03 employee

When And How To Hire Your First Employees

Description: The topic of the article centers on employee. It mentions the main content on the exactly right time and the proper condition and situation to hire the first employee which is important to startups. The author wants to give you some advice and help you figure out some problems you may face.

We’re going to talk about something that’s important to startups, which is hiring and one of the things you’ll learn about hiring over time is that there’s no recipe or magic formula that you can use.

When it’s time to hire the next person, a lot of it comes from trial and error, a lot of it comes from your advisors or asking for help and looking at what other companies are doing and modeling them which means copying them and a lot of it comes down to gut feel as well.

Over the last 15 years in terms of hiring, I’ve been able to hire hundreds of people in my companies, I wrote a few things up here that I wanted to share with you today to give you a bit of advice and to try to help you figure out when it is time to hire my first employee.

If you’re a solo founder at the moment, when it is time to hire the next employee, if you’ve already got a little team working for you, the advice I have is for startups that have 30 or fewer employees, if you’re beyond that stage, then you probably have a recruiting team and at HR manager, you have some help there and you’ve probably got a few managers on board already.

But this is more for the solo founder or the co-founders who are getting started, you’re probably at a stage where you’re finding product market, fit your revenue starting to grow.

But you’re not past that stage where you’re comfortable with your revenue, if you like it, as a start-up founder, you’re never comfortable, if you are going backwards, but you are beyond it, so you’re not at that stage yet, where you have this team, you can hire this person, so that’s what I want to talk about today.

So I’ve put three things up here, I think that the most important thing when it comes to hiring, the first thing I’ve written up here is to do it by yourself, I’m a big believer that for every single role in your company, you should be doing it first before you hire someone, that means customer service, that means sales, that means marketing, that means almost every role.

Obviously, if you’re a founder, that’s not technically fishing and there are some technical roles in your company, don’t go and jump in the seat of an engineer and try and write code, you don’t design anything if you’re not a designer.

But I’m talking about all of the other roles where you need some skills and talents, but it’s not technical, so as I mentioned sales marketing customer service HR, now the reason why you want to do it is because of a few things.

So you want to spend your time more than your capital initially, when you’re getting started, if you’ve gone out and raised two million, five million, ten million, this probably doesn’t apply to you, but I know my audience and you probably haven’t raised money yet.

So when I think about a startup, you’ve either got time or capital leverage and I’ve written about that before, when you’re getting started, it’s all about time, it’s about doing the grind, putting in the time and doing crazy hours.

There’s no way around it, that’s how every startup starts unless you’re in the valley, unless you’ve gone through it, accelerate a program, unless someone’s put five million dollars on your lap.

Then you can go and ramp up, but you probably haven’t got that and I didn’t have that when I started as well, so do the roll yourself first and you do it until you can’t do it anymore.

A good example might be customer support or customer service, you’re building the product with a little team or maybe with an agency or even by yourself, if you’re an engineer or you’re a designer depending on what you sell and you spend maybe 50% of your time building the product or 80% of time building the product 20% on customer service.

As you start to get traction customer service or customer support starts taking more and more of your time and it gets to a point where you’ve handled so many phone calls or so many tickets that you’re an expert in what your customers are asking you about or potential customers.

You know what you need in the role, you know the kinds of questions that come in, you know the technical proficiency or the design proficiency depending on what you sell that someone in that role would need and you can’t do it anymore.

You don’t have any time and it comes down to opportunity cost which means your time is better spent running the business building your product whatever it is than doing customer support.

So at that point, there’s a full-time role, then you know exactly what that person in the role needs to do and you can use to go and write the job, because you’ve become an expert at that role depending on what you sell, that might take two weeks, it might take two years depending on how fast you’re ramping and and how much time customs the support.

But I believe in doing every role first, that’s something that I did for four years, when we got started at some of my previous companies, I remember joking with people that I had seven roles, I was running product, engineering support, marketing, doing some HR, doing some finance, all these crazy things.

But what that allowed me to do is proficient at those roles and to know what the metrics were around the rules which is important, when you’re hiring, because you want to give someone goals and metrics when they come in.

I knew all about our customers, I knew how to build the product and how to support it, I knew how to market it, during the interview process, when I decided it was time to hire people, I could call BS in the interviews.

If they said something and I knew that it wasn’t true, then I knew that from my experience in that role, what might I know about the role? There’s a big difference there, so being able to do the roll yourself everywhere unless it’s a technical role where you’re not technically proficient.

That’s the only way you can hire and build out a great team by knowing what’s required in the role and understanding the metrics, so when you do hire someone, if they tell you something and it’s not true, you know when to hire one person versus two, you know when one person has enough on their plate that you need to hire a sidekick form. That goes for sales customer service marketing, you know support all that kind of stuff, it doesn’t matter what the role is.

The second most important thing when hiring in startups is revenue and that doesn’t mean generating revenue though that’s a no-brainer, it means your first 10 20 30 people even should all have a direct attributable path back to revenue.

You can see my excellent artistry skills up here, I’ve drawn a Picasso like model up here for you that shows any person your hire has to have a direct impact on revenue, if they do hire them, if they don’t them which is simple concept.

It’s not rocket science, but the key thing when you’re starting up again, if you don’t have ten million bucks in the bank or if you haven’t raised around, your goal is to get to break-even as quickly as possible.

So you stop burning money, you can start generating a profit, what’s the simplest way to do that to hire people that will help you get closer to break-even or generating a profit that will grow revenue while keeping your costs low?

That’s why you want to be very careful and very considered about who you hire before you’re at break-even, before you raise around or before you generate a profit, because all that cash has to come from somewhere, it’s probably coming from your pocket, that’s probably you’re reinvesting profits from the business, you want to be able to say that it has a direct clear line to increase our revenue and over time increasing our profit with sales people.

That’s easy, they’re going to be quota bearing which means every month, they have a certain number of sales, they need to make at a certain volume to hit that target, so you can almost forecast sales reps predictably or you can definitely market, it’s easy.

Marketers have to bring in leads, they need to bring in a certain number of leads that are passed to the sales team that they close, so you can work up the funnel from there, what about people like engineers or product managers or designers?

They’re not directly bringing in revenue, they’re not sitting on the phone selling something, so how do you think about them? The way that I think about it is that you’ve got a six-month road map, if you bring on another engineer, can you make that six-month road map happen in two months, which means you can reach more customers, because you’ve got a better product.

So there are direct and indirect ways that new hires can bring in revenue, so for people that aren’t selling, so sales reps people that are generating leads marketers, customer service people engineers, product managers, they do have an indirect way to drive revenue.

It’s important that you think about what that is, because you do want to have a metric for them, that’s related to revenue with engineers and support reps and everything you’re probably not going to comp them or give them a bonus on how they drive revenue, because a lot of that sound of their control, it’s around sale Marketing and everything like that.

But you do want to give them some paths where they can understand their impact on revenue and where you can model that out right, because you’re building a technical product maybe an iPhone app and you have one engineer now and it’s going to take you a year to get the product where you need it.

You have a bit of money in the bank, maybe you are lucky enough to have some profit or you raised a small seed round, if you hide four more engineers in the next few months and that condensed you a twelvemonth for a map down into three months and then that open the funnel.

So you could get a lot more customers, because you can build the features and the functionality you need and that they’re asking for that, they’re not buying that, then it may make sense to do that condense your hiring bring on more people and you’ll get to that path of breakeven or profit sooner.

But I’d advise against hiring anyone that doesn’t have an immediate impact on revenue and the third point up here is to defer those roles, so some typical roles that I’ve seen startups hire, I scratch my head and say, why are you hiring an IT manager? You’re six people, everything is SAS now, you don’t need a 19 manager at big commerce.

We didn’t have an IT manager until we were got 250 people, HR managers, as the founder, you should be doing the HR up to 30 40 50 people, there are products like works and gusto and zenefits and that automate a lot of mundane, the payroll, the HR, the benefits time off.

You shouldn’t have to worry about getting someone on full-time to do that, if you don’t like doing it, let’s face it, you have to do it unless you want to go and raise money, unless you want to extend your break-even point, which is not the thing you want to do.

It should take you a few hours a week, that might eat into one night a week at home where you jump on the computer and you do it, but do it, that’s the right way to build a startup, receptionist is a no-brainer, if you have a reception desk and you’re worried about people coming in and seeing it empty who cares leave a bell on there and say please ring bell, someone rings a bell, you or one of your team goes out and says did we do that few years?

We didn’t have a receptionist, when we did have a receptionist, it was co-founders wife and she was the receptionist and the HR manager, so think about creatively merging those rules down the track of deferring them.

The final one is recruiters, a lot of startup founders say they have to pay fifteen twenty thirty percent to a recruiter, that’s a one-time expense and that only comes up when you’re hiring someone, that’s going to drive you closer to revenue right and it’s a one-time cost as opposed to a salary on the books which can be 40 50 60 70, thousand dollars a year.

That’s going to push your break-even point or push your profitability out even further, it could be a few months, you don’t need recruiters in the early days, you need to be doing the recruiting, you need to be writing their job ads posting interviewing, you can shortlist, you interview one of my favorite ways to do, that is with video interviews.

So hirevue hir ii-v ii-v i SP AR k HR e comm, anyone that applies send them to do a video interview, you screen those video interviews and then instead of interviewing, the interviewed twenty people, you get the three or four best formulas video interviews into your offers, it saves you time.

So you’ve got to think about automation, but you’ve also got to think about deferring those non-critical, non-revenue attributable roles, you might say with recruiters with for hire more people, they’ll help me generate revenue.

But you’ve got to put cost ahead of opportunity in the early days unless you’ve raised a big amount of money which I mentioned before, so recapping with my amazing amazing diagram, I know you’re shocked plan my awesome drawing skills and don’t worry, you’ll learn how to draw like this with time.

If you hire someone, can they generate revenue directly or indirectly? If they can, hire them, if they can’t, defer three simple things that I’ve learned about hiring, I’ve made the mistakes in some of my previous companies, I’ve put the deferrable roles ahead of the non deferrable, the non revenue generating roles.

It’s heard every time, it’s heard in terms of cash, it hurts terms of opportunity cost, it hurts in terms of frustration to me, as I’ve found the same, why aren’t we selling more? Why is product getting better? Why don’t we have better marketing?

It’s because I put these deferrable roles ahead of the non deferrable rolls around, like I mentioned, product engineering, sales marketing, primarily customer service as well, so that’s all for this video.

If you’re not watching this video on my website, if you are a founder, you are going to Mitchell Harper dot me which is my cool core website, go ahead, join my email list, I send videos like this to my email list, so after this video, I’m recording another one that will go to my email list.

If you want that, go ahead, go to beach, rapid up me and jump on my website, thank you for your time, hope you found it useful, I had a great time making the video for you, hiring is something that tricked me up as the first time found in many years ago and even as a 2 3 4 5 time founder, it’s something that’s hard to get right.

So you know I empathize with you, I know this situation you’re in, hopefully, this was helpful to you, have a good day and I’ll talk to you soon.

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