Startup Professionals Musings

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6 Hiring Principles To Grow The Best New Venture Team Posted: 03 Jan 2022 06:05 AM PST Startup investors tell me they invest in a new venture with a higher caliber of people, rather than the product or service, and I agree. In my role as a business advisor, I see successful businesses most often emerging from great teams rather than great products. Yet I find the people building teams are usually product experts, often with no experience in team building. Of course, it's no surprise that most entrepreneurs don't have a background in hiring teams, and don't have a budget for training or human resource consultants. But these days with all the resources on the Internet and elsewhere, there is no excuse for not keeping up on the latest insights, best practices, and technology in the area of hiring, motivating, and training. For example, I remember a classic book, "The Best Team Wins: Build Your Business Through Predictive Hiring," by Adam Robinson, CEO and cofounder of Hireology, which details the how and why of hiring your most valuable assets today. He comments that in spite of the digital revolution, the hiring process hasn't changed from its low priority, last minute, subjective roots. In fact, his analysis of current statistics and many case studies leads both of us to recommend a focus on a set of key hiring principles that shouldn't come as a surprise, but don't seem to get followed very often these days by new companies, or even the more mature ones: Look for a cultural fit before a skill match. In the past, very little consideration has been given to finding people who share your purpose and values for the business. But today, in this era of relationships, people who fit your culture have proven to be much more engaged and productive than others who are more skilled, but feel like outsiders. Some of the companies with the best team cultures, including Zappos, even go so far as to offer new employees $2,000 to quit after the first week on the job if they don't feel a fit with the team assigned. It's a small cost to prevent a long-term loss. Give priority to attitude over experience. New businesses need people who have a passion for getting things done with limited resources, enjoy problem solving, and relish constant change. Often times, candidates with more years of experience are frustrated and unproductive in these environments, and are looking for structure and consistency. At Twitter, for example, even though everyone gets great perks, including meals, yoga classes, and unlimited vacations for some, employees can't stop talking about how they love working with other motivated people, where no one leaves until the work gets done. Be patient when filling open positions. Not planning ahead, and only hiring people in the crisis of an open position is a recipe for creating dysfunctional teams. Having no one is better than someone who needs constant attention, or is working against you. Define a disciplined process, take the time to find multiple candidates, and do proper reviews. Get interactive in candidate interviews. Some entrepreneurs approach hiring as a test of their selling ability, while others wait for the candidate to sell them. The best approach is to ask open-ended questions, really listen to the answers, and then follow-up for depth. Have multiple team members do their own two-way interviews, and compare notes. Avoid surprises through proactive homework. Team managers in a hurry to hire often skip references, assuming they won't get the real story anyway. In truth, much can be inferred from what is not said, and the tone of former managers. Doing multiple calls will reinforce your qualms or eliminate them. Recovery from a surprise bad hire is expensive. Another type of surprise is the perfect candidate who walks away at the last minute. This can be avoided by asking about extenuating circumstances before you extend them an offer, such as spousal objections or other pending job offers. Asking will give you the chance to address these considerations, and avoid disappointment and drama. Do your onboarding with conviction. Integration of a new employee into their team is the right time to communicate the culture and direction of the business, and let them know what is expected of them. The proper training and support right up front is key to retention, the right attitude, and their ability to be influential in driving your business. Building and managing a great team doesn't stop when your last position is filled. Keeping the team motivated and happy over time is just as hard. Even happy people expect to be promoted, and do move on to other opportunities, so you have to plan for replacements as well as new business. Is your business able to grow and adapt as fast as the market changes these days? Marty Zwilling

6 Strategies For Luring Investors To Your New Venture Posted: 02 Jan 2022 08:32 PM PST Fundraising is brutal. Actually, according to Paul Graham of Y-Combinator fame, "Raising money is the second hardest part of starting a startup. The hardest part is making something people want." More startups may fail for that reason, but a close second is the difficulty of raising money. Quite a while back, I outlined "The 10 Best Sources of Cash to Start Your Business" for startups, listing angel investors as alternative six. I still get a lot of questions on these mysterious and often invisible investors, so here is another attempt to bring them out of the ether. By definition, an angel investor is not an "institutional investor." Venture capitalists (VCs) are paid to invest other people's money, and measured on the rate of return they get. Angels are typically high net worth individuals who are investing their own money, for a wide range of motives. So "good" angels are ones with motives that are consistent with what you bring to the table. This means they usually invest in people who have the right "chemistry", and areas of business they already know. They tend to work locally, so they can "touch and feel" their investments. Angel investors also tend to limit the size of individual investments to $250K or less. If you need more, you need VCs or a flock of angels. So how do you find those good angels? Use personal networking. The best angels you will find are the ones who know you personally, or know a member of your team or advisory board. If a potential investor gets to know you BEFORE you are asking for money, your credibility and investment probability will be improved by an order of magnitude. Entice angels to play along. Of course, angels are really mortals. They want to make a difference. Asking an angel to work with your company in an advisory role is a great way to establish a relationship that may lead to a cash investment. If you impress the angel, it will likely make her at least an archangel (advocate) when it comes to funding. Court local angel groups. Since angel investors most often focus only in their own geographic area, it's most effective to court the local group, or even make a guest appearance with an archangel. If you can earn an archangel's confidence, he or she will invite you to pitch the group, and you'll have an edge in the voting. Mine national databases. If you are still alone, submit your application to the leading online website national databases of angel investors, Gust (USA) and National Angel Capital Association (Canada). These sites have arrangements with hundreds of local groups and individual investors that you might otherwise have missed. Remember angels beget angels. That means that once you get the first one, he or she becomes your best advocate for finding more. Investment angels don't like to travel alone, so they will bring in others if they can (it's called share the risk). Don't forget passive angels. These are angel investors who are private, meaning they don't go to meetings, but will invest if someone they trust brings them an attractive opportunity. Find the right investment advisor, or member of your advisory board, and the "match-making" will happen. Remember that angels have a culture all their own, and it pays to understand how to deal positively with them after you find one. There are some books out there to help, like the one I published a while back with Joe Bockerstette "Attracting an Angel - How to get Money from Business Angels and Why Most Entrepreneurs Don't", and an old standby "The Art of The Start", by Guy Kawasaki. Even if you follow this recipe, you are likely to find that fundraising is a brutal challenge. But if it results in a good angel or two watching over your startup, you will definitely be one step closer to heaven. Marty Zwilling

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