Wednesday, December 25, 2013

Employee selection in Start ups: A few useful pointers

Entrepreneurship is often considered the pursuit of a goal without being restricted by the limitations imposed by resources. The goal could be limited only to financial gains, but could also include larger gains. Invariably, each of these goals has an end customer who benefits the most from the action of the entrepreneur. Often, if one doesn't think of the customer right from the beginning as suggested in the earlier post, one realizes this extremely practical learning at a high cost!  

Translating the idea into a product/service without being restricted by the resources currently under control would imply seeking support from other sources. While co-founder (read about benefits/drawbacks and implications here) is definitely an option considered there are many other who do not like to cede control over their business and attempt going for an employee who could help realize the idea/concept into a product/service on offer.  

My interactions with the start up ecosystems have helped me find some better approach that some entrepreneurs prefer. Here are a some of the pointers I believe would help lot of other entrepreneurs:

What role am I hiring the employee for?
Often the lack of structure could confuse the founder about the skills that one is trying to look out in his employee. Would it be apt to choose an employee for the IT development involves or for the sales side?

My personal advice in this is to keep the business aspect with the founders always - not because it could be a business secret, but because there could be important decisions that need to be taken on the ground and direct customer interactions could help this process.
The need to hire an employee begins from the need to accelerate the production to revenue cycle of the business. This gives a complete spectrum of activities and the notion of job-description wouldn't make any sense here. Recollect the notion of uncertainty again here - would you prefer some one who is a sort of specialist in one area or a person with generic skills adaptable to the surprise scenario that is so common in the entrepreneurial journey.

Clearly, independent of the dominant role for which you are hiring. looking for some one who is flexible is better - lets call them Jack of All Trades (JoAT). 

Note:JoATs are better as long as there is no significant specialization that is to be needed in the product/service development. [We are still in the survival phase]. Working would JoATs for too long could in fact begin limit the growth of the business. Switching over to specialists at the right time is important as one navigates the growth stage.
What am I looking for in the new employee joining?
Flowing from the above aspect of preferring a JoAT to a specialist what needs to be understood is that ability to learn quickly is important. If you employee is not willing to bend his/her back and put in the effort with you in your pursuit it better stay away from the candidate. Many candidates come in with the notion of a fixed working time - if one are fixated with a notion of rigidity, it definitely an indicator of the inflexibility that is so essential to live through the survival phase.

And remember to take note of the thumb rule - attitude is more important than aptitude - this is the ground on which any recruitment has to be based. 

Reading this blog and thinking about it, is surely a precursor to the large issue of organization culture that is often ignored in start ups - this is definitely an issue for another blog!
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Tuesday, December 17, 2013

Co-founder selection

An entrepreneur when starting off his venture typically tries to on-board a co-founder, and the most co-founders are friends. On-boarding a co-founder is an interesting junction in the start-up's journey. Here are possible benefits and drawback one would need to think of in choosing co-founders:

Clear Benefits:
Having a co-founder is an indication that the ideator has been "sold" the idea to someone other than himself/herself, and that someone has joined the pursuit - this is an interesting signal to the outside world (primarily investors & employees). Resource pooling clearly emerges out as a very tangible benefit from such an approach - thereby de-risking to a limited extent.  
- "I am not alone believing in an idea!"

Teams enable the entrepreneur pool in some essential "factors of production", in the classical terminology - land, labor, capital. Definitely, this process has added resources as a result of accumulation from more than one of the founders. In the contemporary world we could possibly look at some more dimensions to the classical factors - network, intellectual capital etc. 
- "I am possibly better off!

For start-ups, whose first challenge is survival this means: on-boarding a stakeholder would enhance the survivability of a start up; a greater breather space, and potentially a greater growth prospect. 
- "I survive to fight another day!"

The benefit is not just in terms of physical resources the idea sounding, check and balance mechanism, emotional support etc are all packaged into this. 

Other implications:
 
In addition to selling the concept of idea, the ideator is also responsible for the firm that gets formed. In many ways the identities of the two - the firm and the founder overlap when one starts off. However, realizing that these two could be separate over a longer period is important - the founder mindful of the distinguishing between the firm and the founder, the founder would need to make a decision that is beneficial for the firm which could continue perpetually. The co-founder decision one makes should be thought out in this light, and with the benefits to the firm be predominantly greater than the personal needs of the founder. Ask the question:
- "Would the person be the right fit for the firm?"

The ideator when on-boarding a co-founder would also have to note that the initial idea could also undergo a change. In addition to accessing new resources (means) there are new goals that the firm would need to adjust itself to. Ask yourself:
- "Am I willing to change he goal? will the joint effort of the co-founders make the firm better off?"

Many of the co-founders shared personal friendships - this could potentially be the source of the on-boarding, rather than the idea.  We are all emotional being, and encouraging friends in their entrepreneurial pursuit could be but a logical extension of the friendship. The ideator would benefit from reflecting on what each individual in his network could get to the table and relate it how the potential exploration could be helped by the individual. Ask yourself:
- "Is it the idea or is it my relationship alone?"

Few words of caution in selecting friends co-founders:

If the common interest is not the idea, and only limited to the social relationship - the firm wouldn't benefit as much from from such an alignment of the founders. An obligation cannot be the source to a long term commitment; periodic incentivization is needed for one to sustain such a relationship.
 
Last but not the least, co-founder conflicts are extremely common. There are many who do go to the extreme step of saying - be ready to loose friendship if you want to get into a partnership for venturing out into a business. Distinguishing what would form the professional space and what the personal space is important - this ability to separate the issue from the actor would be extremely helpful for founder.

The call to add on a co-founder is one that could have significant implications on the firm and the ideator. So think through before you on-board your co-foudners.

Tuesday, December 10, 2013

Prioritizing Stakeholders for your start-up to reduce uncertainty

Murphy's Law seems to follow entrepreneurs more than anyone else - Yes! anything you believe wouldn’t happen, will most possibly happen. So the challenge is really of being able to live through all these experiences and eventually be able to get the business they intend to create see the light of the day. 

The notion of such unpredictability in what one does is generally called - uncertainty. There is really nothing certain about the entity that entrepreneurs are trying to create. They have a thought about the need for something they believe would be required by someone... Yes! It is only a thought when it starts like many other thoughts! The entrepreneur chases the thought and attempts to create value - economic, social etc out of the thought by manifesting the thought into the realm or reality.


In the process there are numerous challenges that come in - beginning with the thought - the entrepreneur would need to really see if the intended product/service is something that would be found valuable and useful for people. The second question is really to see if someone could pay for the same! I have mentioned multiple times about the need for early customer engagement in earlier blogs [read here and here]


The maximum uncertainty would definitely be on the customer's end of the chain. The thought that the entrepreneur would have initiated invariably would have come from his/her prior experience/ability/capacity - essentially - the response to the questions: who am I? What do I know? Whom do I know? She/he would also have attempted evaluating what would it take to create something of value and how someone could and then figure out a way to reach out to the person who could not just use but also pay for the same. 


This mean the maximum uncertainty for a business is not on the customer's side of activities and would progressively reduce in the following order - investors, suppliers and employees. The following diagram indicates the same:
 
High Uncertainty                                                     Least Uncertainty
Customer    >    Investor      >    Supplier       >        Employee
The uncertainty in the above context could be understood as containing two components - the predictability of the behavior of each of the stakeholder and second, the effective control on that the entrepreneur could have on the behavior of each of these. We could visualize the spectrum of predictability and controllability to be as below.

Least Predictability                                              Most Predictability
Customer    >    Investor      >    Supplier      >        Employee 
Least Controllability                                             Most Controllability
Customer    <    Investor      <    Supplier      <        Employee

An effective approach for an entrepreneur to be able to leverage and grow his/her business would be to reduce the zone of maximum uncertainty and steadily build the other stakeholders commitments to effectively handle the reduced uncertainty. 

(click on the stakeholder link to be directed to some best practises in finding a better stakeholder)