Entrepreneur Myths (34 page)

Finding and hiring employees with the entrepreneurial mentality for your startup venture is as much art as it is science and luck. One approach is to develop a psychological profile on each of them. Their resumes won’t be much help unless they indicate entrepreneurial-type activities.

You want to hire people who don’t need to be micromanaged. I always say, “If I have to micro-manage you, I'll fire your ass.”

Here are some questions I ask, and patterns I look for, in finding entrepreneurial types while hiring:

Has the employee been part of a startup before, or have they always worked for a bigger company? If they haven’t previously worked for a startup, they might not have the stomach for it. They might tell you that they can multi-function, multitask but you'd better make sure. I once hired someone who claimed to be a multitasker, only to find out he couldn’t chew gum and walk at the same time. It was a nightmare.

When I look at funding startups, I look for the makeup of employees as much as I do of the founding team. If the employees come from other startups, I feel better about investing into the company. I funded one wireless venture where the founding team consisted of former startup entrepreneurs, but some of the employees where from Fortune 500 companies. That’s a recipe for disaster if the venture requires scrappy, resourceful and frugal entrepreneurial employees. Nothing against Fortune 500, but employees from large corporate environments have a different mentality.

Has the employee previously worked for a failed startup? What happened when it failed? How long did it take them to get another job? If it took them longer to get the job than others in the job marketplace, then they either didn’t have the right connections or their qualifications are not as good as they claim.

Has the employee previously worked for a successful startup? Did they make money when the company was sold? What was their compensation plan? At what stage where they hired? Were they hired on the ground floor, or after the company took off like a rocket? There are potential employees who claim to have been part of the ground floor opportunity of a startup, but after further questioning, you discover that the startup was not really a startup, but already had sales of $50 million and in business for 10 years.

Is the employee scalable for the short term or long term? Can they grow with the business? When investing into technology, most investors consider the scalability. The same applies to employees, partners and even founders. You don’t want to be stuck with employees, partners or founders who can’t or won’t scale up in the business. How do you determine whether an employee can scale up? It’s not easy. One thing to look for is their adaptability or changeability. If you’re in business situations where the employee is reluctant to change direction or do things differently, this person may not be scalable.

Entrepreneurship is like a sport. If you’re the club manager, you have to figure out how to lead the team, how to choose the right players to play for you, how to mesh all the personalities together to work as a team, and how to get maximum performance out of each player.

I funded a company in the enterprise sector where the employees were as entrepreneurial as the founders. I could walk the floors of the company and see their intense activity. The office was hustling and bustling like a soccer team playing on the field. And they weren’t just putting on a show because I was the investor. The employees, being shareholders, had the desire to help the company to make a big splash in the marketplace.

I funded another entrepreneur in the web services sector and his employees were more committed than he was when it came to running the business. While he was driving racecars on the weekends, they were busy working. The entrepreneur was a smart, nice guy, but he had already made it once — so he wasn’t as intense about running the business as the people under him. He was obviously smart enough to choose employees with an entrepreneurial mentality.

The ultimate goal in your venture should be that your employees learn to become an entrepreneur like you and then spin out to become entrepreneurs in their own right. Hopefully, if they’ve done a great job for you, you’re
fucking
smart enough to angel fund them.

Brain Candy: questions to consider and ponder

(Q1)
How do you determine if an employee will be entrepreneurial?

(Q2)
What kind of psychological profile do you use to hire employees? Do you have other employees interview the candidate as well?

(Q3)
How do you know during the interview if the candidate will need the least amount of micro-managing — hopefully none at all?

(Q4)
Even though your employees are not entrepreneurs like you, how do you make them more like you?

(Q5)
If one of your good employees leaves to start their own company, and you have the money, do you angel fund them?

Entrepreneur
Myth 49
| Your friends and family will be honest about your idea

Who needs competitors when you have friends and family? Do not rely on your friends or family to validate your entrepreneurial idea. It just doesn’t work.

Of course, your dear supporting mother will say your idea is great. On the other hand, your father, who thinks you should stop fooling around with being an entrepreneur, may think it’s a horrible idea; that you should go back to the real world, get a real job, work for some bullshit large corporation forever, retire, and die. Your spouse or significant other, depending on your relationship, might be supportive, depending on their risk appetite.

For fun, I like to ask entrepreneurs what their spouse thinks about their venture. You’d be surprised at the variety of answers — everything from “My husband thinks it’s great,” to “My wife thinks I’m crazy,” to “Well, we’re separated or getting a divorce because I work too much,” to “My spouse doesn’t even know about it yet.”

The answer I want from the entrepreneur is, “I don’t give a fuck what my spouse thinks because they’re not the buyer of my product or service,” or “I don’t give a fuck what my spouse thinks because it is my dream and I will make it happen.” You can tell a lot about the mind of an entrepreneur on how they answer this question. Your spouse should be supportive but, to be blunt, they’re not running your venture. You are. I am investing into your ass and don’t let anyone get in your way — not even your spouse.

I have seen my share of bullshit between entrepreneurs and their spouses. If you’re an investor, you have to watch for the signs. If you’re an entrepreneur, you better be sure your spouse supports your venture when you’re out for dinner with a potential investor. I've attended investor dinner meetings where I found out more about the venture and the entrepreneur by talking to their spouse. The spouse would spill all the beans, and the poor entrepreneur wouldn’t even know it. And I mean
all
the beans. By the time the dinner was done, I knew for sure whether I wanted to invest into the entrepreneur. So as an investor, I encourage the spouse to come to the dinner. It’s the best investment in due diligence an investor can make. I make sure I buy the dinner too. “Sure, bring the spouse for dinner. Kids too, if you want,” is what I often say.

If you’re an entrepreneur bringing your spouse to the investor dinner, be sure they support your business. You don’t want your spouse chatting with the investor or even worse, the investor’s spouse, about how stressful running the venture is for you, or how fucked up things are at the office, or how the company is sucking wind and has run out of money. What your spouse says or doesn’t say can make a huge fucking difference during and after the investment process.

Get rid of any friends that do not support you emotionally while starting your venture. You don’t need anyone telling you you’re not going to make it, especially anyone who doesn't have the guts to try being an entrepreneur themselves.

My advice: It really doesn’t matter what your friends, family, spouse or significant other thinks about your idea. First, what matters is what you think. Second, what matters is what the market (aka customer) thinks about your product or service. The third thing that matters is what the investor thinks.

I was working on a venture some years back, and my friends thought the idea was absolutely crazy. They gave me a million reasons why it wouldn’t work. After I successfully raised capital for the venture, they didn’t know what to say. I preferred they didn’t say shit — and they didn’t. You could see their disbelief as they ate their words. I didn’t get smartass about it either. I let it go because I was focused on growing the business.

Girlfriends or boyfriends can have a positive or negative effect on the ventures as well. Be careful that when you start a venture your relationship is on solid ground. I saw one entrepreneur work so hard every day that his girlfriend dumped the guy for working too much. They might not tell you the truth about your venture either. Not that it matters but it’s always nice to have some mental support. You have to be cognizant that you’re around positive people when you launch your company. You don’t need your significant other telling you how your idea sucks, or how it’s not going to make it or how you’re going to go broke. Startups are hard enough. If the person is negative, then either get rid of the venture or get rid of your significant other. It’s that simple.

What matters is the customer. The customer is the one who’s going to part with their hard, earned money to buy your product or service. Unless, you’ve got a lot of significant others, family or friends, they’re not going to be able to buy enough of your product to support your venture.

Brain Candy: questions to consider and ponder

(Q1)
Does it matter what your family, friends or spouse think about your venture?

(Q2)
Does what your family says about your venture affect you positively or negatively?

(Q3)
Do you need your family’s or friends’ approval to start your venture?

(Q4)
What do you do if your risk-adverse spouse says, “If you start a new venture, I’ll divorce you”?

(Q5)
What if your spouse doesn’t share the same risk tolerance as you do? What if they’re concerned about the stigma of failure? What if your spouse is a nervous type?

(Q6)
What if your significant other thinks your idea or venture sucks and is generally negative about it? Would you break up with them to avoid the negative energy? Do you try to convince them otherwise? I mean, if you can’t sell your spouse on the idea, can you sell anyone?

(Q7)
Do you think you should develop a presentation for your significant other and pitch them like you would an investor, to get their buy-in for your venture? Is their buy-in important to you?

(Q8)
Should you get your significant other involved in the business to help you, even though they may not be qualified? What happens after you hire them, and they end up being incompetent? How do you fire your spouse or significant other from your venture? You may not get screwed for a while — that’s for sure.

Entrepreneur
Myth 50
| Family members make great employees