A panel of startup founders and experts shared their expertise on how to hire your first 10 employees and discussed ways to support entrepreneurs’ mental health.
As the pressures of starting and running an early stage startup mount, it’s natural for founders to focus heavily on measurable results from revenue growth and customer acquisition, to product-market fit and acquiring startup funding. Yet just as critical to startup growth is establishing the right team to deliver those desired results and propel the business forward.
Event Recap: Hiring Your First 10 Employees and Supporting Mental Health in Startups
Finding and supporting the right people to drive startups to success took the spotlight at a recent RBCx presentation, co-hosted with corporate venture studio and VC firm, Highline Beta. A panel of startup founders and experts shared their expertise on how to hire your first 10 employees and discussed ways to support the mental health of entrepreneurs.
More than 50 early stage founders gathered at Highline Beta’s downtown Toronto headquarters to network and learn insights from the panel, comprising of serial entrepreneur and professor, Shari Hughson, Co-Founder of Loopio and Barley, Jafar Owainati, and Head of People and Community, Highline Beta, Lisa Partridge, and moderated by Samuel Daviau CEO and Co-Founder of UpBeing and Arron Lin Associate Vice President, Banking, RBCx.
If you missed this lively discussion (or want a refresh), here are the key takeaways:
1. Determine your hiring needs based on the “gaps”
Hustling and bootstrapping is just part of the job description for early stage founders, but as that workload intensifies, it becomes obvious where you’re most stretched for resources, and what gaps need filling. “Hiring the first employees in that kind of environment was very natural because you start seeing where your bottlenecks are the sharpest,” says Jafar, recounting his early days as Co-Founder of Loopio. “It was really identifying the areas where we had our superpowers and areas where we wanted to give some of the tasks we were doing to someone else.”
One effective exercise he recommended is to use Post-it notes to discern the highest need areas. Simply jot down every single thing you do (one item per Post-it) and organize into categories. “You’ll see roles start to evolve,” he says.
2. Be specific in what you want, but cautious of any bias
Many job seekers inaccurately assume early stage startups offer the opportunity to wear multiple hats. In fact, says Jafar, founders hire for very contained roles. “I think the gap there is that most people don’t understand startups are looking for specialization.”
Shari agrees, “Figure out the skill set you need and hire someone that can stay within those bounds.” It can be tempting for founders to prefer candidates with a startup background over a corporate background. Lisa, whose corporate experience brings value to her current role, cautions against this thinking. “Make it more about what your business needs,” she says. “What’s the company culture? What do you value?” There are other ways to determine if a candidate has desired traits, such as adaptability, without relying on unfounded biases.
Jafar personally experienced that bias after graduating with an MBA and working briefly as a corporate consultant before launching his first business. After immersing himself in the startup ecosystem, he faced resistance from other startups, and even VCs years later, due to his corporate background. “I’d worked in consulting for a year and a half and had been building my startup at that point for three years,” he says. “That stigma needs to be shaken a bit.”
Instead, Jafar looks for what he calls proven interest. It’s not enough for potential employees to say they want to work at a startup. He wants proof. Have they attended a recent startup event? Have they read any books on the subject?
3. Tailor your interview to tease out the traits in a candidate
When you ask the right questions, you can look for hints on whether a potential employee has the traits you desire in their answers. For example, distinguishing if a candidate leans more toward independent worker than teamplayer is often important to startups. Lisa recommends asking, “How do you work within your structure with your current or past teams?” Then pay attention to how often they say ‘I did this’ versus ‘we did this’ in their stories.
Shari likes to ask candidates to describe a time they worked with a difficult colleague. “And then let them go on and on. It is amazing how much people will tell you,” she says. “The way they speak about it tells you a heck of a lot about that person, themselves.”
4. Creative recruitment strategies can have big impact
The prevalence of remote work has helped create a world without borders, which means competition to find top talent can be stiff. While it may be tempting to outsource recruitment, our panelists recommend early stage founders keep it in-house.
The key, says Jafar, is to make it personal. “Founders have to be on LinkedIn, reaching out personally, being creative.” For one promising potential candidate, Jafar took note of a LinkedIn photo featuring her in a race car. With a little online research, he discovered she raced cars as a hobby and, in the subject line of his introduction email, included the type of car she raced. It had the intended effect of grabbing her attention. “She was, like, no one’s ever done that.”
While Shari also recruits employees in-house during the early stage of startups, her most effective recruitment strategy inadvertently resulted from a performance-based program set up to incentivize its current employees.
“Every employee had three target goals that they had to meet, and we measured it every month. It was all data driven, measurable goals…and then they got a bonus every month,” she says. “People that didn’t get the bonus, or hit those targets, knew that they were not performing up to the standard of anyone else. And they would just leave.” This meant the highest performing staff remained who, in turn, recruited other employees through referrals, which also reduced management time.
5. Focus on career fulfillment, not perks, to engage your employees
While perks like free breakfast and ping pong tournaments are nice, employees are most engaged when they feel they’re part of the startup’s journey. Organizations that make transparency a priority help employees feel valued and connected with the company. “Put it all in front of everybody,” says Jafar. “And everyone is then motivated to not only be there as part of the win, but also helps them react to the lows.”
Goal setting is integral to nurturing this inclusive environment. “I think it gets neglected, especially in the early stages, when you feel like you’ve got to do all these different things and we don’t have time to actually set individual goals,” says Jafar. But it’s a missed opportunity.
“If employees are meeting goals and you’re helping them achieve their goals, you’re learning together. That’s the connection piece that people will have with the company because they feel the company cares, and then you’ll get that back,” says Lisa.
“You’re never going to make someone happy in terms of perks. And that’s not what drives engagement. It’s actually career fulfillment and progress and learning,” says Jafar.
6. Fair and transparent compensation can help minimize financial anxiety
The once typical compensation approach of startups—pay low salaries and offer equity in lieu—is on the decline in favour of compensation that offers more stability to employees. “The first thing when it comes to compensation is being able to have a living wage,” says Jafar. Financial stability can be a tremendous source of anxiety for people, especially when life circumstances suddenly change and financial needs follow suit.
“I personally don’t recommend creating disparity where some people take on more risk by having a lower salary and more equity,” he says. “Their life circumstances may change and it’s hard to reverse that decision and that can cause a lot of anxiety if they made the wrong decision.”
Stock options, however, can have a remarkable impact on employees—just be sure you communicate your business goals and objectives. “It could drive the right incentives in terms of the motivations to grow the business,” he says, but people need to understand how company performance ties to compensation.
7. Adopt a healthy mindset to keep things in perspective
From celebratory highs to shaky lows, the startup journey is unpredictable and has been known to take a toll on mental health. Shari knows this all too well. “My first company was wildly successful on a national scale. The next two companies failed… and I was bankrupt. Fourth company, wildly successful.”
Over time, she learned to accept that everything is temporary and attributes this mindset to carrying her through the tough periods. “Love the highs and embrace them fully. And, when you’re down, just recognize it’s going to go away. You’ve got to keep repeating that over and over,” she says. “You want to just get to being okay.”
Developing a support system is essential, keeping in mind it can take many forms. Today, Jafar relies on his partner “to make sure I stay in check.” For others, having a strong staff network—from an efficient executive assistant to multiple direct reports—is key. And, of course, seek professional help when you need it, whether that’s a coach or counselor.
RBCx backs some of Canada’s most daring tech companies and idea generators. We turn our experience, networks, and capital into your competitive advantage to help drive lasting change. Speak with an RBCx Advisor to learn more about how we can help your business grow.
