As a startup founder, there will be times when you want or need to build your team, both key employees and potential future partners. How do you convince someone like a skilled chief technical officer (CTO) to join the team? How do you propose a fair deal to someone who will become an associate? How do you build the minds that will come together around your boardroom table and help grow your dream?
Consider what you need
The first thing to consider is what your company’s foundation needs to grow and evolve over time. What skill set, connections or market knowledge will be of value? Each of these components brings value to your team, so the question may be which do you need the most or which element best fills a void that you as the founder may lack.
Recognize that there is no love at first sight
Just as the idea of love at first sight or a proposal of marriage after a first date is a thing of fairy tales, so too is the idea that you can meet someone and know instantly that they will make a good partner. It is important before you make such an offer that you truly know someone and how you will work together. That means working together through stressful and quiet times. It is important to know how someone will respond in all kinds of situations.
For someone you are able to work side by wide with, depending on the environment and how quickly you are able to evaluate your working relationship in different scenarios, I would suggest at a minimum three months, perhaps even six. Where the person you are working with is remote, stretch that to nine months to a year to be sure you really get to know them.
Convince them to join
There are many different arrangements you might propose to a potential business associate. These might include them receiving a partial payment for their time and energy for a few months, and then moving to a bootstrap situation where they will also support the business financially. For a more established company, there may be a starting salary with the addition of a percentage of equity as the company launches and sells a product.
Whichever situation makes sense for you, there will be some give, some investment on the part of your new associate, whether financial, time, or perhaps simply accepting a lower than normal wage for services. In order to get the partner to buy into the plan, you must sell them on the opportunity and on the company. The potential partner must believe the concept is interesting, understand the advantage it will serve, and understand the marketplace possible. In other words, just as you might sell a potential client, you must sell your potential associate on the value of partnering with you.
Set the framework
Because you may want to bring in additional assets as your company grows, it is important to define the rules for business partners so you aren’t having to re-evaluate every time you consider bringing someone on. How will you value their contributions in a monetary, profit or share way? How do you value time invested already and new assets they may bring to the table? Foundrs.com is a good tool to help get you started.
In the case of someone who wants more than you are offering, it is important to look at why. If you explain your reasoning and they are open to considering your opinion, you have someone open-minded and who you will be able to work with in the future. Someone who is unbending in their demands is likely not a partner you want to engage with.
Accept that the future will not take care of itself
You must also consider the future and potential what-ifs. What if someone leaves or dies? All possible scenarios must be considered to avoid difficulty later on, and it may be that you require the services of a lawyer to help you understand fully what may be involved. One thing you might need to consider is allocating a time commitment to equity in a business. If the person leaves within a period of time, they lose their equity share. This can be an incentive for people to stay and can be critical for first employees on whose expertise you depend.
Keep in mind as you are building your dream that you are also building a company. Being open to growth, to sharing the dream and the vision, can be key to your success.
How did you deal with growing your company’s foundation? How have you defined equity shares? What went right? What went wrong? Share your stories below.