better. Spend time working out your presentation - remember getting the right graphic/images could make is just so much more communicating.
4. A catchy website URL- there is really nothing like a web URL! for the company that clearly defines what you intend to do. This is invariably a one time choice - so think through and work out your thoughts with the name. For those who still believe offline is the only business - spending time online and having a good website could make a enormous difference.
5. Blog - Developing a habit of blogging pretty regularly is important when you intend to communicate with your audience regularly.

Start-ups would benefit by devoting time towards a sustained communication effort. It would be ideal for the founding team to sit down on the communication dimension periodically and take stock of what they are trying to pitch right from day one (or even earlier depending on when they are booking their URL). 

Even as little as 30 minutes a week to re-look at the way you communicate could emerge very fruitful.Keep the audience coming back for more interesting, relevant aspects. So take the time off and get your communication plan worked out.

Early Customer interactions are very valuable

It is a hard time for entrepreneurs visiting a prospective client.Very often the entrepreneur comes back with the feeling - this guy just chewed away my time. He/She didn't give any feedback on the product, nor did he give me the purchase order! 

This is typical of the very first meeting, but over meetings the scenario changes. The entrepreneur could look at the multiple interaction with prospective clients in a different light. In these interactions, entrepreneurs are over loaded with tons of unstructured data. The entrepreneur needs to structure them to be able to figure out a common thread and focus on it - make the data into a valuable, actionable information. 

Yes, while the entrepreneur is focused on selling  the product to the prospective client, the client is really looking at what more can be got out from this product when in use. The client is looking at how the product that you intend to provide could be put to use - their focus is typically at cost reduction, scaling quicker than the competition etc - in essence overcoming an obstacle. 

Very often, we as entrepreneurs do not distance ourselves from the  product we are trying sell. The product that we go to the market could be just be a technology offering - if is important to make it a customer usable product with some "finishing touches". The Entrepreneur could leverage this wealth of information to really thinking of creating the "product" from the "technology offering" that he/she would get to the market.

As an example - you could have built a conference plat form, but the interaction with the customers keep giving you the repeated questions - Can I know where the customers come from? How much time they spend on it etc? Clearly, the customer is looking at some analytical interpretation of the technology - so adding a layer of analytics and presenting as a dash board could really make it easier to sell!

Look beyond technology when starting a Product Business

If you have been following your friends who are starting off closely with a new technology business idea - you would have probably found the following scenario:

Very often, one finds engineer entrepreneur who comes up with an interesting insight from technology and attempt venturing out on his/her entrepreneurial journey. Invariably, one finds that most of these  entrepreneurs focus on developing their products for a very long time, so much so that, they do not know who their market is! They wouldn't have even spoken with a single customer! They face a constant internal resistance and find it hard to get off their office where they are comfortable with their technical expertise and step into selling the product they are building!

In making these statements I do not intend to say that entrepreneurs who are technologist cannot build a business - it is an attempt to get them to move out of their offices into the shoes of a businessman.

As some one who has started a business, begin with the following understanding:

1. Technology is not Business - Technology is generally a component of business that helps in delivery. 
2. Get out and Sell - It is important to sell the product that you are building, if you don't sell the product there is no commercial use of product you might build.
3. Engage with your customers early - Do not wait for the complete product that you think has a market. Go in with simple to use features and see how the market reacts and listen to what it wants.The following suggestions could help you to start on this:

• List product features into a priority (your thought) and freeze in on the first 2-3 features in this list
• Make a list of customer (prospective) that you think could benefit from these features
• Quickly build this feature set (do-not change as of now)
• Approach a Customer and ask him to try out as a commercially free product but give you feedback
• Listen to the feedback - improve your product with the feedback

Clearly, listening to the market early is important to ensure that your product is market accepted and it is important to do it early than late in the process of building your business. Get out of your comfort zone - businesses really need to be as close to their customer and not in the high rise offices...