Startable: Finding the first technical employee when you don’t know squat
Knowing how to build your technical team when you’re founding a startup up but don’t have a technical background is challenging. I was reminded of this while I was having a few beers with Ariel Diaz, founder of YouCastr, a local startup focused on online sports broadcasting, and Todd Galloway, co-founder of Fafarazzi. Ariel is not a programmer or techie, but has managed to put together a solid technical team; Todd is technically solid and has also successfully hired several programmers. We were talking with another young CEO starting a business who had deep domain expertise and contacts, but who needed a technical person on his team.
When you are a non-techie starting a technology business, you’ve got two basic problems when you try to make your first technical addition to the team: 1) you haven’t got the network to easily find the right people; 2) you don’t know enough to evaluate the people you do find. (A third question is employee vs. co-founder, which I take a stab at below.)
Ariel’s basic advice was to acknowledge that you don’t know what you are doing, so you need to find the people who can help you. He aggressively networked with friends who were starting companies and he recommended using connections with schools you’ve attended (assuming they have a computer science department or an equivalent department focused on the technology you need.) If you’re luckly/good you can get them to help with both issues.
I agreed completely. Getting help is the best way to find the right person. Got any friends who are in technical positions at large corporations? Do they know fellow employees who are rockstars looking to make a move to a startup? Any local startup CEOs use a contractor for a specific project who was great but who is now looking to do something full time? I thought Ariel’s idea of using your alumni network was great. Can you get any of your technically skilled friends to help you in the interview process? Let them ask the hard technical questions!
The other question is: do you want this person to be an employee or a founder? This is more than just a cash salary vs. equity question (although that is an important question too, which I’ll get to in a second.) Is this person going to be helping you with strategy and setting the business’ direction, or is she only going to report to you and execute your commands? You’re looking for a very different technical person if you want a co-founder, and this should be a whole different level of commitment from both parties. A founder should look to make sacrifices alongside you, such as taking a lower salary to get the business going, and should be willing and able to stand up to you when you are making early strategy decisions. Also important, a founder should be able to grow with the business… can this person manage a team? You’re looking for a founder who can help you put together a team, get them pointed in the right direction and keep them on track.
You really want to make sure a founder has the best interests of the startup in mind. While you bring on a co-founder because you hope this person can scale with the company, you should also make sure this person is willing to let you hire someone above them if required. The right co-founder might be perfect for the company if they can help you get the product launched, even if they aren’t the right person to run the 50 person engineering team you’ll have if the company grows like crazy…just make sure you talk about this when bringing on a co-founder. Properly motivated, both an employee and a founder will run through walls to get the company running or the next release out, but one relies on YOUR ability to motivate while the other should be internally motivated.
Another good piece of advice proposed by Todd was to bring the person on as a two week contractor, so you can evaluate both her skills and ability to hit deadlines as well as her interpersonal fit with you. He stressed that you need to make it clear that this is just a trial period, so that she knows to work hard and is also aware that it might not work out.
Should you grant equity to the technical person? If this is a true co-founder, then yes. If you are bringing on an employee then you’ve got some discretion. I’ve seen experienced founders hire technical employees and not grant them any equity for the first six months or more of the technical people’s employment. Generally you’ll compensate employees with salary and perhaps a bit of equity. Since many technology companies offer stock option plans you may want to eventually offer small amounts of equity options as part of the compensation packages. When discussing stock options with employees it is usually best to talk in terms of shares, not % of company.
If you are giving up equity MAKE SURE IT VESTS. Do NOT give away fully-vested equity right away. If you’ve granted 100% owned stock and the person leaves, then you’ve lost a piece of your company. The non-technical founder who we were speaking with had been working with a programmer for a few weeks, and this programmer asked for and negotiated hard for some equity in the new company. Eventually they reached and agreement but the programmer ended up leaving the company shortly afterwards for another opportunity. Thankfully the programmer’s equity had a vesting period with a cliff. Without that vesting period the founder I was speaking with would already have had his ownership diluted – even before he’s raised funding or begun real work on his service! This is a typical provision amongst founders of tech startups, so you should feel comfortable requiring vesting.
I’m going to spend some more time asking other non-technical founders who I know how they made the first technical additions to their teams, and will add more in the future.