- 0.1 Build Your Team (2/2)
- 0.2 How to hire your first employee
- 0.3 An alternative: hiring freelances
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Build Your Team (2/2)
Employees, Freelancers & Mentors
By the end of this lesson, you will learn:
– when/how to hire employees
– how to attract & retain talent
– when to use freelancers and seek advice from mentors
When to hire employee?
Hiring an employee is a big decision. If you’re thinking of doing so, make sure that your hiring decision comes from a real need (lack of time, expertise or network) and that you are in one of these two situations:
– you haven’t validated your product/market fit but this person would help you learn from customers much faster
– you have validated your product/market fit, and you’re aiming for growth
Why should you hire only in one of these two situations? Because premature scaling is a common mistake and one of the top reasons for failing: as long as you are not 100% sure that enough people want to buy your product and how to make them aware of your product, you should keep the cash burn as low as possible.
“DON’T JUMP INTO HIRING WITHOUT IDENTIFYING YOUR STARTUP’S MISSION AND VALUES”
(Tim Khoo-Jones, Head of Recruiting at SoundCloud)
The sooner the better
If you are in one of the previous 2 situations, hire someone as soon as you need it and you can afford it, even if it’s tight at first. That usually means sacrificing the founders pay to make room for the new hire, but it can be an amazing return on your investment. If you don’t hire, you will quickly realize how much you are NOT getting done.
Don’t think that you will “hire an employee” but rather that you hire expertise, network and/or time from someone else in order to learn faster or sell more.
Once you are confident that you need an employee and can afford to do so, you will realize that hiring your first employee is a huge step for your start-up. In addition to the sudden sense of responsibility (you’re now in charge of someone else’s livelihood!), it’s a strong signal that your company has real merit: Someone has chosen to turn down other opportunities to help make your idea happen.
And in many cases, he or she is embracing a significant amount of risk to do so.The most fundamental way in which it changes your business is bandwidth. A new person dedicating all of his or her time and focus to the company means that suddenly you get to move faster. A lot faster.
How to attach and retain talent
You’ve probably had a chance to see at least some picture of Google offices and other tech companies with table football, ping-pong, nice colorful sofas, bicycles, hipster-style offices.Although that’s nice, it is not something that you should focus on if you are an early stage startup. Other things matter more.
You usually are in a situation where finances are limited and the company’s credibility is yet to be established.
Let’s be honest: people will go and work with you want to be financially linked to your company’s future success, especially if they have a low fixed salary (typically market price minus 30%). It’s quite common for startups to create a stock options pool that can represent 10-20% of the company ownership for employees.
If you want to attract productive talent, value their deliverables rather than their hours on the job. You will increase your retention rate and your employee evaluations will make more sense.
The digital world allows a team to have team members everywhere in the world, using communication tools like Skype, Facetime, Slack, Google Hangouts, Viber, …
That’s not easy to manage, and communication is quite different from working physically in the same office, so be aware of that and try to create a framework so that nobody gets frustrated because of poor communication.
Culture is not only for big multinationals. Your startup culture starts from day 1, even when you are 2 people. Your values, company mission, the way you work, the transparency you have can appeal candidates or turn them off.
The person you hire should feel she can trust you. That means, say what you do, and do what you say. Don’t promise things you can’t respect or you will breach that trust.
How to hire your first employee
Hire for potential, not just track record
Look for someone who has strong interest or passion for causes or missions that are similar to yours, and who are highly efficient at their role with a great ability to learn new things: at first, you can’t afford to hire experts at every single area. Your first employees will usually have a very broad job definition: full-stack programmers who can design, sales people who can write quality blog articles, … Your first employees need to be aware and ok with the fact that they will do many kinds of tasks.
Have applicants demonstrate their skill or aptitude
Even if you are hiring a potential you must have a clear job definition. The person you hire must be able to demonstrate a good level of expertise you are looking for. Many people know exactly how to answer interview questions in a way that instills confidence in a hiring manager. In short, it’s (relatively) easy to bullshit. So, research shows that the best way to vet someone is to have him or her complete a task for you—for example, if you’re hiring a salesperson, ask them to sell you something.
Invite them to truly be part of the team.
Once you hire someone, you have a choice: You can consider him an employee, in the sense that you issue him directives, evaluate his work, and compensate him for his time. Or, you can consider him a member of the team that has chosen to dedicate his time to making your vision a reality, including learning alongside you and experiencing the ups and downs of your venture. And the latter is one of the main reasons why people join start-ups in the first place.
An alternative: hiring freelances
Do you need to “buy expertise” or is “renting expertise” enough?
When you’re an early stage startup, your cash burn should be an obsession: avoid increasing it by all means. Do you need to hire a web designer or does your job need only 1-2 month time?When you can’t afford to hire an employee, freelancers can be a great alternative.
They usually are more expensive on the short term (freelancers are often paid by the hour), but you will avoid the contract paperwork, taxes and still having to pay someone when the main job is over and the next task is not clear.
Where can you find freelancers?
Here is a non-exhaustive list of websites:
One rule: avoid outsourcing what is your core business. For example, if you are a software startup, don’t outsource the software!Freelancers can switch jobs fast and let you down, and you should make sure that your business can keep operating well when a freelancer leaves. The same is true for employees but it is even more relevant for short-term hires.
If you’re an aspiring entrepreneur you’ve probably heard about mentors. What does a mentor bring you? Do you need one? Where to find a good mentor?
A startup mentor is a person who has expertise in a particular area and who offers advice. Asking for help from a mentor is not a sign of weakness; it means that you are aware that you can’t do everything yourself and you lack the expertise a mentor can bring you. Mentoring is based on the idea that you will progress much faster with an advisor on board!
You usually find mentors in accelerators/incubators. But if you feel you need expertise in a particular area, contact people directly (LinedkIn, meetups and other startup events) and ask for help. You’ll be surprised that many people will agree to help you for free.
If you want to build a mentoring relationship, offer a 50% discount on the next investment round to your mentor: try to avoid giving shares of your company for free; some financial commitment is sound and means that your mentor will take things more seriously. It’s a common mistake to give equity for free.