Staffing your startup

Most startups fail because they don't know how to build up their staff. In this easy to follow guide we will teach you how to do it intelligently.

14 gush 2019 • 24 minutë lexim

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@EdwardKost

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How do you build your business team for success?

While the expansion of a team should be a time of celebration, the joy is usually overshadowed by the anxieties of a directionless endeavor.

Who should I hire first?

Which team should I focus on growing?

How do I scale?

These questions and more plague the minds of most startup owners. When left unanswered, the standard course of action is to just hiring to fill skill set gaps in the business.

The problem with this strategy is that it can result in a lopsided growth, where one set of skills is given too much attention over the others. Such an imbalanced startup is not designed for scalability.

To give your startup the greatest chances of success, its operations need to be highly efficient from day one.

The establishment of your team shouldn't be a blind process. It should be driven by a strategy that provides you with the key resources you most require at each successive stage of your startup’s growth.

Waste in business

Before we move on, it's important to understand the concept of waste in business operations.

"Waste" in our context refers to anything that does not add value to a business.

There are 8 main categories of waste. These categories were originally developed by Taichi Ohno the chief engineer at Toyota when he developed the highly efficient Toyota production system:

Figure 1 - The 8 Wastes of lean

Any waste in a business process is a serious problem, it results in the loss of time, and/or money.

Methodologies have been developed to mitigate this wastage, the most popular of them being the

Lean Startup Methodology by Eric Ries.

Lean Startup Methodology

Eric Ries argues that most startups waste both time and money producing products that are not guaranteed to sell because they are being developed without any insight from users.

The more established businesses are in a much more desirable position because their product development processes are directed by historical data that reveals what their users like and dislike.

If you're selling a course online, an e-book or reselling products, this feedback loop can be established simply by reading customer reviews.

For more details about performing market research for digital products, refer to chapter 2 of our Ultimate Guide to Starting a Business

The Lean Startup methodology is a three-step process for developing products with the highest chances of selling.

Build

Your team builds a minimal viable product. This isn't the perfect final product, but it has the minimum capabilities required to be functional.

Measure

The minimal viable product is then released to a set of users who provide feedback on their experience using it. All feedback is then analyzed and each key metric measured.

There are different methods of measuring feedback from your users. If you're developing a product, you could send a survey via email or request feedback through push notifications in an app.

Learn

The final stage of the cycle is to learn from the data collected from users. Learning involves planning product alterations and necessary upgrades. The cycle overlaps onto the build stage once again where these modifications are implemented.

This cycle continues with each successive change being tested on a set of users and adjusted accordingly until a final product is developed and released to all users.

The power behind the lean startup methodology is that it results in a product that’s almost guaranteed to sell because it’s essentially designed by the people, for the people.

Hiring a cofounder

Before hiring staff, you should consider whether or not you could benefit from a cofounder.

Many people come up with fantastic business ideas, but never follow through with them because they’re afraid of their limitations.

This should never stop you. A business partner could complement your weak areas with the necessary strengths to help make your dream a reality.

For example, if you're more of an analytical and introverted person, an extroverted cofounder could help establish the strategic partnerships you need to grow your business.

A cofounder will also support you through the hard times, starting a business is a very difficult and lonely journey,

But where do you go to find a cofounder?

There are a few options:

Finding a cofounder via Meetups

Figure 2 - meetup.com

Meetup is a face-to-face social networking platform. There are meetup groups for almost anything, including startups.

Signing up is free. Then just search for a group of interest and attend one of their face-to-face networking events.

For every meetup you attend, it will be a matter of networking with each attendee until you find the perfect person to partner with.

Pros of using meetup groups to find a cofounder

Very low cost

There are no fees involved for signing up to the meetup platform as an attendee. Some meetup groups, however, do charge an attendance fee to cover all rental and food costs.

You meet these prospective cofounders face-to-face

Some people prefer to meet face-to-face as opposed to a digital platform. Listening, objecting and collaboration are different face-to-face compared than online.

Meeting face-to-face also quells any doubts you may have about the true intentions of a prospective business partner.

Cons of using meetup groups to find a cofounder

Not very efficient

This is not a particularly time efficient option if you're on a tight schedule. You may need to attend multiple meetups across different groups over many months before you finally find someone you're happy to partner with.

Requires networking skills

If you're a natural introvert, you could struggle at these events.

Finding a cofounder at colleges and universities

This is a little known method, but very effective. Many colleges and universities offer MBA programs that incorporate entrepreneurship.

You could contact the program director to discuss options of letting their graduates know about your search for a cofounder.

Many of these students dream of launching a business and would jump at the chance of meeting with you to discuss your venture.

Pros of finding a cofounder at a university

Very hungry prospects

Many of these MBA students chose their degree to prepare them for launching a startup of their own one day. You're likely to receive a very positive response from these prospects.

Fresh, up-to-date head knowledge

These graduates will have the most up-to-date knowledge of business operations. Partnering with a cofounder like this will help keep your business as innovative (and therefore competitive) as possible.

Modern perspective

This fast-paced digital age is producing a generation of customers who think and react very differently.

Having a millennial on board your venture will ensure both your product and marketing efforts are as relevant as possible to your millennial customers.

Cons of finding a cofounder at a university

Limited experience

Graduates have little to no industry experience. If you're seeking a well seasoned cofounder, a university graduate is definitely not the right choice for you.

Generation gap

We're not making any assumptions about your age, but if you're already a few years into your career there could be a considerable generation gap between you and a fresh grad. This could make working together as cofounders very difficult (at the very least, they won't get your witty pop culture references).

Finding a cofounder at Cofounderslab

Figure 3 - cofounderslab.com

Social networking platforms have expanded into the cofounder space to help make the messy process of finding a business partner much more streamlined.

The

Cofounderslab

platform uses an AI algorithm to connect you with the best possible cofounder candidates based on the information on your personal profile.

You can search for candidates by skill sets, country, industry or experience. The AI algorithm aims to achieve a perfect match based on your ideal cofounder attributes.

Cofounderslab pricing

Cofounderslab has both free and premium membership options.

The premium plans are divided into 3 tiers:

$19.99/month for a 3 month plan.

$19.99/month for a 6 month plan.

$14.99/month for a 12 month plan.

Pros of finding a cofounder via Cofounderslab

More efficient form of cofounder search

Unlike meetups and MBA programs, you're not limited by geographical location. By transitioning your search for a cofounder to the digital realm, you're increasing your prospective cofounder pool from just a few to many thousands.

This means that you can tap into a lot more prospects over a shorter period of time.

This is great news if you want to skip all the boring administration and finally begin establishing your startup.

Less intrusive first introduction

If Tinder has taught us anything, sometimes a face-to-face meeting is best left until after you've both chatted online for awhile. As mean as it might sound, there's less of an obligation to maintain a conversation via chat if you can instantly conclude that prospect is not a good fit.

Face-to-face is different. Even if a prospect is an obviously terrible fit, you're sort of obligated to maintain a conversation and entertain the prospect of a partnership for the sake of politeness.

A face-to-face meeting via Skype could follow an initial digital introduction if you choose to further engage with a prospect.

Cons of finding a cofounder via Cofounderslab

You need to upgrade to a premium membership

Even though there is a free membership option, you'll need to upgrade to the premium membership in order to access the entire search network and get as much use out of the platform as possible.

Not all prospects are serious

Because you're tapping into a much larger network of candidates, you're much more likely to get contacted by candidates who don't understand the commitments of a startup.

A quick peek at the site's forums have revealed this to be the case for many users of the platform.

Sourcing a cofounder via a social network is a lot like the aforementioned Tinder. You might have to kiss a few frogs until you finally find your prince (or princess).

Finding a cofounder at a startup bootcamp

Startup bootcamps are a great way for you to connect with potential cofounders while learning valuable business lessons at the same time. Have a look on Google to find a startup bootcamp near you.

Startupweekend

Figure 4 - Startupweekend

Startupweekend

is a popular bootcamp powered by Google.

These events are designed to help founders learn about all the facets of launching a business through fun and collaborative lectures and activities. They're also a great place to form cofounder relationships.

Pricing for startupweekend

The price of each bootcamp varies for each event. Some range between $25–75.

Pros of finding a cofounder at a startup bootcamp

Find a cofounder while learning from experts

Many of these events host well seasoned entrepreneurs that share highly valuable insights on starting a business. In some cases you can meet these people during the event and connect with them.

Event organizers can also help attendees develop cofounder relationship through mentorship and mediation.

Cons of finding a cofounder via a startup bootcamp

Can be expensive

These events can get quite pricey depending on their location and caliber of speakers.

Limited by geographical location

Your cofounder prospects are limited by one event in one location. The odds of attending just one event and walking away with a cofounder are not very high.

For many attendees learning something new is their primary focus and finding a cofounder is just a bonus (if it happens).

Once you have chosen your ideal cofounder, you'll need to split the equity of your business with them.

Staffing structure of a business

In order to efficiently staff your startup, it's important to first have a clear understanding of how a business is structured around its core operations.

The core operations of a business are split into 3 main categories:

Business (B)

This category includes everything business related such as financials, analysis, future projections, negotiations and partnerships.

Solution (S)

This the offering of the business (the product you are selling). If it's a tech business, the solution is “technology.” If it's a service business, the solution is “service.”

Users (U)

This category involves everything related to the users of the product. This includes user reviews, user experience, sales, troubleshooting, etc.

These three categories make up the backbone of all business types. They can be represented within the 3 vertices of a triangle as shown below:

Figure 5 - The three core categories of a business

Staffing your startup is a matter of establishing a network around these three categories. The role of a particular staff member differs depending on their position along the edge of this staffing triangle.

All business types are supported by these three pillars, those that provide a service for end users, as well as those that provide a product for end users.

To illustrate the application of this to a service-based business, let's use the example of a salsa dance school.

In this case the students would be classified as “Users”

Dancing lessons would be classified as the “Solution”

And all business operations would fall under the category of “Business”

As the salsa school grows, staff are employed at each vertex of this triangle:

The salsa teachers would be placed at the “User” vertex since they are working directly with the end users.

The dance lesson curators would be placed in the “solution” vertex since they are creating the solution.

The business operators (accountants, operation managers etc) would be placed in the business vertex.

As the salsa school expands into multiple locations, staff are now placed between each vertex, along the edge of the triangle in order to establish a communication network between each vertex:

Marketers would be placed between the “User” vertex and the “Business” vertex in order to deploy marketing campaigns in adherence to business goals.

They would also feed marketing data back to towards the business operations vertex in order to keep to help them cultivate their growth strategies.

Head dance instructors would be placed between the “User” vertex and the “Solution” vertex in order to ensure that all dance teachers are teaching the curriculum correctly.

They would also report to the dance curators to provide feedback on the effectiveness of the lessons, and any feedback given by students.

Area managers would be placed between the “Solution” vertex and the “Business” in order to ensure that each salsa school is operating within set business guidelines.

They would also report the status of each individual school to the business operations team.

This staffing template is also applicable to tech businesses:

Staff situated in the “solution” vertex are primarily involved with developing and establishing the solution (eg, a software developer if this is a tech business).

Staff in both the “solution” and the “user” categories would be situated between the “User” vertex and the “Solution” vertex. An example of such a role in this scenario is a UX designer.

We'll expound upon the establishment of staff between each vertex of a tech business shortly.

Since a business that offers a digital solution is the preference of most business owners, we'll use this business type as the default staffing illustration moving forward.

A fully established business is comprised of staff members throughout this staffing triangle.

Below is a visual representation of a fully staffed business:

Figure 6 - Completely established staffing structure

Each segment corresponds to a staffing category. The role of staff at each vertex is covered above.

Lets go over some of the other roles in this complete staffing structure:

USB

At the very centre of the triangle is the team responsible for all 3 primary categories of the business (USB = Users + Solution + Business). The staff in this category consists of upper management that have visibility across all other departments, otherwise known as the “core team.”

Some examples of roles within this category are founders, CEO’s, CFO’s, CTO’s, etc.

These individuals have superior jurisdiction over all other departments. They run the show and ensure everyone's efforts keep propelling the business forward.

Solution - User edge (SU)

The SU category consists of staff that connect the business solution with its users.

The roles associated with the SU edge lie in a spectrum between users and the core product.

Some staff work closer to the users, others closer to product development, and the remainder somewhere in between.

The staff members that work closer to the core product, or “Solution” end of the spectrum, would primarily focus on developing a product based on the feedback they receive from colleagues working closer to the “User” end of the spectrum.

Figure 7 - Staffing spectrum across triangle edges

The staff comprising the US edge establish a constant stream of communication between the development team and the end-users of the product.

Some examples of roles within the SU edge of a tech business are:

Software Engineers

User Experience designers (UX designers)

Product quality assurance team

Front end developer

Data scientist

Business - User (UB)

The staff in this edge category establish a continuous connection between the business operations and end-users. They are primarily responsible for keeping the user-base growing in alignment with business plans.

This department always keeps the business sector informed to ensure that all funded projects achieve as high a return on investment as possible.

Some examples of roles within this staffing category are:

Sales staff

Marketing staff

Business developers

Inbound customer service representatives

Solution - Business (SB)

Staff in this category are responsible for ensuring that the core solution is developed in line with business goals

They set budgets for the development team. The development team, in turn, can appeal these budgets via this staffing edge.

The staff in this category are also responsible for managing all development operations to make sure all projects are completed within their set deadlines.

The SB staffing edge establishes a consistent communication stream between business operations and the development team.

Some examples of roles within this staff category are:

Project Managers

Engineering Managers

Data Science Managers

Below is a comparison between the staffing structure of a young organisation and a mature organisation.

As a startup, your end goal is to build out all of your teams until you achieve the full staffing structure of a mature organisation.

Figure 8 - Infant staffing setup vs mature staffing setup

But when you launch a startup, where do you begin?

Which staff category should you focus on establishing first, and in what order should the others follow?

To give you a clear roadmap for expanding your startup, lets go over each stage of growth:

Phase 1: Just the core team

Figure 9 - Phase 1 of startup growth

Unless you're starting a business with a partner, during the initial phase you'll be running the business alone.

As the sole member of the core team you'll be responsible for all the roles that connect all three pillars of your business, this includes marketing, product development, setting budgets, reconciling payments, etc.

This universal management can get extremely overwhelming, especially when you're forced to ramp up all your efforts in response to increased product demand.

Once you start struggling to keep up with an increased output, it's time to upgrade to a higher staffing structure.

At this point you have two choices: you can either start establishing a single vertice within this triangle or, if the budget permits, jump straight to an entirely established triangular border with all vertices in place:

ideal progression staffing progression for startups

Figure 10: Ideal progression from phase 1

This is an ideal next level progression from phase 1 because all primary departments will be in communication with each other and your business will instantly start operating as one complete unit

We outlined earlier the importance of customer feedback when it comes to product development. With the above structure in place, customer feedback is continuously fed through the user engagement department, and into all the other departments.

If you need to be more conservative with your funding, you should instead focus on establishing each vertex and edge individually and slowly build up your staff structure.

With such an approach, the first edge you select to establish should be one that provides your business with the greatest value at such an early stage of its development.

Phase 2: Establish user feedback

During the delicate stages of growing a startup, you should primarily be focused on being profitable. A proven profit strategy will help you meet your overhead costs, as well as make your business very attractive to investors.

The first vertice you establish should, therefore, have the greatest influence on profits.

What has the greatest influence on the profits of a business?

End-users.

If nobody wants to purchase your product, no matter how much time and money you invest in business strategy or R&D, your business will not stay afloat.

So you should focus on strengthening the bond with users as early as possible in order to keep your sales figures nice and plump.

Of the 3 edges in our staff structure triangle, two are connected to the user pillar:

Solution - User (SU)

And

User - Business (UB)

Figure 11 - User influenced staffing edges

But which of these two edges should you choose to establish first?

The Solution - User edge (SU).

Let's unpack the reasons for this.

Why you should establish the Solution - User (SU) edge first

Staff in the Solution - User edge can cover any weaknesses you may have in the departments that involve user interaction.

If you are proficient in coding but not very confident with people interaction, you could focus your efforts on your solution vertex (coding, software development etc) and hire staff towards the User end of the SU spectrum (UX designers, sales, customer service, etc).

Figure 12 - Focusing on Solution and hiring staff towards User vertex.

This will give you more time to focus on areas that you are most comfortable with, like product development and running the business from the back end.

If it's your programming skills that are limited, you could work in the departments closely related to the User vertex (such as sales and customer service) and hire developers up near the technology side of this spectrum.