Intro

Welcome back to Thinkk's startup foundations course. Today, we're diving deep into a critical aspect of scaling your business: building your team. At Thinkk, we've seen firsthand how the right hires can catapult a startup to success, and how the wrong ones can derail even the most promising ventures. Let's explore the ins and outs of hiring for your startup, from when to start to how to handle the tough decisions.

When to Start Hiring

Here's a question we get a lot at Thinkk: "When should I start hiring?" My answer might surprise you. In general, I recommend waiting until you're consistently hitting about $10,000 per month in revenue. Why? Because in the early days, it's crucial that you, as the founder, wear multiple hats.

You should be creating social media content, running ad accounts, designing your logo, making sales calls, and even doing your own accounting. This hands-on experience gives you a deep understanding of every aspect of your business. It's invaluable knowledge that will serve you well as you scale.

Once you're cash flow positive, the first hire I typically recommend is a CMO (Chief Marketing Officer). In my experience, sales and marketing are the lifeblood of most businesses, so bringing in expertise here can really accelerate your growth.

Who to Hire

When it's time to expand your team, don't just look for clones of yourself. At Thinkk, we always advise our clients to hire for complementary skills. As I like to say, find the yin to your yang, the 6 to your 9. If you're business savvy, look for a technical co-founder. If you're great at marketing, maybe you need someone who excels at operations or finance.

I once had the privilege of speaking with David Sylvan, a brilliant entrepreneur, who shared this wisdom: "I've never been the smartest person in the room. What contributed to my success is that I knew how to put the right people in the room together, and give them the resources they needed to succeed. That's it."

This echoes the philosophy of leaders like JFK, who famously said to "hire great people and get out of the way," and Steve Jobs, who believed in hiring smart people to tell us what to do, not the other way around.

Your goal as a founder should be to delegate eventually. However, in the early stages of a startup, financial constraints often make this challenging. That's why it's so crucial to be strategic about your first hires.

Compensating Your Team

Now, let's talk about a tricky subject: compensation. Most startups don't have deep pockets for big salaries, so you need to get creative. At Thinkk, we often recommend two main approaches: equity and profit sharing.

Equity gives team members an ownership stake in the company. It's a powerful tool for attracting top talent who are willing to bet on your long-term success. But be careful - equity is precious, and you should be thoughtful about how much you give away.

When deciding on equity splits, consider both the current and future value each team member brings, as well as the risk they're taking. Who's funding the company's development? Who's taking on the most responsibility? These factors should influence your equity decisions.

Profit sharing can be an excellent alternative to equity. It aligns incentives without diluting ownership. It's particularly well-suited for roles directly tied to revenue generation, like sales and marketing. Plus, it naturally encourages team members to be mindful of expenses - the less they spend, the more profit there is to share!

Whichever route you choose, consider incorporating buyout options, cliffs, and vesting schedules. These protect you and your company while still providing upside for your team. They give you the ability to buy back shares or terminate profit-sharing agreements if needed, and they give employees a way to cash out of an otherwise illiquid asset.

Best Practices for Recruiting and Interviewing

At Thinkk, we believe the hiring process starts well before the interview. When posting job listings, treat them like marketing campaigns for your company. Post on LinkedIn, ZipRecruiter, and Indeed. Highlight what makes your startup exciting and unique. Remember, you're not just filling a role - you're attracting talent to join your mission.

During interviews, we recommend a technique called mirroring. Repeat key phrases back to candidates to show you're actively listening. Create a calm, welcoming environment - you'd be surprised how many interviews feel more like interrogations! This is often a candidate's first interaction with your company, so make it count.

Here's a tip that's served me well: ask candidates about their life story and their purpose on earth. In my experience, these open-ended questions reveal far more about a person's potential fit and performance than a standard resume review. Not everyone has the same motivations, and understanding what drives a person can be incredibly valuable.

And here's a crucial point: do you genuinely enjoy interacting with this person? Can you see yourself working closely with them for years to come? Do you trust them? If the answer to any of these is no, it's better not to make the hire. Remember, culture is everything in a startup, and one bad apple can spoil the bunch.

Making the Hire

Once you've made your decision, it's time to make an offer. Always use a clear, simple contract that outlines roles, responsibilities, and compensation. This protects both you and your new hire.

Here's a pro tip: send out acceptance letters first, before any rejections. This gives you a fallback if your top choice doesn't work out.

Always send thank you notes to candidates who didn't get the job. It's not just courteous - it's good business. I learned this lesson the hard way when an angry rejected candidate reported me to the BBB! People care deeply about their careers, and a simple acknowledgment goes a long way.

After the interviews, send all candidates a thank you message. It positions your company as a memorable and kind place to be. Most people just want to be happy and feed their families - you can get 60% of the way there by creating a loving and welcoming atmosphere.

When Things Don't Work Out

Sometimes, despite your best efforts, a hire just doesn't work out. At Thinkk, we always advise giving people time to improve, but if progress isn't happening, you need to be prepared to let them go.

Before you fire someone, it's a good idea to lock their access to company work accounts and put any company bank cards on hold. This is a precautionary measure to protect your business.

Firing someone is never easy, but remember - this person dedicated their time and energy to your company. Treat them with respect. Give ample notice and opportunity to correct issues before making the final decision.

When you do let someone go, ensure they're fully compensated for their work. Offer to write recommendations if appropriate. Remember, how you handle this process can impact your company's reputation. A respectful, professional approach is crucial.

Keep in mind that a fired employee might speak negatively about your company. By handling the situation with respect and professionalism, you can minimize this risk.

Wrapping Up

Building a team is one of the most challenging - and rewarding - aspects of running a startup. At Thinkk, we've seen how the right hires can transform a business, and how the wrong ones can set you back months or even years.

Remember, your company is more than just a legal structure - it's the people who make it up. Two people are a couple, three make a company. Choose wisely, treat them well, and create an environment where everyone can thrive. Do this, and you'll be well on your way to building a team that can take your startup to new heights.

In our next class, we'll be discussing how to get your first customer - a crucial milestone for any startup. Until then, start thinking about the gaps in your current skillset. Who might be the perfect complement to your strengths? That could be your first key hire. See you next time!