Hiring the founding team 101

There is a lot to be considered besides the salary of the team or the skills you need to start building your product. There is people behind technology and the backbone of any team lies in the operations supporting its members.

I like to divide the work of building a founding team into 5 spheres: Talent Acquisition Strategy, Recruitment, Onboarding, Payroll & Benefits, and People Performance & Retention.

What I'm excited to share here is the process I follow to build a founding team —a method shaped by my experience working with early-stage startups and aimed to be a down-to-earth guide as you dive into creating the perfect environment to attract, hire, and retain A-players.

This is my approach for hiring founding teams and creating an HR structure. This is what I build for my clients; however, consider this a letter from me teaching you how to do everything by yourself.

A good, strategic, and honest call with all founders and advisors to pinpoint the essential first hires is the way to start. Kick off the conversation about people with a culture call, describing what you are doing, what you are building, and why. Think about the kind of person that has the skills you need to make this happen. Always have in mind “what we do not have right now?”. You do not need another version of you. Building a team is about bringing diversity of experiences and backgrounds to create something meaningful. Write it all out or use Otter to make the recording and transcribing for you so you can have it all documented.

Here's a piece of advice: Be honest about your expectations. In this early stage, your ideal candidates are those who bring expertise to the table or are ready to develop it rapidly. Look for individuals who show promise in swiftly adapting to new domains and show passion for building. This is way more relevant than having an Ivy League school on their resume. This is not about credentials; it's about looking for people's unique background and their potential contribution to bring results. Keep it genuine and focus on aligning skills and potential with your evolving startup needs.

It is time to craft a competitive compensation package that goes beyond salaries and equity. So much to consider here… Are they based in the vibrant tech scenes of San Francisco, the cultural hubs of São Paulo, or in the A-player talent pools of East Europe?

What we can do now is establish benchmarks tailored to various locations to ensure your offer aligns with local norms, making them appealing and competitive to where you are hiring and giving you clarity on the salary range for each region. Now beyond monetary considerations, a good offer also has a great benefits package. It is a huge risk to go for an early stage, but you can show how ready you are to make your product and team thrive. Think health insurance? Professional development opportunities? 401(k) for US-based employees, flexible work schedule, Unlimited PTO? Share the love.

Equity Transparency: When it comes to equity, transparency is key. Communicate the equity structure, emphasizing how it aligns with the long-term vision. You want to make sure your candidates understand not just the job but also their potential ownership and impact on your startup success. Also have in mind, this is a moment founding employees will negotiate so it's important to have clarity yourself and a plan in mind.

Full-time or contractors? Does it matter? Let’s say you are hiring full-time, a direct-hire but also hiring abroad. What does that mean? Visa sponsorship? Relocation help? Does it mean hiring contractors to be as much a part of the team anywhere in the world? In essence, the choice locals or global hires depends on your startup's goals, the nature of the work, and your commitment to fostering a diverse team. It's a strategic decision that goes beyond work arrangements and becomes an integral part of shaping your startup's identity.

Where to pay? Payroll management is NUMBER ONE. Payroll has no time to get it wrong, and it is always a priority. Platforms like Gusto, Deel, or ADP can be a game-changer. Checking them out individually to see which one would work best for your needs is key. I have my opinion about them all, and I will soon create another article to share this. For now remember: Getting payroll right is not just about timely payments—it's a testament to your commitment to your team's well-being.

This is the space to change from ‘Who do you need?’ to ‘What do we need?’. Now that we have the backend of hiring set and running, we are ready to find the people that will make everything you have in your mind come to life. How magical, right? Let's think: Evaluation Process, A Career’s Page when you don’t really know…, Interview, Technical Assessment, Reference, Candidate Experience, Hiring Manager Experience.

How many stages and why?

Well… It depends. I do believe the shorter the better. That means we know what we are doing, we know what to ask, we create the right environment for the candidates to give their best…But there is a lot that can be said here. If you are sourcing, someone (like me and you) will be the first point of contact and probably the first interaction. Kick off the conversation about people with a culture call, describing what you are doing, what you are building, and why. Think about the kind of person that has the skills you need to make this happen. Always have in mind “what we do not have right now?”. I talk more about Sourcing & Reach Out here. This is usually the first interaction for an Engineer that is being sourced. The perfect message makes perfect sense. Here in this first talk, you will check: Were they founding engineers before? Are they used to building from scratch using Next.js? This is a pre-screening conversation.

Now even if you are not sourcing and this will come from a Job Advert, ask Pre-Screening questions in the Job Application to make sure you will talk to the right people.

Now let's say the answer or conversation went great, so you can share with them how to prep for your first official call, and I have a template for you here: Sourcing & Reach Out.

In your first call, you told them about you, shared the values you want for the company you are building, shared what you need help with, narrated your history, and gave them space for the candidates to narrate their stories. You shared experiences, values, skills, and potential. You had a Culture Call and you checked their skills to keep on moving with you.

A really important detail on this interview: Make it structured.Research shows that having a clear assessment criteria in structured interviews mitigates biases in candidate evaluations. Now, we're not advocating for robotic interviews—we infuse a touch of personalization and delve into follow-up questions. However, there's a foundational set of questions that every candidate should encounter.

But now… A Technical Assessment? Yes, but why? To give you the data you need to make decisions based on what they know NOW. In a Technical Assessment, you will see what engineering candidates bring to the table right from the get-go. You can see how well they perform in tasks that align with what they'll be doing at our startup. It's all about making sure they're ready to dive in and start making meaningful contributions from day one. It is really important to remember: 1. They cannot put everything they know in one assessment. 2. You are evaluating with they have what it takes to start; they will get better while they are building and working specifically with what you are building together. Then soon will be specialists in your product and service.

If you find yourself without a CTO, consider teaming up with a fractional one or seeking guidance from an experienced engineering leader. They can provide valuable insights during the assessment evaluations. To facilitate the process, platforms such as Coderpad or Test Gorilla. They can be excellent tools to streamline and enhance your evaluation procedures. Personally, I've found these platforms to be particularly effective and user-friendly.

The last stage, the last phase is for them. I love to create this part, and it shows so efficient on retaining new hires because when they make a decision, they are sure about it. Create a call for them to ask you or any part of your team any questions. What is it like to work there? What are the challenges? What do you love? What is too hard sometimes? If you do already have a team, try to not be part of this call and let the candidate ask questions directly to them and make sure they know this stage is for them to ask questions to make sure if an offer follows this, they have all the information they need to say yes.

A really important detail on interviews: If you have enough people, try to conduct the calls with two or more team members participating in each interview. We want to outsmart our own bias. This approach minimizes the influence of individual biases and will allow the other interviewer to compensate for blind spots, catch nuances that may be overlooked, and collaborate in evaluating candidates more equitably.

Reference Check: This is a love it or hate topic. For the ones that love it: Data always help us with better decisions. Talking to someone that worked with your potential new hire can be really relevant to your decision-making. I have a really good template on questions to ask and how to organize your reference checks. Send me an e-mail at: lorena@founding.com, and I will send it your way. It’s free!

Candidate Experience: Safe to say it is a hypercompetitive world of talent acquisition, so it's essential to recognize that the engagement between you and the candidate is a two-way street. A-players are bombarded with recruitment messages. If they're investing their time in your company, treat it as a valuable partnership, not just a one-sided invitation.

Be open, be curious, and communicate in a way that reflects how much you value their potential contribution to building your product. From the very first interaction, strive to be an exemplary leader, showcasing the culture and environment they'd be joining.

Considering that these candidates likely have a 9-to-5 commitment, make the conversation easy for them. Implement tools like a scheduling calendar to avoid any timing conflicts or misunderstandings. Prioritize being organized and efficient to respect their time.

Moreover, preparation is key. Ensure candidates know what is happening before every step of the process. This not only demonstrates your commitment to a smooth hiring journey but also equips them to bring their A-game at every stage.

Hiring Manager Experience: If you're the founder and the hiring manager, that means the entire recruitment process is in your hands. To make this a seamless and effective experience, ensure all the elements discussed earlier, from payroll to careers page, to the flow of the hiring process itself, are set up for success. I highly recommend that before delving into the hiring manager role, establish a solid recruitment infrastructure to make the process flow effortlessly.

Now let’s say you want a recruitment agency to help you out! Immad Akhund, founder of Mercury, shares:

Would I recommend a Recruiter Agency? Not really. It's based on at least 15% of the salary of the new hire; if you have 10 hires, this is a big investment that you could be putting into better salary, benefits, and tools for your team.

Now, what about In-house recruitment?

Noah, Founder of Priviom says:

Here's where a model like Founding comes into play. Acting as a bridge, as the intermediary step between being ready for full-time recruitment hires or HR leaders and avoiding the hefty expenses associated with recruitment agencies. Noah's sentiment captures the essence – having a service like Founding fills the gap between doing it all independently and waiting until it becomes overwhelming. So the Hiring Manager Experience stays under me.

There is a lot to be said about onboarding someone. The most important thing is to keep the great experience. If the first week is amazing, this will show their next years are going to look like.

Alex Hormozi put it simply “If you treat your employees like recruiting candidates, they'll keep working for you”.

Documenting everything, aka writing your startup story: Now, what about everything you want them to know about your company? I know you are starting, so what a great time to start building with your new hire a Knowledge Management System. A KMS is to centralize your most important info and make it immediately accessible — instead of needing to ask someone, your employees can simply grab what they need. Your internal knowledge management system fosters self-service among your team.

If you want a template to build your KMS, again, it’s free, let me know here: lorena@founding.com

Onboarding Schedule: It is important to provide a clear path to success for new hires so they can understand what you expect of them and how to succeed in their new role. Have a checklist, to cover the first day, first week and first month. Make sure they know where to go and still have a good amount of space to be creative and explore.

Getting to know them better: Meeting someone is a full-time job, to make it easier always add a page on Notion in the Onboarding Dashboard and it looks like this:

<aside> 👩🏻‍💻 - 👋 The basics you should know about me:

This is basically what we already might have on the “Who are we” page. An about you, where you come from & how you got here, maybe some on what you do in your free time. Anything not work-related that might be useful to know also fits here!

Call out skills you have that someone could come to you for.

This will help people know some things that you’re already aware of and addressing (or not), but might do.

What makes you get excited about a project?

What kinds of things do you want to work more on?

</aside>

I ask every new hire on day one of onboarding to fill this out and to read the ones made from the people in their team so they can also get to know everyone. How lovely, right?

Benefits Management: Create a document with all the information they need to access their benefits, 401(k), Medical, Dental, Vision, Mental health support, PTO, Flexible vacation Time. This could be part of your startup handbook, but that is for the future. For now, make sure all this information is easy and accessible for them, probably living in your KMS.

Performance Review for the Onboarding: How does it work? Think 4 pillars. The overall focus, priorities, goals and metrics. This is so important to make sure your new hire has a path to walk. Is this your first hire? Build this with them.

Overall Focus

In the NEW HIRE first month at YOUR STARTUP, the focus could be on comprehensive job training. Following this, the next 30 days will emphasize seamless integration into project teams. This structured exists to just give a really clear and easy idea of progress and can track progress.

Priorities

Example: the priorities include completing training and (goal). Breaking down tasks into a list helps the NEW HIRE manage his time effectively during his initial 30 days at YOUR STARTUP.

Goals

The NEW HIRE short-term goals involve acquiring new skills and gaining company-specific knowledge. These goals can range from daily tasks to performance goals BUT we can also add more personal goals, like making sure we are doing the 1:1 and learning from it.

Metrics

To measure the NEW HIRE progress, we will use concrete metrics, number of successful project proposals submitted or in the first month, getting to know how much the new hire understood of YOUR STARTUP. Ask the new hire too what is the best way to track this. Collaboration, always.

Example:

30-day

Overall focus — Example: learn about the company mission and product offerings, fill the your guide to me.

Priorities — Example: Complete knowledge base training

Goals — Example: Learn about product features and clients

Metrics — Example:

60-day

Overall focus — Example:

Priorities — Example:

Goals — Example:

Metrics — Example:

90-day

Overall focus — Example: lead your first project

Priorities — Example:

Goals — Example: gain a complete understanding of the service

Metrics — Example:

I love this structure to give me the chance to draw up manageable SMART goals and milestones that fall within the business's overall mission and the goals for that new hire.

Based on research, dissatisfaction with performance reviews is everywhere and employees see performance reviews as being time-consuming, demotivating, inaccurate, biased, and unfair. A McKinsey survey reveals that a significant number of CEOs express dissatisfaction, stating that the appraisal process in their companies fails to effectively identify top performers. Additionally, more than half of employees believe that their managers fall short in conducting accurate performance reviews. A Gallup study paints an even bleaker picture, with only one in five employees agreeing that their company's performance practices serve as a source of motivation.

I mean, terrible, right? With all the other things a founder is constantly working, thinking about Performance & Retention is a big task that requires constant work.

So why should you conduct performance reviews? There is a lot of different ways you could choose to evaluate performance and depending on the approach and the time you have to put your constant focus on it, this could drastically change the results. For me, a performance evaluation is a way to increase communication between managers and the team; the goal is to set realistic expectations and giving everyone the chance to offer and receive feedback. Performance is only a piece of the professional development puzzle — effective professional development involves mentoring, monitoring, and following up. Without the conversation opportunities performance reviews present, it isn't easy to truly understand where your employees stand and where you, as a manager and leader, stand with them.

There is a lot of different types of reviews you can choose to evaluate your team and give them the space to grow in your startup… And why would them want to grow? Do they have the right place and incentives? To start, do they know that this team is not your family, this team is your league? - Looks simple but a team will perform better than a family.

Let's start… You have some options, and we can start with a 360 review, which gathers feedback from the employee itself, their peers, and their manager. This type of review provides a holistic perspective on an employee's position within your startup and how their performance compares to their peers.

You could also go for a Compensation Performance Review, focusing specifically on evaluating compensation. This review addresses things like raises due to factors like inflation, improved performance, and increased responsibilities. While it doesn't guarantee a raise or promotion, it serves as a valuable gauge to understand employee satisfaction with their income.

Or maybe we go a Goal Setting Performance Review, the focus is on discussing employee objectives. These reviews typically involve assessing measurable metrics and milestones set earlier in the year. Like what I shared previously on the 30-60-90.

While I haven't dedicated a specific article to this topic, if you want more information about different types of performance reviews, feel free to reach out to me at lorena@founding.com. Regardless of the review type you choose, it's crucial to ensure it:

I understand that this may seem overwhelming but you don't have to navigate this alone. If you opt to hire a team of specialists in HR, payroll, and talent acquisition, they can provide invaluable support. However, you CAN do it yourself in a more hands-on approach with your co-founder, dividing responsibilities effectively. In my work with early-stage startups, Founding serves as a bridge, between the first HR hires and doing all yourself. I take care of People, meaning, at Founding I am looking out, full responsibility for: Talent Acquisition Strategy, Recruitment, Onboarding, Payroll & Benefits, and People Performance & Retention. If you ever need assistance, feel free to reach out here.