Two Things Not to Mess Up: Cofounders and Employees
What drives a great idea and a great company is its founders and its team. When a startup launches, it’s the first few employees that make the company succeed or fail. They are first believers in that company and they will do anything to make the company grow. As a result, having the proper cofounders and building a strong team is everything in the early days.
Let us start with the cofounders - If you are an independent founder, skip to paragraph five - Think of cofounders as a significant other and a bit more than that. They are people who are going to experience everything with you, and you will be spending so much time with them. When they are stressed, you will be there. When they want to celebrate, you will be there. Hence, you need to know these people really well, because you do not want any surprises down the road. You must also trust this founder blindly. Just ask any person who works with startups the numbers of issues that arise with cofounders who are not aligned 100%. They are complete disasters and they often result in companies closing and even lawsuits. Therefore, do not find any person who wants to start a startup and get to working with them. Instead, find someone who you know very well, maybe a college friend or former colleague, and then get into business. Having bad cofounders is one of the biggest reasons companies fail.
Now, not everyone you trust is a good cofounder. You must also believe these people are as impressive as you are, if not more. These people must be go getters, creative, intelligent, humble or anything that will be important for you to have this company succeed. Most important of all, you must respect these people and believe that their ideas could be better than yours. It is also crucial that you and your cofounders are aligned to the same goals. If that is the case, then you have a good founding team.
Side Note: if you are building a technology company, having one technical cofounder is ideal (some VCs have a requirement that at least one cofounder has a technical background). Same thing goes if you are opening a suit shop for example, make sure one of you knows about suits really well. Nevertheless, this is not a must, it is just something good to have.
The founding team is awesome and is ready to go, but you still need to hire a team. So what are some of the best tips for hiring a team? Below I have added some of the best tips I learnt through a YC podcast.
- At the beginning, do not hire anyone. The founding team should be doing everything. When you hire someone, you are controlling a big part of their life. Thus, pause hiring until you are sure that you are building something real and that you reached a point where you need the extra manpower.
- When you need that first employee; know that you are making a huge decision. This is the most important hire, they must be a hustler and someone who believers in the company as much as you do. They also must fit the culture you are trying to build, because after the first hire, the tone is going to be set. Therefore, make sure you can get someone who will be productive from day one and who gets along with you perfectly.
- It’s time to grow the team. You want to scale and hire so many people; don’t. Small teams are more effective and productive. It sounds counter intuitive, but everyone in a small team is aligned and is working as fast as possible to grow. A founder could just lift up their head from their laptop and talk to their employees. You need to be that agile and lean at first. It is much more productive and you can make decision much faster. Keep a small team as long as you can. Try to stay small until the day you realize that your employees and your cofounders are going to start burning out if you do not hire.
- If you have a bad hire, let go from of them as fast as possible. The first hires are the people you hope will stay with you till the end. You do not need anyone to slow you down. Therefore, if you have someone who is not very productive, fire them as soon as possible. You do not want them lingering around. Another thing to be aware of, other than productivity, is company fit. If there is a person who is doing a great job, but does not fit your culture, let them go as well. You need your team to be at top performance from the beginning, so having good chemistry in your team is really important. For example, imagine having a productive person, who starts gossip in the office and gets close with another employee. You just build a divided team for the future.
- You want to stay diverse. Have a team that is all aligned in terms of goals, but from different backgrounds. You do not want to have a team of people that all think in the same way and have the same upbringing as you; if you do, then you are building a product for a niche market of people like yourselves. One common mistake founders make is that they hire a lot of friends and old colleagues that are like them, and that is fine for a few employees. However, with time, you need a team that is diverse and that can bring you new perspectives to the table.
- Retain your employees! If you have a good team and good hires, keep them as long as possible. Give them incentives, stock options, good salaries, just do whatever to keep them. Don’t be cheap with the employees, they are your best investment in the company, and low pay will push them and potential new hires away as well. Also, finding a hire that is a good fit for your company is really hard and takes a lot of time, so you need people who will want to stay with you as long as possible. Nevertheless, if an employee threatens to leave unless they get a raise, do not do that. A mistake like giving them a raise will create a domino effect. You always have to be fair with everyone and have some sort of structure on how these benefits will work and how the employees will grow in the company. Being fair will give them comfort and keep them onboard.
- Talking about structure, let’s say you reached scale and you grew your company a lot, your team cannot be free spirited anymore; the company needs to have structure. Therefore, make sure to tell the employees who they are going to report to, you no longer have time to have everyone report to you (every employee should only report to one person to keep everything clear and avoid issues). Let the employees know how they will grow in the company in a clear and fair structure. You want the employees to know how and what they will need to do to grow in the company. The best way to do that is to always be honest and transparent with your team.
- Finally, the last tip on building a team is being honest. Keep everyone informed with why you are doing a certain decision. Obviously do not tell them company secrets, but be honest in most cases. If you let someone go, explain why they were let go in a nice manner. If you need to hire someone above an early employee, explain why you are making this decision so they won’t get offended. For example, if you need a VP of Engineering and you already have one senior engineer, he/she might be offended that you do not think they are fit for that role. Therefore, explain why you want to hire a manager for them, and explain you vision for them in the company. Hopefully they will understand where you are coming from and agree, but either case, it is definitely better explaining why, than just doing it and having an angry employee on your team.
There is no perfect way to a build a great company, but the team is definitely the reason why great companies exist. Maybe you do not agree with what I wrote above and that is fine. However, it is really important to think about these stuff when finding a cofounder or hiring a team. Keep them in mind, because all great companies start with a great team. Investors, clients, future employees, and partners will always look at a company’s team and its culture before starting to work with them.
