Hiring Your First Employee
What You Need to Know as a Startup Founder
How do you know when/how to hire your first employee?
This is a question that I get asked a lot, and it’s no small feat. Hiring your first employee is like adding your first team member to a sports team — you need someone who is going to buy into the same vision as everyone else on the team, but they also need to be able to meet the requirements of their role.
The first employee hire for any startup should be someone who is not only a great cultural fit but will also help the business execute on its vision.
For example, if you’re a SaaS company and your goal is to sell to enterprise companies, you should look for an employee who has experience working with enterprise companies. Not only will they be able to hit the ground running, but they will also have the right skills to push the business forward.
When it comes time to hire again — and it will happen quickly — the second hire should be someone who can help scale the business. What does that mean?
In a SaaS company, you might want a salesperson who has experience in how to sell into enterprise companies.
In a real estate investment company, you might want someone with real estate experience — or someone who is familiar with investing large amounts of money into single assets.
If you’re just starting out, I recommend hiring one person at first (full-time or part-time) and then adding more people as needed based on what your sales pipeline looks like and what skills your staff needs in order to stay efficient (and profitable).
This way you can save money on hiring fees ($1–3k) and get more familiar with your systems before making additional hires.
As long as you have good documentation processes in place and are organized about how projects get done, you can operate as efficiently with one full-time employee as with several part-time employees (as long as everyone is working full time).
What are some skills I should look for when hiring my first employee?
The first skill set I look for when hiring any employee (but especially the first hire) is their ability to make decisions without me.
Can they make decisions on features without asking me?
Can they understand our vision for the product?
Can they find new customers without my help?
The reason we don’t want our employees constantly asking us questions about what we should do next is because being too available can clog up your inbox and slow down progress on all fronts — from building products and services to closing sales deals.
So in general, good hires are self-motivated problem solvers that aren’t afraid of taking risks when appropriate. If an employee isn’t willing or able to make decisions on their own, they might not be right for your startup at this stage of growth.
The second skill set I look for is adaptability.
Has the candidate been in startups before?
Have they worked with multiple teams?
Do they have experience with remote work?
If you’re hiring your first employee, chances are they will be the only one working full-time on the project when you hire them. So you want to make sure they can manage their time effectively and communicate effectively with other team members (including yourself).
For example, if they don’t know how to prioritize tasks or need constant direction on what to do next, it might be a sign that this person isn’t going to be a good fit for your startup.
Finally, I recommend hiring someone who is willing and excited about taking risks — especially if you’re bootstrapping your startup.
If your first employee is risk-averse, they might not have the necessary drive to help you grow your startup. The more risk involved in an early hire, the more equity compensation should follow.
What is the turnover rate of early employees for bootstrapped startups?
There’s no set number, but it’s definitely higher than for those who raise venture capital. Bootstrapped companies have to be more creative and think longer-term about their business model.
They’re not paying employees with the promise of a huge exit, so they have to be willing to weather some less than ideal conditions in the short term while building their company for future success.
Many bootstrapped startups are also run by the founding team, which means founders are investing their own time and money into growing their business. So when it comes time to consider a new job offer, any employee has to consider what would make them happier: staying at their current job or taking a new role elsewhere?
How much equity do early employees take in exchange for a lower salary?
It depends on the type of startup and employee, but most employees aren’t taking zero salary — just less than you’d see in a VC-backed startup. If an employee is taking on risk alone (i.e., without other investors), they may receive additional equity as compensation.
The more risk involved for an early employee, the higher the salary and equity compensation will be relative to later stage employees who also receive some form of funding from external investors (like VCs).
How do I onboard my first employee?
The process of onboarding an early employee can take weeks or even months before they feel like an integral part of the organization — so plan accordingly! Here are some tips for getting new employees up-to-speed:
1. Have a question and answer document ready
Before you start the hiring process with a candidate, make sure you have a document prepared that answers all of the questions they might have about joining your team. This document is especially important for remote hires — I recommend having it ready to send to candidates 3–5 days before they join the team.
The document should include the following:
How to setup their computer and email How to set up your company chat app or video conferencing How to use your CRM (if you use one) The tools you use for project management (if different than the ones you use for communication) What to expect during their first week on the job (e.g., training, onboarding calls, etc.)
2. Have a face-to-face meeting during their first week on the job
If possible, I recommend having a face-to-face meeting with new employees during their first week on the job. It can be as simple as grabbing lunch with them and answering any questions they have about setting up their new computer or getting to know the rest of team, but it will provide them with a sense of connection and belonging.
And it will give you a chance to get in front of them in person — something that is important for remote hires where communication might be limited — and see how they communicate and interact with others before they become integral members of your team.
You can also set expectations around what’s expected of them over the next month or two and how best they can contribute towards achieving your company goals.
Finally, make sure you’re giving this new hire lots of one-on-one time so they feel like an important part of your startup — even if they are just starting out!
3. Hire an outside contractor (or other team members) as soon as possible
One problem I’ve noticed with some startups is that they hire one employee initially and then wait 6–12 months before hiring another one (or sometimes even longer).
This doesn’t make sense from a productivity standpoint because it means people are doing more work than necessary without anyone else helping out. If you have two people working full time on a project, chances are each person can complete 2–3x more tasks than if there was only one person working on it during the same period of time.
So don’t be afraid to start hiring new people right away! That said, don’t just hire someone because you feel like there should be more people working on your startup — take this opportunity to really assess whether these people are going to make an impact right away or within 6 months at most!
As long as you have good documentation processes in place and enough work required for your company to justify hiring a new employee, then you should feel comfortable hiring someone ASAP.
4. Work with your first employee to create an onboarding plan for new employees
Once you begin hiring multiple new employees, I highly recommend creating a well-documented onboarding plan that explains in detail all of the things that your first employee did when they joined the team and how other future hires can best replicate that process.
This will ensure consistency over time and prevent future hires from having to start from scratch when they join the team or learn new tools.
5. Watch for early signs of burnout
If you do end up hiring too much too fast, be sure to watch for early signs of burnout among your employees — especially if they are working remotely. Things like going silent on Slack for more than a day at a time or not responding to emails are some of the first signs that someone might be feeling overwhelmed by their workload — so keep an eye out for these types of behaviors!
In summary, remember that it’s okay to start slow when hiring your first few employees. The most important thing is that you’re doing the best you can to get work done with the resources you have. This includes keeping your expectations realistic and being vigilant about early signs of burnout among your team members.
When building Cudy Technologies (formerly just known as “Cudy”), the first thing that I considered was to optimise our process for hiring talented individuals, while ensuring that there is a constant inflow of new talented candidates as the churn rate is expected to be very high for any bootstrapped startup with the focus on keeping operating costs as low as possible.
In the first month of recruiting our first employee, the average interview time per candidate was 1 hour. We reduced that to 30 minutes within 3 months, and in a year, we reduced that to just 3 minutes — and only spent 15 minutes in total for BOTH the onboarding and offboarding processes.
About the Author
I am the Founder of Cudy Technologies (www.cudy.co), a full-stack EdTech startup helping teachers and students teach and learn better. I am also a mentor and angel investor in other Startups of my other interests (Proptech, Fintech, HRtech, Ride-hailing, C2C marketplaces and SaaS). You can also find me on Cudy for early-stage Startup Founder mentorship and advice.
You can connect with me on Linkedin (https://www.linkedin.com/in/alexanderlhk) and let me know that you are a reader of my Medium posts in your invitation message.