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What Every Tech Startup Should Know About Hiring

What Every Tech Startup Should Know About Hiring

Startup tech entrepreneurs are often eager to grow their businesses as quickly as possible. That means hiring a lot of people, taking on a lot of new work, and aggressively scaling. This strategy is effective if you have a solid business plan and a solid team, but there’s also significant room for error.

One of the most important elements of your business’s growth period is your approach to hiring. How, when, and who you hire can have a massive impact on your startup’s eventual success. So what should young tech startup entrepreneurs know about the hiring process? And how can you prevent disaster?

Why Hiring Is So Important to Get Right

Let’s start by explaining why hiring is so important for startups to get right.

For starters, hiring is how you’re going to build your team. It’s how you’re going to cultivate the core talent responsible for making your business a success. As you know, no business can grow from the efforts of a single person; even small teams have at least a dozen people working together behind the scenes to make a business plan a reality.

You’ll be depending on the people you hire to execute your directives, collaborate to solve problems, and perhaps most importantly, come up with new ideas on their own. If you get the right people into your business, you’ll have a powerful team of collaborators working together to make your business stronger. If you hire even a handful of weak links, it could compromise your ability to perform—and sometimes result in slowdowns and setbacks.

This is also your chance to develop the work culture from scratch. Prevailing thoughts on what work culture “should� be tend to change with the times; in recent years, it’s become increasingly trendy for businesses to promote a casual, laid-back environment, with loose dress codes, flexible hours, and other unrestricted policies. However, what’s important isn’t fitting into some kind of preestablished cultural mold, but rather, building the culture that’s going to work best for your business.

A startup with a strong sense of identity and a culture that every employee follows (at least to some extent) will be much more cohesive, and much better able to grow long-term. Hiring is your chance to flesh out this team, and reinforce the culture you want to establish.

Additionally, hiring people is costly—and labor expenses will be one of the biggest categories of expenses for your business. If you get the timing wrong, spending too much too quickly, it may become impossible for your business to recover.

So what exactly should startup entrepreneurs be considering when hiring people for their growing business? How can they get this right?

Legal Considerations

First, you should think about the legal considerations. Depending on where your startup was founded and how you plan on hiring people, you may be forced to follow a number of local and federal laws. As a simple example, you’ll need to ensure you’re paying employees the minimum wage and that you aren’t putting them in unsafe work conditions.

In more complex scenarios, you’ll need to think about things like employee compensation, ongoing treatment, and termination. If an employee files a wrongful termination suit, it could devastate your business’s finances—not to mention harm your brand’s public reputation.

Because there are many legal considerations to keep in mind when hiring people, and you can’t possibly learn all of them on your own, it’s best to talk to a lawyer when putting together your hiring strategy. They’ll be able to help you understand the necessary laws and regulations to follow, and put together the paperwork and strategies necessary to remain in compliance.

Timing Considerations

You’ll also need to think about the timing of your hires.

Generally speaking, you’ll be attempting to manage two major problems, one at each of the extreme ends of the hiring timing spectrum. If you hire too many people too quickly, you’ll experience financial strain; you’ll be forced to pay the salaries and benefits of more people than you really need, and you won’t have much revenue coming in. If this situation lasts too long, it could exhaust your budget and compromise the long-term financial health of the business.

On the other hand, if you wait too long to hire, you’ll also be in trouble. It takes time to train and educate new people, so you need a bit of a runway to acclimate your new hires; accordingly, you need to hire at least somewhat proactively. If you’re anticipating three times as much work as you currently have, you may want to hire three times as many people now—that way, you’re ready for the impending work. If you begin experiencing growth without the team to back up the business, it could mean your business is unable to perform or keep up.

Resolving this problem looks different for different businesses. However, there are a few general rules you can follow to get the timing “right.�

First, don’t hire impulsively. You should have a clear understanding of who you need and why you need them. This may seem like an obvious point, but many startup entrepreneurs overlook this in favor of hiring to support generic growth.

Second, prioritize establishing revenue. Your budget will quickly dry up if there’s not consistent money coming in. Once you have a steady stream of income, you’ll be much better capable of understanding your hiring capacity.

Third, hire gradually. Don’t build a new team of 50 people in a single week. Take your time, and fill one position at a time. This will help you keep a tighter leash on the company culture and improve your cost management—in addition to helping you nail the timing.

Pay and Cost Considerations

You’ll also need to figure out what to pay your employees, and whether to offer benefits. More robust pay packages will likely attract better talent and increase employee morale and satisfaction—but they’ll also deplete your business’s budget much faster. By contrast, smaller compensation packages will make your financial management much easier, but may also attract less talent or have a negative effect on employee outlook.

One way around this problem is to find alternative forms of compensation. For example, many talented people aren’t interested in high pay—they want fair compensation, but would much rather have a flexible, fun workplace than a ridiculously high salary. You could deliberately seek these kinds of people to round out your team.

You could also seek out people with talent, but minimal experience—such as people straight out of college. They won’t have the background necessary for a high salary, but they may have the knowledge, instincts, and talent you need to round out the team.

Culture Considerations

Finally, you’ll need to think about the culture fit. Even if your business is operating remotely, culture is going to be one of the most important factors for your business’s success; it’s what brings your team together, unifies your ideas, and establishes your brand identity. You should prioritize hiring people who fit your culture as closely as possible.

This, of course, means establishing your ideal work culture before you begin the hiring process. What kind of workplace do you want to build? What are the core values of your brand, and how will those core values be embodied by your employees? What attitudes or philosophies are important to find in the people you hire? Document these ideas, so you have an objective record to follow when evaluating new candidates.

Hiring is more important to a startup’s success than it might at first seem. This is the team that will support your business’s growth, represent your culture, and keep your budget in balance. Don’t rush through this decision, and try to establish the best core team possible.

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coronavirus interview Lead

Guiding a Tech Startup Through COVID: Q&A with Hawke Media’s Erik Huberman

The coronavirus pandemic has been hard on every company. But as in every crisis, the small players have been bruised worse than the big ones.

Tech startups, in particular, have faced hardships. ClassPass, a fitness membership startup, saw more than 95 percent of its revenues dry up in less than two weeks. Hiring platform ZipRecruiter has cut nearly half of its staff.

There’s no one-size-fits-all solution to startups’ financial struggles. What they can do, however, is look at how agencies designed to help tech startups grow are handling the situation.

For that, I caught up with Hawke Media founder Erik Huberman. Hawke Media is the fastest-growing agency in the United States and serves as an outsourced CMO for a range of tech startups.

Erik’s take? Every startup is going to struggle, at least in the short term — but the greatest opportunities are rooted in adversity.

Talking Shop for Tech Startups

Erik and I covered a lot of ground. Here’s a lightly edited transcript of our conversation:

Brad Anderson: How has Hawke Media been affected by the COVID crisis? Has it seen any silver linings?

Erik Huberman: For the first time in six and a half years, we’ve gone fully remote. That’s tough in the best of times; try doing it overnight.

We’ve also had client challenges. Although we’re fortunate to have a massive client base, some of their struggles have cascaded to us. We’ve had some pullback on marketing, while others have shut down completely. There’s been a lot of triage work to do.

The silver lining we’ve seen is that, because we’re focused on internet business and driving digital commerce, our work has become increasingly important to our clients. In the past six weeks, e-commerce has gone from 18 percent to 30 percent of consumer spending. As a result, we’ve been able to almost double the average online company we work with.

Many of our clients have wound up thriving in this crisis. The challenges come from the minority of them that haven’t grown — and in some cases, simply can’t grow — during this.

BA: It sounds like Hawke Media has weathered the crisis well so far. What key risks are other startups struggling with?

EH: It’s critical to understand that every startup is going to lose some customers because of the pandemic. It’s just a fact. If you have a diversified client business, there’s a very strong chance some of your clients will pull back on what they’re spending with you.

There are two ways to counteract your clients cutting back: You’ll either need to grow your existing customer relationships, or you’ll need to develop new ones.

Like us — and many of your own clients — you’re also likely learning to operate remotely. That’s going to look a little different for every company. How you meet, operate, or manufacture might have to change. This crisis could last a while, so focus on building out new processes and procedures.

Likewise, assume fundraising is going to be wonky for a while. Some firms, like Zoom, are going to close much higher rates because they’re built for this sort of thing. With that said, investors are unsure about what the future will look like, so it’s going to be harder for most companies to raise money.

BA: Those are big challenges for small companies. How should startup leaders handle them?

EH: The good news is that marketing costs have plummeted because so many companies have pulled out. In that sense, replacing lost business is actually easier and less expensive than you might think.

That’s exactly why we’ve been playing offense at Hawke Media. Double down on marketing and sales now, and you should see a surge in retention and acquisition as the situation improves.

Remember, though, that sales and marketing can’t be a contact sport right now. You’ll need to operate with the least amount of human contact possible. Use digital tools, but make sure you don’t lose the humanity of the workplace.

Throw happy hours. Have Zoom parties. Get your team involved beyond just Slacking and working from home. People are going to get lonely, so it’s on your company to keep the culture strong.

Focus on building to last. You don’t know what’s coming. If you’re burning cash, slow the burn; if you’re mid-negotiation with an investor, close it. Slow down a bit, and find ways to button up your business so it’s not just a startup.

Are you ready to actually make money? If you can drive revenue and build a solid business, as opposed to just fundraising, you’ll be fine. “Primetime revenue solves everything,� as the saying goes.

BA: How can tech startups go beyond just meeting challenges? What COVID-related opportunities do you see?

EH: As I mentioned earlier, marketing is dirt cheap right now, and ROIs are massive. If you can afford to market digitally and aren’t in an industry directly affected by the pandemic, you’re probably doing very well right now.

Even if you are in an affected industry, you can still thrive. Many restaurants have successfully switched to contactless delivery and takeout. Gyms that have gone virtual are getting a lot of engagement. You shouldn’t be scared to spend money on marketing if you can help people enjoy their homes in some way.

Realize, too, that your competitors are having these same conversations. Some of them are going to be aggressive about winning business right now, and some are going to be playing scared. Which do you want to be?

The bottom line is that a pandemic is a great opportunity to bring people together. If you can hold your team together and look out for your customers, you’re going to come out of this much stronger. It’s human nature: Nothing creates community like crises.

BA: Help us understand how the rubber meets the road: How has Hawke Media tapped those opportunities?

EH: We’ve encouraged our clients to keep going. The majority of our clients have had record months across the board.

Because of what’s going on right now, there are tons of consumers moving online. The best move is to model that. It’s a chance to grab market share, hit the ground running, and emerge from this crisis as a leader.

At Hawke Media, we’re choosing to go after that opportunity. We’re watching our competitors — or at least a portion of them — fall apart because they’ve made the opposite choice. The difference is that we’re running at the problem while they’re running away from it.

When I question whether we’ve made the right call, I think back to a quote from my business partner and COO, Tony Delmercado: “Even if it lasts another year, it’s still going to be just a blip on the radar of our lives. Our actions during this time, though, will stick with us for the rest of our lives.�

Decide who you want to be when the pandemic is over, and set yourself up for that. If it’s a successful business, keep that mindset. If you want to run off into the woods, why not just shut down your business?

Imagine what you could do if you were to treat this as an opportunity. Think about how not just to mitigate risks, but also what you can actually do to grow.

In my experience, most startups are operating that way; it’s the bigger companies that are freaking out.

BA: You’ve given a lot of good advice, but what’s the most important lesson you think startup leaders should take from this crisis?

EH: Don’t let external factors become excuses for not building your business. There’s always going to be some crisis — whether it’s a pandemic, tariff, natural disaster, lawsuit, or internal issue — to deal with.

That’s exactly the advice my dad gave me during one of the first crises my company faced. Stressed out, I called him and told him the whole story. His response? “Yeah, it happens all the time. I have to go. Talk to you later!�

That’s the mindset you need to thrive. Welcome to the world of business ownership: There’s always going to be some type of adversity to overcome. Get used to it.

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