“I’m great at finding all the wrong people.” Founders confess this to me in several ways, and it’s a severe problem. After driving so hard to hit launch speed, founders often find that the only thing holding them back is the crew that is supposed to be getting them off the ground.
Tips for Founders
People need people, but anyone who’s ever tried to move a couch can tell you that adding more people doesn’t constantly improve things. Distracted or underqualified workers can make operations more difficult when there is little room for error and no safety net.
Yet, you have to bring people on board. The Theory of Constraints, first proposed by Eliyahu M. Goldratt, is built on the premise that successful operations continuously add resources at the production bottleneck. For founders, that bottleneck is you.
Delegation of tasks unlocks time and capacity for growing the business, UNLESS (and this is the problem) the task is done so poorly that it requires to rework. That’s the point when founders have a strong desire to say, “I’ll just do it myself.” Those five words are a death knell.
Anyone creating something radically new—and this point can be incredibly challenging for chronically underestimated founders—must necessarily bring workers on board who are out of their comfort zone. Joining a startup is a substantial risk to the worker’s professional life, and it requires a facility for learning and unlearning at a breakneck speed.
I don’t blame anyone who refuses to work for a startup. I’ve made a different life choice for myself, but I can understand why the odds against startup success and the mad turbulence of sporadic growth can be too much for some to bear. The fact of the matter is, though, that Fortune 500 companies are not any safer anymore. Disruptive tech is knocking down dinosaurs on every front, and the average corporate lifespan has shrunk to less than 20 years. There are no secure paychecks or lifetime job offers in the future.
How do you hire well under these conditions?
I’ve gathered some of the most challenging lessons learned from our Headliners and data from founders everywhere who have found ways to assemble stellar teams on the fly.
Lesson 1: Diversity Is Better for the Health of the Company, Especially for Innovators
This is one of those simple facts that seem intuitive but rarely translate into real-world hiring practices. It’s self-evident that echo chambers and homogeneous groups get blindsided because they share faulty assumptions. As General Patton barked at his troops, “If everybody is thinking alike, somebody isn’t thinking.” *
Not only is diversity in hiring logical and the right thing to do, but it also improves financial performance, with more significant revenue impacts the more innovative the business model.
Boston Consulting Group’s study of 1700 companies across eight countries found that greater diversity in the workforce was directly correlated to higher innovation revenues for startups.
Despite every indication that companies gain an advantage from hiring diversity in terms of gender, race, age, and other factors, it’s still not very common. Traditions of erasure and oppression are strong and may take another generation to weaken. Even in progressive work environments like those of the 23 most prominent tech companies in the U.S., the percentages of people of color in the workforce remain in the single digits.
* Side note on Patton: He was undoubtedly a deeply flawed person, but he would have been just as effective as a management coach as he was on the battlefield. Another quote from deeper in his canon of strategic advice was, “Prepare for the unknown by studying how others in the past have coped with the unforeseeable and the unpredictable.” Another practical tip that is obvious in retrospect yet rarely practiced. Following these practices will give underestimated founders the advantage in competing with entrenched, slow-moving enterprises.
Lesson 2: Look deeper into your org chart
Speed and cost containment take precedence for many startups. As a result, the founders and early hires tend to do whatever is necessary, often without regard to process adherence, scalability, or self-care precepts. Eventually, that has to end, and process efficiency must become a strategic goal as you work to stabilize cash flows and ensure profitability.
One of the best ways to establish firm boundaries is to document the essential metrics used to evaluate the performance of each founder or department head. Compare your growth and current projections against the original forecast and the assumptions in your business case. Decide if a hole needs to be filled and what skill set would be needed by the person filling that role. Don’t settle for the same vague guidelines and overlapping responsibilities that characterized the formation stage. Get serious and make your process repeatable.
Lesson 3: Add women at the leadership level as early as possible
As with the diversity of discussion above, there is an ethical component to this discussion, but without getting into all that, it is financially beneficial to your business to put women in positions of power. This is not a matter of opinion.
New studies indicate that female-led companies are better investments, earning more than double the revenue of male-led firms. The same research concluded that women tend to be more conservative in their financial projections and are more technically knowledgeable because they know they must withstand much more brutal interrogations from potential investors than their male counterparts.
I know this is true from my experience. When I see a startup come to us looking for funding, and they don’t have any women on their leadership team—that’s a red flag. That’s a company that will be operating disadvantaged in the market from the very beginning. It’s a window into company culture, which forms early around the founder’s decision-making processes. No women early on; it is likely to perpetuate as the company grows—IF the company grows.
There’s another critical factor at play, though. Women in power are in the zeitgeist. 2018 will be remembered as the year that “the first two Native American and Muslim congresswomen are headed to the U.S. House, and Massachusetts is getting its first black congresswoman, while Arizona and Tennessee are getting their first female senators.” Customer orientation alone should be enough of an argument to bring more balance to the question of company leadership.
Lesson 4: Hire local if possible and build the community
There are always good reasons to hire remote teams for highly skilled workers like software development and the creation of digital assets. The talent pool in your local area may not be broad enough to support someone with the necessary skills and tools at a price that a startup can afford. However, I have seen over and over that investing in local talent and partners can pay off in many ways as the young company gains traction.
For one thing, investment in local businesses is critical to building up the local economy and supporting the culture of the community. The network effects from establishing these bonds lead to better access to resources along unpredictable pathways. For example, if you need printing for business cards or other marketing collateral, you can order inexpensively online or pay more to contract with a local printer. The owner of the local print shop may be married to someone in the chamber of commerce who can provide you with personal introductions to suppliers that can cut your operating costs.
Giving back to local businesses generates economic benefits for the surrounding businesses. Members of local coops often find that local investments “pay off better annual returns (in discounts and patronage dividends) than Wall Street does.”
The same applies to hiring local employees rather than outsourcing projects to more experienced talent online. Hiring locally gives you a more significant personal stake in the success of the local community. It also opens the door to energetic workers who more than make up for their lack of experience with an intense commitment to the company’s mission. Local employees are more likely to contribute to the local economy and continue to support it. As your local ecosystem thrives, you gain a firmer foundation for growth and a more resource-rich network of partners.
The team is part of the deal. There is an infinite amount of great business models and disruptive concepts. How well your team can execute the idea and propel the company into sustained profitability matters. You can simplify that by hiring people with diverse minds and histories, defining specific goals for company leaders, bringing talented women to serve in strategic roles, and investing in your local ecosystem. Before you run out of runway, assemble a team that will lift your spirits and financial prospects.