For Founders: Hiring (only) Rockstars

When Your In-House Talents Become Your Most Valuable Asset.

Looking at what successful startups have in common, it appears that they all had a better combination of vision, execution & cash than their competitors’. Doing the right thing, doing it right and having enough cash to do it.

Considering the plethora of industries to disrupt, markets to tackle and the huge amount of cash available from Venture Capitalists, it appears that the real bottleneck comes from execution. In other words, the inherent quality of your startup’s assets (algorithms, commercial contracts, product mockups, processes, files, …) and the time you spent building them.

Then the question is simple: “How do I build better assets than my competitors’, faster than them?”. Since your startup’s assets are only built by your founding team and the people you hire, the answer is even more simple.

Be better than your competitors in your hiring strategy:

Targeting, Seducing, Onboarding

1/ Targeting the right profiles

Do your homework.

Your hiring process won’t be successful if you don’t know who you’re looking for. You should first and foremost clearly define the roles and the requirements of the people you are searching for and rank them. You’ll deduct where you can find them.

“At Doctolib, our Business Developers & Regional Managers will eventually lead 10+ staff units and manage areas with over 500k inhabitants or even countries. Hence, they need to have a strong academic background and be excellent sales person with proven leadership and management skills. As of June 2015, 87% of them graduated from top schools or universities (HEC, LSE, ESADE, …), priorly worked in health, startups, consulting, auditing (Groupon, LaFourchette, Amazon, Westwing, Deloitte, PwC, Mazars, …) and/or had a significant entrepreneurial experience.”

Agnès Bazin, Head of Growth at Doctolib

Editor’s note: Kerala Ventures invested in Doctolib.

Leverage co-option.

Being demanding about the quality of your new hires has 2 main effects:

• It’s very hard to grow fast at the beginning ... Since you don’t want to artificially increase your hiring conversion rate (New Hires divided by Total Applicants) by lowering your demand, all you can leverage is the Total Applicants. A very good way to achieve this is by performing direct approach.
• … but then it gets easier and easier to hire top talents. Top profiles often like to work with excellent pros as well and your people can spread the word among their network which, a priori, is excellent.

Co-option always becomes the most efficient and cost-effective source of acquisition of top talents for your startup. Make sure you leverage it.

“We strongly believe in co-option at AdotMob. As our developers are chosen very carefully, we completely trust them to source new tech talents. As of June 2015, 1/3 of our technical team was directly sourced by our crew. We hired friends, former colleagues, … It’s highly virtuous since one generally recommends only his most skilled connections. The hiring process is then faster and the “chemical compatibility” with the rest of the team is more likely.”

Thomas Zaepffel, CTO of AdotMob

Editor’s note: Kerala Ventures invested in AdotMob.

Process, process & process.

Hiring is like concluding a transaction. You need to be sure you want the applicant, the applicant needs to be sure he wants you, and both of you need to do it quickly. In order to do so, you need to be really well organized and processed. You don’t absolutely need to use an ATS (Applicant Tracking System) from day 1 but you do have to write down you hiring process and make it clear to every person intervening in it.

A simple Google Spreadsheet can do the trick as long as it’s well structured and everyone knows how to use it.

2/ Seducing the best candidates

Best candidates are also interviewing you.

The first goal of the interview is to have the candidate wanting to work with you. You need to be as transparent as possible, share your vision, your ambition and your strategy. You also need to tell him/her how he/she can evolve within the startup. Top profiles always want a clear vision of their short/mid-term future, so do your homework on that.

Best candidates demand excellent interviews.

• Be very clear about what you expect ... Describe as specifically as possible what you expect from the candidate and what his/her typical week will look like over the next few months. During interviews, I often use sentences like “Alright, it’s your first day with us, it’s Monday 10 a.m., what are you working on?” just to figure out if the job is pretty clear for the candidate. The more junior the candidate, the more important this test.
• … and test it. Forget the boring “What are your strengths and weaknesses?”. Conduct actual tests and simulations referring to real problems you are working on or real situations you have encountered. Best candidates prefer such interviews.

Best candidates want access to motivating incentive schemes.

Discussing variable compensations & equity-based incentives is welcomed during interviews. OK, maybe not in the first 10 minutes. Actually, I’d prefer having an applicant ask about incentive schemes than not. It shows that he/she is value-creation focused, ambitious & long-term oriented which are pretty good signals. However there are a few things you need to do before deploying those plans within your team.

Regarding variable-compensation schemes:

• Define the KPIs your want your team to be focused on (keep it simple, 2 KPIs are generally sufficient).
• Make sure these KPIs are easily retrievable & unambiguous.
• Make sure your interests are fully aligned (Revenues vs Gross Margin, New Users vs Active Users, …).
• Make sure your scheme is non-capped. Best employees will seek non-capped opportunities & you must always reward the value someone has created.
• Make sure your scheme is exponential (3% from €10k of Sales, 5% from €20k, …) so your team is always willing to go the extra mile.

Regarding equity-based incentive plans:

• Define the long-term vision of the equity pool you want to grant the management with (including dilution from future financing rounds).
• Build a realistic (yet ambitious) business plan showing what your 4-year valuation could be.
• Define your long-term organization & the pool of people that will be equity-incentived (including those who will be hired in several years).
• Define different package levels to have flexibility in your granting & to keep consistency (keep it simple, 4 or 5 levels are generally sufficient).

3/ Onboarding your new hires

Centralizing know-how to diffuse it fast.

It is very likely that 95% of the global knowledge accumulated by your startup is nowhere but in your people’s heads. That means 2 things:

• A departure means a high % of your startup knowledge leaving because any experience (How did Alex deal with that type of prospect’s objection?), any logs (What’s our password to log into this extranet?), any best practice (What were Alex’s results when he tried this 12 months ago before leaving?) and any knowledge (Who’s the right person at Company A to talk to regarding that issue?) wouldn’t have been stored and organized.
• Someone learning means someone else being disturbed because any Person A needing information or help on Person B’s topic can’t get it without having Person B focused on formalizing, structuring and diffusing it to Person A. Don’t get me wrong, I’m not saying your employees shouldn’t teach new hires, they should. But every piece of knowledge that can be transmitted without face-to-face meetings should be done through onboarding documents. Face-to-face meetings then intervene when new hires are already familiar with the majority of the startup’s subjects so they can focus on high value-added training programs.

Initiate an onboarding program.

Once your knowledge is fully centralized & organized, make sure the few weeks necessary for your new hires to be fully onboarded are well planned with a clear agenda. Do not hesitate to include this agenda and all your Onboarding Documents in your new hires’ Welcome Pack so they know exactly what they are going to do. Moreover, it’s important that each new employee gets a warm welcome from every department of your startup. This way, everybody knows each other and what they’re doing even if the Welcome Lunch w/ Brand Marketing can be a severe test for your newly recruited Full Stack Developer.

This could be the first week of your Sales Onboarding Program.

What’s next?

Back to the fundraising process, among the ~70 entrepreneurs I interact with in a way or another every month, HR costs often represent between 60% and 80% of the fundraising. Do not hesitate to be specific on how you are going to hire & structure your team when you pitch VCs.

Targeting, seducing & onboarding people is essential considering the benefits brought by outstanding human resources. Sure this is not the whole thing given the huge importance of developing personally and professionally your employees and making them want to stay in the long-term, yet it is surely a good start.