Hi everyone. This is my first post. A quick introduction about myself. I am Vivek and currently located in Chennai. Aspiring to be an entrepreneur in the days/months/Years to come 🙂 This article is an attempt to understand the process of hiring at a startup. Your comments would help me understand what went on.
To understand the situation, you need to know that I have been trying to work for a startup because I thought it would give me the flexibility to learn how to run one down the line. Having said this, I always knew the kind of challenges and sacrifices that I would have to make if at all I joined a startup. But I am also of the opinion that the passion to work in a startup varies with your association with the group. For instance, if you are the founder, you would be practically working 24×7 and also in your sleep you would probably be working out strategies. The level of commitment would slightly reduce say for a co-founder who came on board a little later and keep going down with a new hire. This is true even more for a company which is performing regular hires (post funding).
Now, having said this (and I am sure many of you would agree/disagree), I was called by one of the founders of a company to work with them. We had various rounds of interviews, tests and lengthy discussions. Coming from a product management/marketing background, I was offered a marketing role in the organization. The company itself was funded by an entity and were in a position to offer stable income to the new recruits.
At the end of these interviews, I was selected and offered the job. However the pay was significantly lower than what I was drawing at my current job. The reasons stated included that I come from a different background and the nature of the job would be entirely different from what I have been doing all these years, that a disparity might be created if they even matched my current pay; let alone exceed it.
My expectations were not high at all. To begin with since I knew the pulse of startups, I was ready to accept an offer which would be below my current CTC and also fore-go other benefits which are offered in a corporate world. I was also prepared to work long hours (startups don’t have any working hours, isn’t it?) including weekends if the situation demanded. But the company simply couldn’t meet my threshold of acceptance and the offer was cancelled as a result.
My questions to fellow entrepreneurs here are:
- How do you balance the pay packet for a potential employee? Please give two scenarios – (a) You are self funded. (b) You are financially backed by an angel or a VC.
- Would you consider the prior experience of a candidate from a different domain, or would you simply consider him/her to be a fresher from your company’s perspective?
- What kind of commitment would you expect from the new hire? What kind of notice periods/bonds would you look at?
- What are the legal aspects which you would look into before hiring someone? Would you do extensive background check on the candidate or rely on references or just hire him/her for what value they can bring in?
- Would you have an age criteria to hire? In other words would you believe that a 21 year old could be as valuable as a 40 year old?
Your comments would help me ascertain where I should have my expectations as a potential hire/employer.
- An Attempt to work at a startup - June 24, 2008
Well its good discussion going on here. I am presently employed & started my own venture
* How do you balance the pay packet for a potential employee? Please give two scenarios –
(a) You are self funded.
(b) You are financially backed by an angel or a VC.
An employee will join you for ONLY ONE simple reason : Career Growth. If he/she will see value in your co. & the long term career growth (see how ppl became crorepatis with Smile Interactive) and join you either at the same pay package or slightly higher then his / her current CTC.
Incase he’s looking for money then simply Startups are not his bait
* Would you consider the prior experience of a candidate from a different domain, or would you simply consider him/her to be a fresher from your company’s perspective?
Startups Require candidates who join running….because startups need money & business growth on every moment. Hence, a person from the same domain would be ideal, otherwise look for a fresher, moulding an experienced person can sometimes take more energy & resources. A startup can recruit Experienced persons in their advisory board
* What kind of commitment would you expect from the new hire? What kind of notice periods/bonds would you look at?
Commitment is the top most thing….bonds etc, are legal stuff & are not effective. If the Idea is good & the team believes in it then there’s nothing stopping them to succeed, nobody sees time & weekends then.
* What are the legal aspects which you would look into before hiring someone? Would you do extensive background check on the candidate or rely on references or just hire him/her for what value they can bring in?
Legal aspects : shouldn’t be a criminal, rest is ok. References makes things easier…but do cross check the positive ones
* Would you have an age criteria to hire? In other words would you believe that a 21 year old could be as valuable as a 40 year old?
Need a Lot of energy to be in a Startup…age doesn’t matter…if you have the passion in you. then even a 60yr old gives the best results
Hope it helps
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This is the one single reason why I want to run a business that has no need for a lot of employees. These questions have no generic answer. But here’s my global fundas.
a) If you’re self funded or otherwise, giving away equity is easier but demands that you sell the company to the employee. Tough ask, and I won’t do it for non-critical positions – would give them some equity but full market salaries. If I couldn’t afford it I’d either look for funding or figure out ways to subcontract, share, barter or some other cheap option. No point trying to get someone to work for less than market honestly. Freshers have no market so there’s a lot of leeway there. Sorry to say that but that’s how it is.
For critical posts I’d sell the equity in terms of saying here’s the model, here’s the fundas, and here’s where your equity will be in x years. And I’ll do this only to people I get references to or that I know or come across and who understand the model. Yeah I know, not scalable, but I do not want to build a business that needs to scale employees to be successful. Would rather add server racks.
Subcontractor models are successful across the world – the elance and rentacoder types.
b) Domains make no sense. Experience also. It’s always about the attitude and aptitude – and if that works typically I’ll make a scale up offer – 2x or 3x if they reach a certain goal in n months.
Still, I may pay more if someone can hit the ground running. For eg. marketing a pharma product is great but I’d be willing to pay more to someone who brings contacts from my field (brokerages, traders etc).
c) What commitment/bond business? I don’t know if a startup will stay solvent long enough! A month is decent and anything more is irrelevant. Bonds are ridiculous. But then so are golden parachutes so don’t expect those either.
d) Well, the employee needs to sign some code of conduct and disclosure thingy but who has the time for background checks. That’s why I’d much rather hire a reference. At least someone in between takes responsibility.
e) Haha. I’m closer to 40 than 21. But the only reason you choose younger people is they are easier to manipulate. Who else works mad hours just for the heck of it! I don’t buy any arguments that younger is more risk taking or open thinking and all that. McDonalds was started by a 65 year old mixer salesman.
(a) You are self funded.
Ans. Apart from co-founders nobody took my startup bait. I could not recruit even one.
(b) You are financially backed by an angel or a VC.
Ans. I got employees at 20% CTC more than what they were drawing. People perceive startups as risk prone. Most of them dont want the varied experience and responsibilities for lesser pay.
* Would you consider the prior experience of a candidate from a different domain, or would you simply consider him/her to be a fresher from your company’s perspective?
Ans. I would never take freshers.
* What kind of commitment would you expect from the new hire? What kind of notice periods/bonds would you look at?
Ans.Fortunately the employees I have are very committed. I cant do much even if I am given a moments notice. I prefer a months notice. Fortunately I have had zero attrition. To tell the truth we would suffer big time if some one leaves. It is true people work 10 times more in startups. The people who join seem to fall into the culture and do put in long hours.
* What are the legal aspects which you would look into before hiring someone? Would you do extensive background check on the candidate or rely on references or just hire him/her for what value they can bring in?
Ans. Legal – None
References – I am influenced by the negative ones. The positive references I dont trust and interview them thoroughly.
* Would you have an age criteria to hire? In other words would you believe that a 21 year old could be as valuable as a 40 year old?
Ans. I dont care for age. I have a 22 year and a 55 year old! Both are darn good in what they do.
I am not sure if these answers help…..
Vivek,
You have put forth a very interesting set of questions and views. Talking about commitment levels, It is a direct correlation to an Individual’s responsibilities and stakes involved, irrespective of the stage of the company. A founder’s commitment level, in most cases, will always remain very high. However the potential learning and exposure levels are much higher in a startup, something which will be very useful when you might launch your own venture.
Talking about salary, nobody will settle down for a lesser salary without being compensated either in terms of equity/stock options. So getting people on lesser salary in lieu of a startup experience will not happen. So if you have money pay, them a salary which is in line with market standards. In case, if you can’t, then work out stock options package. So the question of being self funded or VC funded doesn’t actually arise.
Your second question is more relevant to the stage of the company. An early stage startup may not be able to consider a person who doesn’t come in with the required experience/skill set. With limited resources often you have to pick the most suitable person available.
Bonds and background checks are rarely used in startups. It is always advisable to hire the first few for your startup through reference. Rather than investing time and money behind background checks, encourage employee referrals, they often have turned out to be the best way to hire
Hi,
This post could be true for me I could change the location to Mumbai.
Comments by other people have been really interesting and here are my 2 cents on the same.
1. How do you balance the pay packet for a potential employee? Please give two scenarios – (a) You are self funded. (b) You are financially backed by an angel or a VC.
A: If I was self funded I would not have a lot of money to give away. I would be forced to look at things like equity or just share in profits. If it was a VC funded, I would have made adjustments for employee costs in my business plan and hence I would have money. Also my understanding tells me that most VC funded startups HAVE a lot of money.
2. Would you consider the prior experience of a candidate from a different domain, or would you simply consider him/her to be a fresher from your company’s perspective?
A: Tough one. I think depends on what person brings to the table. He could bring his experience, his learnings, his background, his perspective, his contacts, even things as intangible as his enthusiasm. If he brings something that I desire, I will make sure I will recruit him.
Talking about fresher or experienced, in a startup personally I dont think I need to have that kind of categorization for people. I want people for skills, not for showing off. Moment I start talking like that I become a lazy, slow moving company.
3. What kind of commitment would you expect from the new hire? What kind of notice periods/bonds would you look at?
A: No notice period. No bonds. Commitment – believe in the idea and evangelize that.
4. What are the legal aspects which you would look into before hiring someone? Would you do extensive background check on the candidate or rely on references or just hire him/her for what value they can bring in?
A: I would want to hire without checks. For me checks waste a lot of time and for a startup, time to market is really crucial. Once we start working, we can always figure out in die course if the person was appropriate or not. And if at a later stage, he is found inappropriate, we can easily part ways.
5. Would you have an age criteria to hire? In other words would you believe that a 21 year old could be as valuable as a 40 year old?
A: No age criteria. Yes a 21 year old can be very valuable. How? You just asked 5 questions that a 40 year old would have never asked. And when you are 21, you are not scared to ask those questions. And thats a huge things to have. There are more areas like understanding of the market from a teenager’s perspective, contacts with more fresh minds and top of everything else enthusiasm and confidence that young people have.
Your comments would help me ascertain where I should have my expectations as a potential hire/employer.