Learning from Failure – Early Hiring Burns Cash

Timing your first hiring for your startup is very important for an entrepreneur. Hiring too early leads to wastages which can prove very crucial if you need to bootstrap your venture. Identifying the gaps in your startup, making a list of the precise skill sets you require and then finding the right profiles to match the requirements is the primary task and responsibility of the entrepreneur. The more the inaccuracy or deviation in this, the more the wastage of money and time.

Wishareit is a social gifting platform which made this very mistake. On receiving a positive feedback from its initial users and being overly optimistic, the startup hired too many people too soon which cost them months of runway.

Advice – Identifying the gaps in your startup and filling them with the right people is the right way to approach hiring.

Hiring your First Employee

Your startup’s first hire is always special. There are a couple of reasons for that.

First Experience of Hiring – Since this is the first time you are hiring someone, it makes you feel nervous and you tend to more careful and cautious.

For the Long Run – The first hires have two things attached to them – they are generally hired for a very particular skill set and are generally hired for the long run. An entrepreneur hopes to find someone who can stay with the company in the long run and can maybe lead the team around the skill set he/she was hired for.

Based on the importance of the first hire which we can gauge from the points above, I suggest that every entrepreneur should look for the following qualities in this person.

Passion – You don’t need an MBA degree or 5+ years of experience at this stage, you need passion to match yours.

Belief in Concept – Only a person who believes in the business idea as much as you do will want to be part of the company for the long run.

Strong Skill Set – Since that first hire will have to do a lot of the skill based stuff himself/herself, having a strong skill set is a must. Until the startup can afford to put together a team, this person will have to drive this part of the business.

Hiring the right people is a key factor which affects a startup’s growth. Hiring the first few people is even more critical and an entrepreneur must not hurry up and think it through before doing so.

How to hire if I have no money?

Hiring is about making someone part of the team in exchange for giving that person something he/she is happy with. Generally, it is money you give. For startups, money is limited. So what can you give in this case?

A Dream: You are in this to follow a dream. You need to share the dream with the new hire to generate interest in the latter.

An Interest: With the dream, you need to give the hire a vested interest in the growth. This can be done through equity or a promise to give equity at a later date (stock options). Equity is the instrument depicting the growth and development of the startup and contains the value which a startup is able to generate.

You should be able to transmit your dream, your passion, your vision and a stake in all this with a potential hire to close the recruitment.