Recruitment for Start-Ups (Part I) Building the Right Team
We’ve seen a number of start-ups recently that are really beating themselves up about recruiting the right people, so Tim Dempsey has prepared the following advice. Here is the first of this serialised epic journey into the realms of start-up recruitment.
James has developed his web-based product to the boil and is aiming for a big launch after the company attracts investment. He feels a sense of urgency to recruit a well experienced team who are each at the top of their game, and has been in discussions with potential members who have each asked for an equity share and large salary. James knows that only the investment can sustain these levels, but feels that the people and their experience will drive his product to success.
In recruiting a team before investment, James must be aware that he, not they, will be the focus of any potential investment decision, and his management skills at this stage could make the difference between 2 months or 12 months looking for investment, just by attracting experienced or successful names to the company at any cost does not class the business as a good investment proposition.
James’s predicament is very common, he has been living the business idea and concept since it came about and harnesses complete trust in its success, however, the key to recruitment at this stage, is that everyone on the team must subscribe to this vision. One big hint to this is negotiations over remuneration… If potential staff command a hefty salary, possibly with preference shares thrown in (target-based or not), you can be sure that they either do not understand the needs of the business, or that they are far from sharing confidence in the business.
Think clearly here, would you trust this person with your business?
This comes as a shock to most people, but I would say that the maximum salary for someone working in a start-up with specialised skills is £30k pa with a performance based equity package, and even that is a bit steep.
The one thing to remember is that investors are putting their money into the success of the business, and will not subsidise the extortionate wage packet of an over-egoed employee. In the same vein, it is the business, not just the team that will influence the investor’s decision, and if the current management (i.e. James) does not understand that the start-up or the product itself is not currently strong enough to support the business, the investor has no choice but to close the file.
This doesn’t mean that a start-up can’t recruit good people, James just needs to realise that good people don’t always come with years of industry experience, connections or large salary requirements…