Shared Vision

Let’s boil down all team-building, recruiting and HR (in its true sense) to one post and see what comes out.

Biggest challenges for startups when it comes to teambuilding:

• Competing for the really good talent against more established players
• Getting those critical first few hires right… wrong first VP of Sales can wreck the company, or so the legend goes.
• Coming up with the right incentive structure
• Getting everybody on the same page

So where do you find them:

• This is where high-quality networking pays off. Networking understood as a 10-year horizon effort of truly helping others through proactive generosity and social arbitrage, as Keith Ferrazzi would put it.
• At your competitors. You get the talent, they lose a key player.
• Through your personal social life. I’m bad at this, but others report a lot of success. (Think kid’s soccer, golf outings… etc)
• At local events, user groups.
• Through your investors (especially for “gray hair”)

Who do you look for:

• People who share your core values. Forget about company culture: you are the company culture.
• People who are very different from you. Different skill-set, different network, different professional experience.
• People who are smarter than you. Remember the old adage: A players hire A+ players, B players hire C players.
• In new hires, you value attitude more than aptitude.

How do you compensate them:

• The golden rule here is to first understand what motivates them. Then cater their compensation to match that.
• For example: are they highly economically driven or are they looking to change the world? Do they like the entrepreneurial lifestyle, or the accomplishments?
• Understand their risk aversion. Equity is wasted on risk averse hires. Cash compensation doesn’t motivate those who want to be part of a grander mission.

Non-cash compensation:

• Multiple forms of equity, listed from strongest to weakest: restricted stock (shares with vesting), stock options (appreciation of shares, with vesting), phantom stock (cash bonus based on share-equivalent value), stock appreciation rights (cash bonus based on value equivalent to the appreciation of a stock)
• But make sure that your employees understand what they’re getting and don’t feel like you screwed them later
• Many of these instruments have terrible tax consequences: they won’t understand them so the right thing to do is to work with a lawyer to design the right instruments. (Restricted stock seems like the way to go at the moment for Corporations and Profit Interests for LLCs)
• Understand that all these instruments, when based on illiquid shares have problems of valuation. Either use a recent investment round and grant them at a higher valuation or spend $2,500 and get a 409(a) valuation done.

Legalese

• Employment agreement – what senior executives joining your management team get, which include terms of employment designed to protect them.
• Employee agreement – what everybody else gets, designed primarily to protect the company.
• The core issues to solve are mostly related to what happens where employees leave.
• Make sure that these agreements are written in a way that they would pass muster with an investor doing due diligence: not too sweet, not too exotic.
• Don’t deviate from a standard document.

Traditional ideas of HR

• The traditional interview process is an intellectually bankrupt idea. People rehearse for these things and they tell you very little. Instead, spend time working with them on real problems.
• Employee handbooks, processes, all of that. We all hate it. It’s demotivating. Try the Netflix approach to HR instead.

The actual team-building

This is something we’ve discussed in other blog posts. But basically, you’re creating a forward looking story of what you’re out to do, and you’re telling the story over and over, drilling it into each person’s heads, fleshing out their role in the story, until the team has a shared vision. Then you go out and model it in your behavior, and you remind people about it when conflict arises, or when things look dark, or when you deviate.

You tell this story to the team members, and the prospects you hire, and the investors, the analysts, your coaches and mentors, anybody who will listen… and that puts everybody in the right mindset to maximize the chances. It’s not so much a self-fulfilling prophecy but the notion that people operate better when they have a higher purpose that they can remember.

On a personal note, I’m working hard on these things, but my experience is limited and I’ve got much to learn, so don’t take all these points as advice, as much as curated information that I believe to be true

photo credit – flickr user michael costolo – link