When I turned entrepreneur, I wrote the first 20 names of my choice whom I wanted to hire. Then I got to a stage where I did all the due deliberations to offer 5 of them. 3 of them eventually rejected the offer for various reasons. That day I gathered a first-hand experience of why bootstrapped setups fail to attract talent.
We all know choosing to be an entrepreneur is a brave decision. Success is never guaranteed even if you have a rich father, VC friend, ready to copy idea. Only some small % of entrepreneurs survive, few more go on to hog the limelight by making it big by getting crazy valuations. Very few get the balance right in terms of making a difference to the customers. Some also get the business model right and get the company profitable in the right way. Its a pity that we only get to hear about companies who failed big or made it big in terms of funding.
In my view, the difference between the successful and failed entrepreneur is simple. The ability to find the right talent during the bootstrapped stage most likely leads to success.
Let’s examine how we try to find talent during the bootstrapped stage. We dip into the network of family, friends, former colleagues immediately. This is natural as some of them would have been even part of the ideation, inspiration of the venture. The very nature of a start-up means conserving capital and maximising output. This means you would be initially focusing on getting some traction in business through minimal scale. To go beyond your own network for talent means you have to talk to talented strangers. Many of them would think about their financial security first before your venture. They may also have minimum attachment to your idea/venture. Also, people with special expertise are always paid market salaries by large firms. The employment market is also broken. People like to change jobs with an increment to their last drawn salary. Many a times that’s the only motive.
How can bootstrapped companies thrive if they should hire at above market salary tabs. When I was hiring for my new venture one of the talented sales lead from a fortune 500 company said, “I am at 2.6 million salary”. I need 4.2 million to outweigh the risks to join you”. It was only prudent to give her the phone numbers of the CEOs of few large companies where her need could be fulfilled. I wondered why she didn’t consider the risk to the start-up with such inflated wage bill at the bootstrapped stage. Many talented people are willing to join a start-up only if its funded. This means 95% of entrepreneurs must depend on talent who will ‘join’ them than the talent who they actually want. That’s why the bootstrapped companies struggle and I suspect they do compromise on the talent they hire.
Many moons ago I wrote this romantic piece about working for a entrepreneur
The person, the value systems should be the core of your evaluation than the perfect expertise, you can teach the skills not the character. As an entrepreneur, you don’t have the time to deal with people who don’t evoke trust, this is a difficult one as interviews aren’t the best place to discover this.
Once you identify the person meet them multiple times so that you both have time to court and understand each other, meet each time to qualify a different purpose and not to waste each other’s time. The person is joining you, so, your punctuality, authenticity, decision making and your passion towards the cause determines the person who is making the call. Give them the personal touch no large organisations can and the hiring process quality few MNCs have.
I must admit that hiring during bootstrapped stage is a vicious circle as your idea takes off only when there is good talent beyond Founders. VCs also say they invest in people than the idea. But your ability to attract the talent of your choice without hurting your purse determines your success.
This means at the bootstrapped stage you are likely to court more people through your network. Your luck plus quality of network determines your quality of hire and thereby your success.
When you are the pilot , you can always control your flight.