November 28, 2017
Our team at Village Capital has worked with more than 700 entrepreneurs and we’ve seen a consistent theme: early-stage CEOs tend to treat hiring as an administrative function rather than a strategic one.
Our advice: think about hiring from the lens of an investor.
The number one mistake we see CEOs make is hiring for the stage they are at, not the one they want to reach. Don’t fall into this trap! Investors want to see a clear understanding of current and future technical and operational skill requirements which will get your business to scale.
Don’t believe us? Just ask an investor. As Shortlist’s Paul Breloff has said, human capital is “miles and miles above everything else. It is without a doubt, the biggest binding constraint to growth. There’s human capital, and then there’s everything else.”
Or as Khosla Ventures founder Vinod Khosla says “If I fund you, who will you hire?”
Particularly in emerging markets, investors care deeply about whether a startup’s team has too many holes in skills and experience — we found in our report Breaking the Pattern that investors often put this at the forefront of their decisions.
How Our Team of Investors Think About Hiring
When we’re evaluating an early-stage company, we use our VIRAL (Venture Investment Readiness and Awareness Levels) tool.
This rubric positions Team as the first vertical for a reason. If you don’t have the right team, you won’t have the ability to hit the milestones you’ve laid out to close this round of funding and get to your next. No team = no scale.
Using this tool, we ask the following questions about a company in our internal conversations:
- Does the company have the right founding team in place to solve the problem?
- Are there at least two different people on the team with clearly differentiated skills and responsibilities?
- Does at least one person on the founding team have the technical ability to deliver on the founding vision?
- Does the team have an idea about the target market size? Do they have a sense of how the industry operates and what value they add to the industry?
- Are there experienced members of the team with lived experience of the problem?
- Is the founder able to envision how your team will grow in the future?
- Does the team have the technical ability to solve the problem they’ve set out to solve?
Can you answer these questions?
Hiring for the future involve thinking strategically about where your company is going. It’s easy to get complacent when you have a lean team of dedicated employees, especially if some of them are your friends.
We’ve never heard an entrepreneur say, “My team is terrible”. Instead, get real and specific about which areas of your organization are risky, perhaps due to a lack of technical expertise or manpower. Then make a plan for how you’ll fill those critical skill sets, even if it’s down the road.
Village Capital’s Talent Curriculum and Marketplace
After several years of seeing pre-Series A companies struggle with the talent question, we’ve decided to provide some resources, with VilCap Talent.
You can visit the beta version of our Talent Curriculum in our entrepreneur resource centre, where you can do an exercise on building a hiring strategy that focuses on leveling-up.
The Building a Team to Reach Scale module specifically tackles the areas outlined in this blog and uses an exercise by Hitachi Foundation & Borough Consulting, “The Human Capital Advantage” to help you build a hiring strategy based on milestones, skills, timing and perspectives.
Read about more advice from investors to grow your startup on TechCo
Rachel Crawford leads product development for Village Capital’s Talent product. Village Capital is a venture capital firm that finds, trains, and invests in overlooked entrepreneurs solving real-world problems. Learn more about Village Capital here.
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