You probably think it's smart to hire employees who have worked for you in the past, huh-- especially the junior employees who you loved managing. They know your style, they know your hot buttons, they can likely read your mind, and the "management stuff" will seem easy to you. Let's face it, you hardly have to pay attention!
They may even be able to take a pay-cut while you get through your seed funding OR maybe they'll be OK with knowing at some point they'll receive some form of equity. They trust you. You're good for your word.
You probably also think you're ahead of the game hiring those who've gotten you out of some previous trouble while in a larger business or even corporate environment. The loyalty is there, they know how to save you from your bad habits, how to organize work quickly to control damage or rejigger everything to your liking, how to make you look good, and again the "management stuff" will seem easy to you.
Great idea for your first start-up hires, right?
(well, that's the tone you're setting anyway, so you might as well own it the moment you hire previous employees to be part of your new start-up team instead of looking at your business plan and selecting talent based on discreet goals you need to meet)... ah-hem... let's discuss...
THE START-UP TEAM: IT'S MORE THAN LINING UP THE WORK AND ATTENDING TO YOUR FOUNDER NEEDS
On the surface it is often easier for you to simply hire those who used to work for you-- not with you, but actually for you where you managed their work, handed out bonuses and flashed smiles of pride each time your team member was recognized for doing excellent work (because one would hope those are the types you would want to bring into your new start-up). They also made you look good. Really good.
And, perhaps you think you all had so much fun working together that any step back into your management den is better than where your former employees are now-- who could beat you and your team back then? (no one, that's who). You might even be elevated to "hero status" if you can save a former employee from the perils of their current boss.
And most times with high achieving team members this is very true: if it were truly an amazing work relationship back then, chances are it will still be an amazing work relationship now.
However, there is much more to someone's performance than boss-employee relationship and as we have indicated previously, Startup-land isn't for everyone. The resources once given to you on presumption of a perpetual, albeit at times painful, budget cycle simply doesn't work the same way the first 1-2 years (or 3 or 4) of a start-up.
And Founder? If you are new to this startup thing there's one more vital datapoint to know: unlike any other time in your career, your start-up is about your business, not how you and your team fit into and excel within an existing business. That tends to be the biggest perspective gap and most painful learning point for any new Founder coming from established and larger organization, and the pain is twice as deep if a Founder has never founded a start-up or been involved in a start-up.
THE START-UP TRANSITION: PAY ATTENTION-- YOUR VIEW IS DIFFERENT NOW AND YOU ONLY HAVE ONE OR TWO CHANCES TO GET IT RIGHT
You are now in charge of the whole vs a piece. If your previous team member cannot be part of the whole-- if he or she is naturally more comfortable being part of the piece, then there is no way you will see the same performance as you used to.
Additionally, whether you realize this now or later, your own needs have changed and what worked so well in your previous environment probably won't apply in your current one.
If you have need for a Project Team to drive discreet work packages toward a critical goal, by all means hire those who used to work for you who could get things done, get you out of a bind, and bring value to the table quickly. In this instance, you will be their Project Manager cloaked as Founder and they are the Project Team cloaked as... your team.
But know this, as we stated in our Start-ups Need Start-up CEOs article:
Your Founding responsibility is to build a solid, fiercely efficient business structure and team so that revenue, operational effectiveness, talent management, competitiveness, product commercialization, and business valuation are as integrated, and therefore as optimized, as possible.
If you're looking for people who will follow you because you earned that in a previous role, or if your style is to task your doer-team on a whim from the latest idea that comes to mind, get smart fast about the truth of your situation: you are hiring a team to execute your ideas. If that fits into your plan and enables you to meet your goals and objectives, by all means hire the team to do what you think is right and hold them accountable to deliver.
But if you are looking to truly create the foundation of your start-up in a way that is efficient and effective, where a team "hums" and identifies with a mission while bringing their core competencies to share with you the burden of a start-up, find and hire a start-up Management Team.
And so the question becomes: Do you need a Management Team or a Project Team? Realistically, you need both. However, depending on the age and maturity of your start-up, you may need one more than the other. There is no right or wrong answer, but you need to know the answer, decide, and position your initial hiring and/or on-boarding based on your answer.
THE START-UP PACE: IT SHOULDN'T FEEL CHAOTIC, AND IF YOU WANT LONG-TERM VALUE THROW "FAST-PACE" OUT THE WINDOW ("fast-pace" means "inefficient" to us). THIS IS WHERE SOME SEMBLANCE OF A MANAGEMENT TEAM WILL HELP YOU.
At Impono, we meet 2-3 Founders a week, mostly those asking for opinions from one of our Associates during open sessions we host through our network. These sessions are free, welcoming and small so as to offer the most pointed advice we can to those interested in discussing various start-up and small business growth practices and ideas.
One of the biggest challenges we see facing first-time Founders, especially those coming from larger organizations vs smaller businesses, is this frenetic First-Time-Founder's energy: discombobulated thoughts, never-ending ideas being discussed, constant chatter about new pathways to take, uncontrolled spend and/or hiring plans, no solid path forward-- or at least not one that is easily articulated and consistent.
Often self-funded with a lack of Investors holding the Founder accountable to a plan, the Founder's fast run is typically because that frenetic energy needs an outlet.
If you want success, the early-stage energy should be a steady, thoughtful walk based on a solid plan, and efficiency, not "fast-paced," is the name of the game.
Despite the glorified techie/Silicon Valley burn-out / just-get-it-done style some mistakenly think exemplifies the unicorn Founder, the reality is that those who plan achieve their goals. Those who pace, succeed through the normal start-up obstacles, and they do so with the benefit of a longer-ranged target ahead.
Now what we describe here isn't always the case. Many Founders are focused, very disciplined, and ready to build start-up value after doing their research, planning their strategy, mindfully pacing their activity and rolling up their sleeves to get the hard foundational work done. These Founders usually show tangible results and some form of revenue (or a solid revenue plan) within the first 6-12 months.
However, the Founders we talk to the most come to Impono because they cannot seem to harness that amazing Founder's energy into a productive and consistent line of force, organized and focused on the right work at the right time. They also have very little to show for their work after many months, or even a year.
They feel chaotic, they sound chaotic, their success is unpredictable and in spurts, they are reliant on executing pieced-up tactics, and if you ask them what they do you will hear about their last endeavor vs what their company actually does.
If you're a sole proprietorship, meh-- it's probably OK if this happens. But, if you're a founder of a company and you're looking to grow and establish with high value and eventual investors or partners? Not so good.
In these "frenetic energy" cases, 100% of the time we first observe the obvious lack of a Management Team.
There are usually some consultants and workers helping the tactics along, but 100% of the time in these cases we see a Founder who is not driving the build of a company, but running a sole proprietorship where he or she has simply hired a project team to do work based on the Founder's ideas. This is not a start-up; this is a sole proprietorship.
TIMING FOR A MANAGEMENT TEAM AND HOW ADVISORS CAN CAN FILL IN THE GAPS
You do not need to hire a full Management Team right from the beginning, and in fact we usually unravel those kinds of existing "hire big and wide" plans just as fast as we insist on creating a plan when one doesn't already exist. We've seen the start-ups where the sister is the COO, the cousin is the CTO, the aunt is the CFO and the step-niece is the Head of HR. That's not the kind of Management Team we're talking about here.
What we're talking about can often be achieved by part-time consultants and/or advisors (or even low or no-cost mentors you've known your whole career who fit the need), and the purpose of an early-stage Management Team is to empower highly capable talents to work on equal ground to the Founder.
When a Founder works alongside peers who have deeper knowledge than the Founder in specific areas of the business, the Founder is forced to consider all efforts from the site of running a business vs a sole proprietorship. Focus becomes a necessity by virtue of social pressure within your Management Team, and discipline connected to accountabilities is the only way you will achieve what the team sets out to do.
With a Management Team-- even a team of 3 who are working part-time with the Founder-- you have a group of peers reporting into a Founder rather than project team members hired to take on discreet projects or complete tasks provided to them.
Not only does the Founder now have a forum to share burden and business risk mitigation, but with a competent, like-minded and respectful Management Team in place, the business approach moves from doing what the Sole Proprietor wants to forcing the more uncomfortable discussions a hired project team wouldn't typically dare ask:
* why are we doing it this way?
* why don't we hire a part-time 2 month expert for that?
* why are we talking about a new idea that isn't in the business plan?
* what is our burn rate if we decide to do the project differently this far into the initiative?
* why would we take on another client before we consider the impact to our plan and adjust our budget and hiring plans?
* why aren't we leveraging the Investor to do that with us?
BOTTOM LINE: FOUNDERS, STEP BACK AND LOOK AT WHO YOU ARE HIRING AS YOUR FIRST-TYPE TEAM
As you can see, there are a lot of questions there that tactical contractors would never dream of asking unless it is associated to their contract and scope of work. It's not that they don't ask the same questions behind closed doors-- because trust us, they do, usually with each other-- but it's that their scope means work, and work means a paycheck. When you hire people to work as part of a part-time Management Team, you are asking them to operate at a Management Team level. They will and should ask those questions.
If you do decide to hire a Management Team, be sure that the scope and cost and needs are aligned to your business's scope and cost and needs.
And for Pete's Sake, let the Management Team do what they do best. If you think you're going to get the best out of seasoned leaders by giving them tasks as you do your project team, think again.
You will instead get what they are able to give you in between your task-master style, and look for an exit with their reputations in tact. They do not need management; they need to help you, so let them.
That is of course assuming you want to build a business and not maintain a Sole Proprietorship (and by the way, we advise Sole Proprietorships and have these very same discussions when he or she considers growing their individual business).
We know that launching a new or transforming an existing organization isn't simple, but it can be easier with the right advisors and doers. If you have additional questions about this topic or how it can impact your business, contact us. Let's see what we can do for you.
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