Building a Founding Team
So you have an idea – should you build a team of cofounders? Or go it alone? And how do you compensate cofounders (and/or early employees) if you have no (or not much) money?
The Startup Genome Project found that startups with a team (better yet – startups with a balanced team; a team that wasn’t 100% developers) are more likely to succeed.
Managing a Startup Team
A startup cannot afford team members that are not a fit and who are not contributing. Choose team members carefully. Perhaps try a trial period. And if it isn’t working, it’s much better to correct the situation by making a change earlier instead of later!
Diversity is Good
Another thing to think about is diversity.
You’re probably most comfortable around people like you. Following that tendency is a big mistake in a startup. If you’re the lead techie, you might need a very different type of person to lead sales. And finance. Finding people who fit your company’s culture – that’s critical. But don’t make the mistake of hiring a bunch of clones of yourself! You need different skill sets, different personalities, and different points of view!
Compensation and the Early Stage Startup
There are not a lot of guidelines for startup compensation models. A lot of it comes down to putting together a win-win model that on the one hand is compatible with the realities of the company’s cash-flow today, and on the other hand is a win for everybody if revenue ramps (and the stock has value).
When the company is pre-revenue and has not received any investment funding, it’s certainly typical for the founding team to not take any salary at all. But when you hire employees – employees need to be paid (state law says so). So you should check with an attorney or with a human resource professional to make sure you set up your compensation structure in a way that’s legal!
Stock is often a key component of a startup compensation plan. Be sure to review some of the founders-stock considerations in the Founders Stock section of the Road Map.