A lot of the things mentioned before also ring true when hiring your first employees. Choosing your first hire is a huge commitment and the first hires will also create the basis for the company culture, which can be hard to alter later.
It's always a good idea to keep the team as small as possible. A small team communicates better and is more agile. Every new person you add to the team can potentially upset the team’s personal chemistry. You should try to find people who are genuinely interested in the job and who know what they should do – or can learn it quickly.
Your dream team
The dream team has many different skills and, ideally, all team members can quickly upgrade their skills as needed. The ideal startup worker is a particularly well-versed generalist in something. For example, a game designer who also does phenomenal code or graphics – not just a coder or a graphic artist. In fact, finding such miracles is really difficult, and a startup must offer something really interesting – an existing team, mission, product, or reputation – to recruit these kinds of people. In the technology field, even finding skilled coders is difficult.
Another feature that unites startups is constant pressure. A startup is really not just about partying and having fun. People who come into the industry looking for mere startup buzz will soon be out of the game. Working for a company that in the worst case scenario has only two to three months of runway requires nerves of steel and high resistance to pressure. While hiring the first employees, you should try to find out if they fit in a startup role. All your first employees should have an entrepreneurial mindset and work as intrapreneurs. Prior experience from startups or even being a startup founder are helpful, but people can acquire entrepreneurial qualities from other settings as well.
Making your startup attractive
So how do you get these people to work for your company? Jumping to a startup from a stable job is a huge risk. Startup salaries are always lower than market price. Generally, key employees are given stock options in order to incentivize them to come to work and do their best, as they will benefit from an upside as well. But this might not be enough and you will need to sell your vision to the potential employee and make them as excited as you are.
As the first hires are important in terms of culture, there are a few things worth considering. Your hiring choices will affect future hires as well, so for example the level of professionality you choose will stick with you. First hires create a sample of what kinds of people you want in the team and any future hires and culture is formed around that. Some things can be done artificially to create the culture you want, but if you want a diverse team building your product, it's a good idea to pay attention to that in the beginning.There is also always the chance that you make a bad hire and need to let that person go, which can be difficult if they are also a part of the stock option plan. So these first choices are quite important. Lastly, don’t hire people you don’t need.
The board
The board of directors in the company is the ultimate stakeholder with direct responsibility to the shareholders. The board oversees the activity of the organization and is in charge of the most important strategic decisions concerning what the company actually does, which markets it serves and how its value base is formed. Typically all these decisions involve also at least the CEO, and well-managed companies also have the employees contribute to strategic considerations, for example through workshops or queries. In short, the board has the ultimate decision-making power on where the company is headed and carries the largest responsibility in addition to the CEO if things don’t work out the way planned.
The board works typically by meeting at set intervals, for example monthly or quarterly. In a typical board meeting, the CEO reviews the present situation of the company, sharing up-to-date data about financial performance, key performance metrics of various company functions and other issues, as well as flagging strategic issues if such have arisen within the company. Given that the board has limited visibility into the day-to-day operations of the company, the board members should normally refrain from making operative decisions, unless there is a very pressing reason to do otherwise. The largest impact the board has on a company’s daily operations is through nominating the CEO, who then will actually run the company operations with the executive team. The board members themselves are, in turn, nominated by the shareholders, based on majority vote.
The board ultimately decides by vote, although usually arriving at mutually agreed decisions is likely to be a better route, and voting often may lead to factions and rifts within the board, which may be detrimental to the board.
The Chairperson of the Board typically has special rights in two ways. First, the Chairperson has agenda setting power – in other words they may direct the discussion in the boardroom by choosing agenda points that they think are most relevant. Second, the Chairperson typically also has a light veto right, which is only applicable in case of ties in voting. In a sense, the Chairperson has two votes to every other board member’s single vote to make sure the board will never be deadlocked in decision making.
In general thinking and in the media, the role of the Chairperson is often seen mistakenly as a kind of a “top Chief Executive” in a company, but in fact the Chairperson normally has only these two differences to a normal board member. In fact, an experienced and professional Chairperson would normally be the most silent and passive participant in an actual board meeting, directing the discussion and ensuring that decisions are made in a proper fashion. The only time when the more typical media image of the “Big Boss” would be accurate would be in the case where the Chairperson is the sole owner of a majority in the company, and would therefore also have the power to dissolve the board. Otherwise, the strategic decisions are made through the board as a whole, and the Chairperson’s main responsibility is to ensure that decisions get made.
The board is the nerve center of the company. It’s vital to the success of the company that there are people on the board who understand why the company exists and are able to make decisions that contribute to its success. It’s not advisable to choose just anyone for the board. Usually in the early stages of a growth company, the board consists of only the founding team. Often the first external member of the board of directors only comes in at the time when an investor wishes to be a board member (in connection with their investment), such as an angel investor or an early stage fund.
Occasionally, having an outside advisor on the board may be helpful, but you may want to consider incentive schemes, for example, owning shares in addition to being on the board of directors to ensure the necessary incentives. However, it is not advisable to have any members who do not bring a clear benefit to the company. In the worst case scenario, additional board members can complicate decision-making and make the life of your business more difficult. In general it’s good to keep the board small.
Advisors and mentors
Advisors and mentors can play a crucial role for a startup. Advisors can be as simple as people you occasionally have informal chats with over coffee and lunch about your startup’s acute issues.
Insights from an entrepreneur – Unacast
Kjartan Slette is the co-founder of TIDAL and today the co-founder of Unacast – a company creating the Real World Graph® to understand how people and places are connected to empower the next generation of data-driven industries. He shares with us how Unacast understood that they were failing at ensuring diversity in their company and how they addressed the problem.
Why diversity is important?
“Some people think diversity is important based on studies showing that more diverse teams perform better. However, I don’t want to connect my actions to those as research about big corporations abroad has little to do with a startup from Oslo, Norway. The differences are too big. The research-based goals might work for big corporations with thousands of employees, but not for startups, who are first and foremost trying to survive. Practicality is the key.
“The diversity ambition should be rooted in the company’s original mission and manifesto – that is how you start making the right decisions from day one. Then you don’t need to deal later with the errors made during the early days, just like many of us have to do now.
“Our diversity goals are connected to personal morality: we want to do this and we think it is the right thing to do regarding our business and the whole society. It’s also connected to our product. We are building a product that aims to understand global movements and movement patterns. We think it’s a disadvantage for our company if we don’t mirror the world. It’s that simple.”
You said you failed at diversity – what went wrong?
“I realized something at the time we were starting to grow and we were recruiting talented and creative people, setting up a head office in New York, signing with partners and beginning to build revenue. We were sitting in a meeting room and I looked at the people around me and realized they were me. We had duplicated ourselves: mostly male, mostly white, approximately the same age, the same cultural background, everyone was the same. That’s when I realized we had failed at diversity.
“It’s not like we never talked about it, we had – but on a superficial level. We thought that if we say that we want to be diverse and want things to change, they will. Of course, it didn’t. There were not more women for example applying for jobs just because we said we are concerned about the lack of diversity.”
How did you start working on diversity and gender balance?
“Even though diversity is a multifaceted topic that involves more than gender, we concluded that we had to chip away at the diversity block one bit at a time, and focused first on gender balance.
“Understanding and admitting you have a problem is a typical starting point for most companies. But like any other thing you do with your company, increasing diversity needs work and not everyone is willing to do it.
“We created a diversity team, a group of people that had the energy and resources to try to achieve the goal. I also think that it’s important that not only the diversity team but also the founders and management connects with the goal. Diversity is not something that you do on the side just to tick a box.
“You need to think about everything: the company website, hiring policies, and how you talk about people in general. For example, we thought that calling our employees ‘the knights of Unacastle’ was a fun startup thing, but we stopped using it after we heard from our job applicants that they found the term masculine.”
A step-by-step summary of our guide to diversity
Realize that we had a diversity deficit
Hold internal discussions on why this was, and how to fix it. Nothing happened but talk, and more talk
Hold new internal discussions on why this was, and how to fix it
Create a team to actively focus on diversity and the upcoming hiring process. This team was backed by the entire company, the management team, and the founders, under the notion that improved gender balance was critical to our future success
Admit to the world that we had failed
Revise our company culture and how we communicate it, with the ambition to get closer to our true core and not settle for flashy wall-slogans
Relaunch our values
Change our hiring process to avoid the biases that so easily can lead to copying yourself
Launch our diversity dashboard
Agree it was ok to take slightly longer to hire in order to improve diversity, since we would never settle for anything less than the top talent
Work hard
Learn and iterate
Work harder
“As a consequence of the steps above, more and more women are applying for jobs at Unacast and hire by hire, we’ve increased the number of women working at Unacast to 41% at peak – more than doubling the percentage in under six months.
“The one aspect I want to emphasize is that often I hear people say ‘but there are not just enough women.’ For me, it’s the same as saying ‘you can only fall in love with one person.’ There are thousands, perhaps even hundreds of thousands, of people you can fall in love with and also more than enough women to fix the gender balance of your company. You just have to give yourself time to find the right mix of people for your company. For example, If there are not enough women in a funnel for a specific position, give it another month or so. However, you should never sacrifice the competences and qualities you need, because if you do so, you also put the whole existence of the company at risk.
“Of course, as an early-stage startup, you might not have the luxury of time since your only objective is to survive. Just like we recently had a setback with our gender balance because, as a company, we had to make rapid changes in our organization. It meant we had to hire people fast and therefore didn’t have the luxury to take that extra time. Even though we had a recent decline in the gender ratio, I think the key factor is to re-balance the situation after the hectic period and make sure the fundamental things are right. Diversity is a moving target we might perhaps never hit square in the middle, but it’s a target we will nonetheless keep aiming for.”
