by Frank Gruber
“If people can celebrate along the way, you can transform something (which has to be a sprint by definition if you're trying to build a half-a-billion- or a billion-dollar company) into a marathon—where it's fun, there's something to look forward to, there's always new challenges,” says Radfar. Metrics are an easy thing to celebrate because they're tangible; they lend themselves to milestones such as 100 this or 10,000 that.
“I remember when I first started at AOL,” my cofounder Jen recounts, “and we had just hit 5 million paying subscribers, which was an enormous feat. All of a sudden, all my colleagues received these really cool AOL leather jackets. They were quick to tell me that when they had hit an earlier milestone (I think around 2 million paying members), CEO [chief executive officer] Steve Case promised all current employees he would buy them a jacket if they could hit 5 million. It didn't take long. Employees wore their jackets all the time—it was a serious badge of pride.”
On Fridays, Tech Cocktail sends out a newsletter with our top articles and videos from the week—and sees a spike in traffic as people receive the newsletter and click over to our site. I decided to make this a fun, weekly ritual and celebrate readers reading Tech Cocktail! I project Tech Cocktail site traffic onto our big-screen TV in the office, encourage our remote team to pull up the real-time analytics dashboard online, and announce that it's time for the traffic dance! This brings joy to our editorial team as all the hard work from the week culminates in a traffic spike.
Whenever Mullin of Onboardly hits a milestone—such as reaching 10,000 unique visitors to their content marketing and PR blog—she and her team celebrate, talk about why they succeeded, and set a new goal. “It's important to celebrate the small wins, especially with startups,” she says. “It's a long road.”
Final Thoughts
Metrics are the vital signs of your business, and every startup has a different way to measure its health based on what it's trying to accomplish. The key is to focus on the metrics that matter and really move the needle for your goals, rather than getting blinded by numbers that give only the appearance of progress. So dig a little deeper to find your metrics. Once you do, you'll have found your compass—one that can help motivate you and your entire team toward startup success.
Part 3
Team and People
Chapter 8
Team
Alone we can do so little; together we can do so much.
—Helen Keller
Whether you're a startup founder or running an existing business, you're tasked with building an amazing team that will go to battle with you and dig deep in the trenches for long hours, every working day of the year. You will interact with these people more than your family—some may even be family! This group of A-player, determined individuals will be the ones to help you realize your vision. But…here's the deal. It's not that easy to build an amazing team. Here are some things I've learned along the way through my own experience and from other founders.
What to Look For
Attitude: FeedBurner was a Chicago-based startup that created the equivalent of the plumbing for the syndicated Internet: a platform for powering content feeds across the Web. It was founded in 2004 by Dick Costolo, Matt Shobe, Steve Olechowski, and Eric Lunt, and after raising $8 million in funding, FeedBurner was acquired by Google for $100 million.
Lunt was the chief technology officer (CTO), tasked with building the technology team. Lunt believes it's the relationship of the founding team members that helps build the foundation for future hires. He also believes there are a couple types of hires—he buckets them into specialists and best athletes. Specialists tend to be high-profile salespeople with a Rolodex or amazing marketing people, and they're expensive to hire.
Therefore, in an early-stage startup, Lunt recommends bringing on best athletes (or stem cells), meaning people who are great at lots of things. I agree, and here's why. When you have 7 to 12 employees, you're going to have a flexible, flat organizational chart. Employees will have their specific roles, but they will each have multiple roles to perform, too. Everyone will be hustling to keep the company going in the right direction. Every few weeks or months, there will be different obstacles that come your way—and you will need highly flexible, self-motivated people to attack these problems head on.
Everyone on the team should feel empowered to take things on, as needed, even if it's not their job. If you're hiring specialists, this type of mentality may be foreign to them. Some may believe it's not their responsibility, because it's not in their job description. This is toxic to the culture of a startup.
Talent: If their attitude is right, the next thing to look for in potential employees is talent. In the words of Napoleon Dynamite, “Girls only want boyfriends who have great skills.” One way to test skills is to have potential hires do some kind of test project first and get paid for it. This allows you to try before you buy. You can do this with short-term projects or even longer-term ones, bringing people on as contractors first and, if you like them and their work, eventually hiring them full-time. I've done that quite a bit, with many members of the team either doing test runs or working as contractors first. If things don't work out, it's much easier for everyone to end a contract than to terminate employment.
Michael Chasen, the cofounder of Blackboard and now founder of SocialRadar, hires people who are more than qualified for their current roles so that they'll be able to grow quickly into new roles. “Remember as a kid, your parents would buy you a winter coat one size too big so it would fit not only this season but next? They were on to something,” he says. “You want people who will not simply settle into a limited role in the present but who will help the company get to the next phase as soon and smoothly as possible. It's not hiring people who are overqualified. It's hiring people whose qualifications will become more relevant with each passing week.”
Culture: Throughout the process, keep an eye on culture fit. Lunt is the first to point out that the first hires have a huge impact on the company culture. “Think about the percentage of influence to the culture of the company that those first employees have. While the founders still have a heavy influence, the rest of the team is going to also set the tone for everyone else after them. So you really need to screen for cultural fit,” he says. I'll talk more about culture later.
Personality: Besides attitude, skills, and culture, start thinking about the personality traits you want your early employees to have. You might want people with drive or empathy, people who are team players or outside-the-box thinkers, or people who are positive and responsible. It's up to you. But one thing is nonnegotiable: being passionate for the company and mission. The chief operating officer (COO) of Boston-based startup Jebbit, Jonathan Lacoste, explains, “If you find someone [who] has a burning desire every morning to change the world, it'll do a world of wonder for team motivation and chemistry. You'll find that these are the people that ‘wow’ you on a regular basis and become advantages against your greatest competition.”
Who to Hire?
In the beginning, many startup founders find it easiest to work with friends, family, and anyone else who is as passionate as they are about the project. These are people they trust, whose personalities and motivations are known.
Put some thought into the roles you give your family and friends and the expectations you set. If you become successful, will they expect to have a senior leadership position in the company? Do you think they can grow along with you? If you know you might eventually have to replace them or hire managers for them, would it put you in a tough spot? These are all questions that various entrepreneurs have had to face.
During your early days, you may be bootstrapping and working with freelancers, contractors, and fans of the project. You'll want to stay as lean as possible for as long as possible and hire only when it makes sense in terms of cash flow and business goals. You may all have too much work to do, but does hiring a marketer actually increase your revenues? In a post called “Lean Hiring T
ips,” lean startup expert Eric Ries advises not to hire anyone unless you've tried and failed to do the job. The reason is because trying to do it yourself has three possible (all good) outcomes: (1) you'll discover you and your existing team can't do it, but you'll get an appreciation for the task; (2) you'll discover your team can do it; or (3) you'll discover that you can do it but it's not crucial.
At some point, though, you'll need additional help. Everyone has a different take on the first positions you need to hire, but it really depends on your industry and company. Steve Blank believes you need a hacker, hustler, designer, and visionary (although one person can do multiple things). Within a small team, everyone can help with marketing, especially in this day and age of social media. Your core team will also be doing business development for the early stages of the company and, to be honest, wearing many other hats, too. You probably don't need in-house human resources (HR), legal, or accounting employees because they can all be easily outsourced and are too expensive to have on staff. Again, your startup will have its own needs.
Once you get past the initial bootstrapping days (which in reality can be months and even years), you can start to bring some of your contract employees on full-time and find more qualified people that you can now afford. It's an evolution, because a startup is literally in a constant state of change.
Outsourcing
The most likely candidate for outsourcing in tech startups is the development team, but it could include other key roles like design or HR. There are pros and cons to both options. Let's start by talking about development/production outsourcing.
On the positive side, outsourcing is usually cheaper. It's helpful for tasks or skills that you aren't an expert at—and if you're a businessperson who can't find a tech cofounder, outsourcing can sometimes be necessary. Skype, the hugely popular voice over Internet Protocol (VoIP) app, was founded in Sweden but originally created by developers in Estonia. Digg, the community news site, was created by a programmer from the outsourcing website Elance. AppSumo, the daily deals company, was built in a weekend for $60 using an outsourced team from Pakistan. Outsourcing can be relatively inexpensive and shockingly fast. On the negative side, whomever you outsource to is less invested in your business than a cofounder or employee would be, because outsourcing companies have multiple projects. And if you outsource key roles, it may be harder to create an integrated company culture.
When it comes to other types of outsourcing, such as HR, accounting, and legal services, I'll reiterate that most early-stage startups should outsource. Whether it's finding a local lawyer or accountant to work with on an ad hoc basis or working with a professional employer organization to manage payroll/taxes and benefits, you'll want to benefit from the best experts out there and leverage their resources as much as possible. Talk to others in your local tech community, and ask for recommendations.
For a list of hiring tools, check out http://tech.co/book.
The Harsh Reality
Sometimes you end up hiring people who aren't a fit—people who don't deliver or work against the team spirit and culture you're trying to build. You know it deep down, lose sleep, don't know how you let it happen, and don't know what to do about it.
I don't like firing people—no one does. Well, maybe Donald Trump does. But in real life, it's not quite what Donald Trump makes it out to be. It generally sucks, but as the boss, you gotta do what you gotta do.
Chris Dixon
Chris Dixon is a serial entrepreneur and investor who's now a general partner at the venture capital firm Andreessen Horowitz. In 2005, he cofounded SiteAdvisor, a consumer security company, and it was acquired by McAfee in 2006. His recommendation engine Hunch (founded in 2007 with Caterina Fake) was acquired by eBay in 2011. On the investment side, he started the Founder Collective venture capital firm and invested in companies such as Group.me, BuzzFeed, and MakerBot. As an angel, he has personally invested in Kickstarter, Foursquare, Pinterest, and more. Dixon is based in New York City.
Chris Dixon, an investor at Andreessen Horowitz, writes this about firing: “You're in control of a situation that will meaningfully hurt someone. It's an awful place to be. The fired person will go home and tell his/her family about how terrible it was. It was your fault. Perhaps your mismanagement caused it. Who knows. You'll question it, and perhaps you are right to do so.”
It's easy to delay the firing process, rationalizing to yourself that the person is getting some work done and maybe he or she will improve. SweatGuru felt this way early on: the founders had hired their friends, and it took awhile to realize that they needed to start over with a whole new team. “Unfortunately, we didn't move fast enough to remedy the situation,” recalls founder and chief executive officer (CEO) Jamie Walker. “We loved the personalities on our team and were reluctant to part with them.”
Let's say your bad hire is a salesperson. What harm will that do? Even worse than building bad code, a bad salesperson can alienate potential clients. This person could poison the well for your brand for quite a while by stressing or severing relationships, negatively affecting your image. Once the well is poisoned, it might take you weeks, months, or even years to get back in front of the same company or customers.
This is the reason why hiring your friends and family can be tough: you might have to let them go at some point.
In addition, you might be fired once you have investors and a board. Steve Jobs was famously ousted from his CEO role at Apple in 1985. In his Stanford commencement address, he recalled the painful experience: “At 30, I was out—and very publicly out. What had been the focus of my entire adult life was gone, and it was devastating. I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down.”
Even if no one's getting fired, team troubles are some of the gnarliest to untangle. It's an unfortunate fact of life that some of the most brilliant people are also divas or jerks, and you'll be tempted to hire them and convince yourself it's worth it. It's usually not: they are a drain on morale and productivity.
Robert Scoble
Robert Scoble, also known as @Scobleizer, grew up in Silicon Valley and has always been obsessed with new technology. He's currently the startup liaison for Rackspace, seeking out young startups Rackspace might like to work with. He also blogs about startups and is known for his forward-thinking predictions (some of which you can read in his latest book, The Age of Context). Previously, Scoble worked as a strategist at Microsoft and ran FastCompany.tv.
Netflix calls this type of people “brilliant jerks,” and part of their culture is to not tolerate them. Thought leader Robert Scoble says, “The thing that destroys companies is hiring assholes. Looking for interesting people who are also nice is key at a big company.” Whatever you call this breed of employee, beware—they bite. Cindy Gallop, the founder of IfWeRanTheWorld and MakeLoveNotPorn, says this about the people she hires: “They have to be extraordinarily brilliant at what they do, but they also have to be very, very nice people. Great and nice is my hiring philosophy—you cannot have one without the other. You can't be brilliant and not a team player and able to work with, motivate, and inspire everybody else around you.”
Cindy Gallop
Born in the United Kingdom in 1960, Cindy Gallop grew up in Brunei and came to her entrepreneurial career from the advertising world, where she worked with brands including Coca-Cola, Polaroid, and Ray-Ban. Her Twitter bio reads, “I like to blow shit up. I am the Michael Bay of business.” After a sort of midlife crisis, she became an entrepreneur and launched MakeLoveNotPorn at the 2009 TED conference. The company has grown to a team of eight and in 2012 launched MakeLoveNotPorn.tv, where people can view, share, and make profits on their real-world porn. Gallop is also the founder of IfWeRanTheWorld, a site that brings people and companies together to take small actions on their causes.
But even nonjerks sometimes don't get along. Management expert Scott Berkun believes that most teams suffer from one of four problem
s: a lack of trust, old wounds, conflicting priorities, or poorly defined goals. Solving these problems sometimes requires you to reorganize your team, change your goals, or stop a project altogether. And the harsh reality is that team problems can often be traced back to poor leadership. “No one can lead a team well if they've never been on a good team. [And] many people never experience a good, healthy team,” he says.
Berkun recommends interviewing team members when something is wrong and asking about their frustrations. “If none of them involve you, you haven't heard the whole truth yet,” he says.
David Hassell, founder and CEO of 15Five, learned this at his previous company. They started seeing a high turnover rate and weren't sure why—until Hassell realized it was his fault. He and his partner had conflicting values, and they had each hired teams that agreed with them, slicing the company in half. “This made an absolute mess of our company's culture,” he recalls.
Outsourcing is a whole other can of worms—it doesn't always work out the way you think it will. Although there are a number of reputable services out there, there are hundreds more that give outsourcing a bad rap. Jinesh Parekh, the CEO of Idyllic Software, warns, “When you are not their important client, you will be allocated the mediocre hires, and that can hamper your business in big ways.”
This is the Harsh Reality section, so I'm about to get personal. Before we took on Tech Cocktail full-time, Jen and I came up with a plethora of ideas. Thankfulfor was one of them, but there was another side project near and dear to our hearts, code-named The Willow Road Project after the road that now crosses Hacker Way in Silicon Valley. Willow Road was a video startup focused on community. We outsourced it all to get a first version out the door, thinking we'd hire a full-time team later once we started to bring in revenue or took funding. Looking back, we felt very excited and organized but ultimately made every mistake in the book—and it cost us.