Attracting talent

This article is the sixteenth in the Startup Series on FirstPost’s Tech2 section and first appeared on May the 25th, 2017.

Apart from having a strategic direction and enough money to execute on the vision, the key challenge for founders is talent. Based on my experience, I will go out on a limb and say this: talent is not scarce. No matter what we hear about the “war for talent”. What is scarce is the ability to know what talent you need, find that talent, and find that talent efficiently, quickly, and affordably. This is truer still of the earliest hires, who shape your vision and your startup’s culture.

Here are some pointers based on my experiences with helping founders find people for their teams.

Making a successful hiring decision requires a process: knowing whom you seek, where they hang out, whether they see and notice your call for talent or otherwise know of your need, whether your call for talent is attractive enough, whether they are interested enough to apply or reach out, whether your hiring process confirms a mutual fit, whether you agree terms and, finally, whether they are still interested and have not been poached by a better offer in the meanwhile. This step-by-step looks obvious when one lays it down in black and white. In reality, most founders founder when it comes to hiring because they are haphazard and their follow-up is poor. Avoiding disorganised thinking and the ensuing chaotic hiring process, which can repel many a good candidate, is therefore the first thing to aim for.

The second thing is to avoid obvious and easy answers. At every step.

Most founders look in one type of spaces e.g. online startup communities or mailing lists or Slack groups. These are also spaces where your target talent is most likely to see all the other competing possibilities. Avoid being so narrow and niche. The wiser thing to do would be to tap your IRL network too. Ask the people you know who are not connected to the startup space and you may unearth several new possible candidates. As a bonus, your contacts would also have vouched for you and your startup before those candidates agree to talk to you.

People have CVs and people have side projects. These side projects in many cases provide insight into a person’s thinking as well as their skills. The obvious mistake is to not probe these side projects and thus miss possibilities. In two instances that I have been involved with, the side projects pursued by potential hires showed how those hires were perfect for the company’s international expansion plans.

Falling back on unconscious biases is another obviously easy thing to do in hiring. And avoidable. It has been shown that women get hired on proof, while men get hired for potential. If you are not finding or reaching talent of the kind you want, it would be foolish to let your unconscious biases against an entire gender make your hiring outcomes worse. Unconscious bias training goes some way not the whole way in addressing these flaws in thinking although it would be advisable for your own personal growth as a leader and entrepreneur. Emerging hiring technology could give a helping hand too. For instance, Blendoor enables merit based matching by hiding irrelevant data and thus widening your candidate pool.

Google’s chaotic hiring process in the early years has now passed into tech industry legend. It is also something best avoided and not emulated. It is crucial that founders build a creative but robust hiring process that scales, including for collecting candidate data, made simpler by platforms such as Workable, and conducting telephonic and face-to-face interviews. Equally it is important to make references as systematic and methodical as interviews themselves. Not asking meaningful questions and failing to listen actively to what the referees say is unwise, although it is easy to do cursory checks and feel you are done.

Last but not the least, avoiding firing people who aren’t a great fit is not a great move. Especially early hires, who will shape your startup’s culture, have to enable your vision and not sabotage it. If they are being disruptive or otherwise do not fit the startup, the founder has to learn to let them go. There are laws of the land that will cover firing within and outside probation periods. Of course this assumes you have given people employment contracts! It is also useful to talk to people in “exit interviews” before they leave to understand what you might have contributed to the disagreements.

Hiring is a contact sport. Putting this advice into practice will take commitment to solving the talent puzzle for your own startup.

How to be a valuable non-tech co-founder

This article is the thirteenth in the Startup Series on FirstPost’s Tech2 section and first appeared on April the 3rd, 2017.

The excessive media focus on techies as startup founders often makes non-techies doubt their ability to found and build a startup and create value. Many non-tech persons I meet believe that they won’t get investment without a tech co-founder whom they then spend considerable time trying to find. Many techie founders on the other hand seem to not think of finding non-tech co-founders with the same keenness. Both approaches need a rethink.

For starters, both the tech and non-tech founders have to stop using the term “non-tech”. The term suggests the primacy of tech skills which, while not inaccurate, does not highlight its limitations i.e. unless the technology is solving a problem and can create a product or service for which someone will pay, there is no business there. “Non-tech” in other words is the business person in a startup team.

A well-known story where a “non-tech” leader changed the fortunes of a “tech” company is of Mark Zuckerberg, the tech founder of Facebook, bringing Sheryl Sandberg on board as the Chief Operating Officer. At the time, Facebook was privately owned, valued at $15 billion, making nearly $56 million annual loss. Within eight years, under Sandberg’s leadership, Facebook grew its revenue more than 65x, made nearly $3.7 billion profit, did a successful IPO and, at $320 billion, now ranks as the fourth-most valuable tech company in the world.

So, how to be a valuable business co-founder?

Bring an understanding of the target customers. Talk to as many as you can. Listen with an open mind. Don’t look for patterns too early. Don’t challenge their reported lived experience even if it clashes with research data. Just listen, with attention.

But what if you are building is something truly path-breaking such as Henry Ford’s car? Ford famously said if asked for what they want, customers would have asked for faster horses! Even in such a case, you will still need to listen, evangelise, recruit champions, and build an organisation to reap the rewards for the startup. That was the magic Sheryl Sandberg brought with her operational nous to growing Facebook!

In an early stage startup, the business co-founder would translate the understanding of the customer to the tech team building the product. Being the champion of the customer and the community through the development process is not easy and will require great empathy with the tech team and the development process as well. At the same time, it is important to emphasise how some tech decisions should not be made before the business issues are resolved. A startup I advised learnt to its considerable cost that it is wise to get the payment gateway sorted before signing up to the customisation of a shopping cart and e-commerce platform. This folly of putting the cart before the horse was also quite expensive.

Test your product, service or app yourself first, and do so remembering the customer feedback you collected. Go further and involve some of your strongest critics in that testing. Enable iterations with an eye on the customer’s concerns, balancing the customer journey with technological feasibility. In a startup I was involved in, the business co-founder wanted the website to be designed to be accessible even on low bandwidth as many consumers were likely to be. Her concerns were overlooked to such an extent by the tech co-founder that the end result was an unusable website, the death knell for the e-commerce-only venture.

Examine all the processes, interfaces, “touch points” where your customer and community interact with your business. Ask if you are treating them well – addressing their concerns, reducing friction in how they can pay for something or raise complaints or indeed give feedback to the business.

In another startup, customers wanted the ability to consult a human being on the phone or chat before completing a purchase. The lack of such a possibility was frustrating customers and ending up in no sales being made. Neither the tech nor the business co-founder had paid attention to that feedback from the customer testing phase, as they were both used to eschewing human contact in favour of online experiences while shopping.

Examine the processes and organisation design for whether they are fit for purpose, efficient, and scalable. Does your business have seasonal cyclicality? Will you need more staff to ship thus increasing costs in your high season? How will you process returns if all your staff is dedicated to shipping faster and more? These questions are often not thought of in advance, as I saw in case of a fashion startup, whose success exceeded their expectations.

 

Going global

This article is the eleventh in the Startup Series on FirstPost’s Tech2 section and first appeared on March the 1st, 2017.

As we have discussed earlier in this column series, founders benefit from creating a scaffold, a structure that enables future success at scale, without them needing to come back later and fix things that should have been done right the first time.

This includes thinking global from the beginning.

Does this sound crazy? It really isn’t! The question “what if I want to go global?” is asked more often than you might think.

As always, the questions a founder asks will shape the business and ready it for taking on the world.

As a first step, validate your offering in your target market. One of my advisee founders is currently doing customer surveys and undertaking competitive assessments in another market to understand if her product offering makes sense and can be offered competitively, and if she may need some form of a local outpost to sell and offer post-sales service. Yet another founder, with a slightly complex healthcare related offering, is negotiating an overseas alliance with a research partner, who can help her set up a significant proof-of-concept study to obtain local data that may go down well with the regulators in that market.

Prima facie, services that can be offered remotely have a slightly easier time “going global” but may hit the buffers fairly quickly in some sectors. For instance, if you are a producer of conceptual films for advertising and public relations, can you really deliver the goods if you do not understand the idiom of the overseas market of your client? How good are the language skills available to your company if you are to serve a non-English speaking client? How might that impact your costs and margins?

Second, assess your assets and organisational readiness for serving customers globally. For instance, if your intellectual property is crucial to your startup’s success, is it adequately protected in the new territory? If yours is a product company, are you ready to deal with the logistics of shipping, returns, and associated processes? The latter is a harder question than it looks. It is tough enough sometimes to serve a customer within a massive country such as India or the USA, where states may have different local taxes, octroi and other levies. Delivering products across national borders takes more preparation. Can you deliver in various regions with different sales tax or customs regulations? Can your delivery partner deliver not only the goods but also the customer experience you are promising? Crucially though, you must work backwards to figure out the pricing of your products in different markets and communicating them clearly. Sometimes a customer abroad may be required to pay VAT and customs duty on the goods they have ordered. The landed cost could be so high as to make the product purchase unenjoyable. Is the communication on your website clear and transparent in shaping these customer expectations?

While on communication, there may be an additional consideration of website language(s). Are you comfortable signalling readiness to deal with customers who may be use a language other than English? Can you consistently support all website content being available in all the other languages? At what cost?

These concerns apply whether you sell products or services.

Further if for any reason, the customer wishes to return the goods, how easy have you made it to make those returns? Who will bear the cost of returns? Will your delivery partner also make the collection for returns? Is your returns process therefore clearly communicated to the customer on the invoice or accompanying papers? How do your internal processes work for checking the returned goods and restocking? For planning purposes, you may need to include an estimate of returns in your financial projections. If they are off by a considerable margin, you could have some significant trouble on your hands.

Each customer transaction, including returns, will generate a footprint for your invoicing and accounting system, as well as a corresponding entry into the bank account. Have you clearly thought of the process and tested that it works and can cope with selling in diverse regions?

A well-run, fine-tuned operation is essential to serving customers in many countries around the world.

A vital, final point here is about people. Do you, your employees, your service providers, indeed your board directors, mentors and advisors have experience of “going global”? Can they help you avoid common mistakes and help build a business ready to serve the world?

More crucially, if you yourself do not have the experience, how will you assess whether their skills and experience are right for your startup’s ambitions? We shall address this often asked question in the next column.

Brand leadership has to change

A few years ago, shortly after the 2008 crash, American Express in the United States paid many of its less profitable customers to close their accounts and go away. The move garnered much attention and analysis then. It was seen as a de-leveraging move. Whatever hubbub surrounded the brand then has since died down and in an unscientific survey of my business-savvy friends, few remember that this happened at all.

It was a story of a brand choosing its customers, rather than the dominant narrative that conventionally goes the other way round. The latter powers the nascent GrabYourWallet movement.  Another campaign, Sleeping Giants, is similarly holding brands and companies to account if they continue to advertise on extremist websites.

These are interesting times, as the Chinese curse goes.

As consumers, we profess to love brands that are “authentic“, never mind that in many cases, contrived authenticity, not rooted in values embedded into the business’s value chain, is all we are getting excited about.

What happens when “authentic brands” meet programmatic advertising? Unfortunate, inadvertent outcomes, that is what. Brands are left scrambling to do damage control.

What happens when “authentic brands” take a stand that is vastly unpopular? What happens when the brand’s CEO tells a customer she is free to leave if she does not like their philosophy? Isn’t that just the brand being authentic?

What when all signs point to the emergent challenges being bigger than the more popular political bugbear of the time?

Is authenticity malleable? Should it be?

What if a brand never had cause to reveal some of its stances before and is now choosing to do it in a way that consumers find abhorrent?

And when that comes to pass, should consumers force the brand to comply with their idea of authenticity, or choose to walk away with their wallets?* After all, wisdom says, when facts change, changing our minds is no bad thing.

These growing disagreements and schisms are why, more than ever before, brands need values at their foundation, in their DNA, embedded in their value chain.

Real, defensible, explicit values that the brand is willing to stand up for.

Not convenient values that change with the times or fads du jour.

It is then that brand managers will truly be able to use programmatic advertising as a tool to help them rather be helplessly enslaved by it, while they operate in a haze, whether it be about their brand values or technology.

It is then that “customer choice” will come to mean both that the customer chooses, or rejects, the brand and that the brand chooses, or rejects, the customer.

[* Switching costs for small businesses on a shopping cart platform are not negligible but then that is an economic argument, not one about values.]

 

Pay for a good startup lawyer

This article is the eighth in the Startup Series on FirstPost’s Tech2 section and first appeared on Dec the 23rd, 2016.

I am aware this is controversial advice.

Especially since the last column said: “You pay for some things, you do not pay for some things; you should take your time to understand which is which.”

Especially since we all know free legal templates are available online, or a friend can send you their stuff, and you can take them and tweak them, and you are done. This is where I mention that I have seen startups in India working with documents that state their jurisdiction as England and Wales. They certainly found a template for free! But is it serving them and their purposes?

The ability to make sense of legal documents is not for everybody. The inability to make sense of legal documents could however be quite expensive. The advice of a competent, experienced startup lawyer is something founders would do well to pay for.

Here is why.

A good lawyer will not just write you legalese and lots of documentation but she will build you the scaffold for a future of success and high growth. It is something to plan for now, because let’s face it, when you are blazingly successful, you won’t have time to come back and re-do the paperwork assembled from a random assortment of templates.

One of the first decisions in a startup is about location and structure. A competent lawyer, equipped with adequate tax advice if necessary, will help set up the most optimal structure for future growth and in a location that works for you. “But I am incorporating in India,” you may say. Fair point, but a good lawyer, who understands the competing jurisdictions you could incorporate in, such as Singapore, will explain the options to you, thus helping you think more broadly and globally about your business right from the start. Tax is not the only consideration, of course. A location can often beat your default location on the entrepreneurial ecosystem, the ease of finding and hiring talent including from other countries, and most crucially, the ease of doing business.

With cofounders on board, you will need a watertight shareholding rights agreement everyone agrees to sign. A shareholding rights agreement outlines founder shares of equity, but more importantly, outlines important issues that may come up including cofounders wanting to leave, resolving matters in a going concern, potential conflicts arising and so on. I have lost count of how many founder conflicts could have just been avoided or resolved more easily, had someone thought of writing a sensible shareholding rights agreement up front.

As you build the business, you will need to think about several other contracts e.g. with service providers and partners. Service providers may send you their own contracts on which it would be wise to get legal eyes so you know what you are signing up to and what recourse is available to you if things don’t pan out as expected. Next come employees and their employment contracts, which for startups may be different from those offered by BigCo employers. A major difference, for instance, may be the inclusion of stock options in the employment contract, as well as termination clauses and what happens to unvested or unexercised options in different scenarios. Especially if your startup is a success, this is an important matter to not deal with in an amateurish manner.

Whether your website is transactional or not, it is an essential for business and brings responsibility. A good startup lawyer will help write the right policies governing the use of your website for the visitors, and policies disclosing how you will treat data you may collect on their visit, their interaction and their transactions with your business.

These considerations are common across startups. Some specific startups may need specialist advice.

For instance, if you are creating a startup in a regulated industry, such as FinTech, in which none of the founders has adequate deep experience, the importance of a lawyer with industry specialisation cannot be overstated. A competent lawyer can advise you on compliance and regulatory challenges arising from, say, your business model.

In case, you are creating a social enterprise or a non-profit, correct legal advice would save you much heartache. Can you set up a trading arm? Who can and cannot donate to your organisation? What tax benefits are and are not allowable? How do you ensure adequate transparency, disclosure and compliance?

And of course, if you are creating a startup with a patented product, you will have already dealt with a lawyer specialising in intellectual property, and the advice here would dovetail with your experience.

Ignorance of the law, in no jurisdiction, is an admissible excuse for violations or non-compliance. Ignorance is definitely an expensive indulgence should anyone, from your cofounders to your customers, bring about a lawsuit against your startup.

Be smart.