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How do you convince the right technical talent to join your startup?

Well back in the 80s Steve Jobs convinced John Sculley to join him by saying "Do you want to sell sugar water for the rest of your life or do you want to come with me and change the world?" and Sculley joined Apple. Would have bene nice if real life would have been any similar.Unfortunately finding the right technical talent for your startup is as big an issue as convincing then to join you.Joel Spolsky in his epic blog"The Guerilla guide to interviewing" talks about how to identify the rockstars from the crowd.But what is even more critical is how to convince them to join your organization.

We clearly know we are no Steve Jobs and programmers clearly know equity means nothing but white trash which might or might not have a value going ahead and high salaries is something which entrepreneurs can't pay at the bootstrap stage.Under those circumstances how do you build your technology team if you happen to shortlist a bunch of really good coders or designers. Hiring as a function is becoming increasingly difficult firstly because of a dearth of good technical talent and secondly because most good engineers are looking at either fat pay packets or good brand names so startups is not a place they'd typically wanna invest their time in.

Would like to know how other startup founders approach this issue?

19 Replies

Andrew Lockley
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Andrew Lockley Advisor
Investor and strategy consultant
Simple answer is to treat technical talent as investors, and make a great pitch, biz case and offer. Prove your assumptions before asking others to believe them. A A
Ming Tsui
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Ming Tsui Entrepreneur
HabitatForAll.org

Attracting a technical person to any team is hard if the compensation is low

unless you can pay them cash with high salaries and equity.

Or one can always hire the average joe programmer but they can

only do simple websites. This is why sometimes one might have

to learn how to code.


My suggestion is to combine forces with other entrepreneurs.


I have a concept for this but am busy working on a big project

myself. The best advice is to make friendship with programmers

so you don't have to make cold calls when you have an idea

for a start up project.

Peter Jones [LION: li.blueoyster~@~gmail.com]
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Peter Jones creates solutions for product USP, market messaging, team building, venture and other commercial capital
Easy to say this but much harder to do:

1) Have a great product
2) Show you've got traction
3) Show you know how to grow the business
4) Show you know how to buy value for money services to help grow cost-effectively
5) Be considerate to collaborators and suppliers, as well as customers and investors
6) Always trial small scale if possible
Ming Tsui
0
2
Ming Tsui Entrepreneur
HabitatForAll.org

Money is key to attract technical talent. No Money no talk is slogan

for the Chinese and everyone included. We all survive on money.

Roger Wu
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Roger Wu Entrepreneur
co-founder at cooperatize, native advertising platform
Unless you are doing something highly technical and never been done before from a tech perspective, the technical talent knows that they can do it. The question becomes why work with YOU? They know they can build it, but they don't know if you can sell it. So show them that you can. Show them that you can sell vaporware, show them that you can get a crowd excited, show them that you can get employees excited, show them you can get investors excited, and if you can do that, this question answers itself.
Saurabh Saha
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Saurabh Saha Advisor
Co Founder at Talent Pegs
Mr Mushin

Thanks a lot for your response.

Don't get me wrong but I really don't have the bandwidth to go through your answer-its huge. Do you mind writing a summary of what you meant if I may ask.


Jerry Mahabub
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Jerry Mahabub Entrepreneur
Chairman of the Board and CEO at Astound Holdings, Inc.
This varies by the individual, especially when dealing with highly eccentric technical talent, which in my company, are software engineers, which tend to be the best developers, and the most difficult to manage. For my company the biggest challenges I have encountered are raising money without giving up too much equity in exchange for capital contributions and finding ways to monetize (or as I call it "signing the backs of checks"). The latter of the two can take a very long time whether you have the most differentiating technology or not, it is inevitable that larger companies will do their best to de-value it for their own benefit, or they will have the not invented here attitude (NIH syndrome as I call it). So, although it is great to show the talent you are looking to hire how great of a businessman you are through raising money, convincing people of your great technology, and finding ways to monetize, this is not always something that happens overnight, and most likely you need the talent to help get you to a point where monetization can start to become a reality with a commercial product. Not a great demo, but, an actual commercial product which has undergone serious testing, evaluation by larger companies looking to license or acquire your technology, and it takes a long time to build those relationships - this is not a tenderfoot trail. So, to answer your question, how did I pull it off, which may or may not work for everyone, but it is worth a shot - Offer strong equity compensation by way of stock options that vest over time, and you will have to be generous with this, but careful too as your ratio of outstanding shares (actual stock that has been sold through an official company offering) to the number of outstanding options and/or warrants can get you into trouble when you do actually have a real product, and are ready to license your technology and are looking for institutional investors. The key here is to not have a messy cap table, and not have a lot of debt - the curse of many startups, including my own, which was cleaned up by way of shareholder action and re-structuring the company and its cap table. This is where you need to be extraordinarily cautious of how you raise money or you will find yourself between a rock and a hard place, and no matter how great of a technology you have, investors will leverage this for themselves to get a bigger piece of the pie, often times, this is where you, the visionary founder, gets either wiped out of your position as CEO and they come in with their own people to replace Sr. Management, and you can lose control of your company. Don't let that happen unless you absolutely have to. I have been lucky to make it this far with my dev team, barely being able to pay the team, and the only opportunities to do so would of meant substantial dilution to the existing shareholders. So, what do you do? Again, strong backside incentive. Make them feel as if they will retire for life if they put the time and energy into working for you, and they too will believe in the upside potential. Backside compensation can be stronger than paying an employee, however, the bottom line is we ALL need to put food on our tables, so you cannot just use backside compensation to keep them motivated and working hard (trust me, they will make your life a living hell on a daily basis even though you have paid to the best of your ability everyone that works for your company and paid yourself absolutely nothing and are having your power turned off in the middle of winter). But you stick with it, you find clever ways to keep your neck barely above water, just enough to breathe, while sacrificing your own sanity for the benefit of you team that is working hard under your leadership. Or, you can find a VC willing to back you and give you money, which will often times have covenants attached to a deal, meaning they will decide how much you and everyone else gets paid, they take the lions share of the equity, they take charge of your destiny, and they determine when the company is acquired or entering the public markets, and you for the most part have lost your company to the clutches of the VC. I myself chose the other path of shaking bushes and raising money through 506 Reg D offerings, and got very lucky I was able to successfully raise money. Now, here comes the REAL issue, when a shareholder that is no knowledgeable of your industry gets pissy because they feel you are not monetizing quick enough for their tastes, then they go crying like a baby to the SEC, next thing you know, the SEC is crawling all over you, and as innocent as you have been, working your tail off day and night with no breaks, now you are being scolded for some SEC rule or regulation you violated (they cast a very large net and will undoubtedly find something you did wrong especially when it comes to what you say in your offerings to raise money no matter how much disclaimer language you have). So, if they feel you have committed information, which at the time would have been impossible for you to determine to add into the business section of your offering, they will act like you are the biggest criminal to walk on the face of this planet. This is because of all the real criminals that get away with a lot of bull crap, and then the real honest people suffer miserably from how they have stolen money from investors, so we, as honorable businessmen, all of a sudden are facing the almighty SEC. In a nutshell, its really a double edge sword, you need to raise money and convince investors you have the goods to give them a healthy ROI, and you also need to keep your team members paid and incentivized. To find the balance, but not the end all solution, setup an equity incentive pool for your team and set aside X number of shares for your team via board resolution such that you recommend to the board who should get what and why. That way, all of your key team members get options that vest over time until fully vested, and, for exemplary work on certain projects the team completes which helps makes your life easier for raising money or licensing your technology, they get equity bonuses by way of backend compensation. I hope this helps, and again, although this is how I did it, and I am disclosing to you some of the challenges and hurdles you need to really look out for, there are always other avenues, but this way, keeps you in control, and you are the master of your own destiny. Not always the best route, however, if you have a vision and you want it to be adhered to, you need to maintain control, or that vision will undoubtedly get altered when there is a change of control, and you watch your life's work get packaged up and sold off for pennies on the dollar for what it really would have been worth, and the investors make their upside, and you end up making not much at all - the one who put all the blood sweat and tears into it! Thanks for taking time to read my post.
Christopher Pyper
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Fixing online advertising for everyone
I think everyone has covered the other parts, but I would say one most employers miss is time off. If you offer 4 weeks vacation, 10 personal days, and working from home a day or two a week, you can lock down pretty much any developer. Yes, passion, stock, and salary is important, but people are sick of living at work. The crazy part is this will probably make them more productive.
Jerry Mahabub
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Jerry Mahabub Entrepreneur
Chairman of the Board and CEO at Astound Holdings, Inc.
Good point Chrostopher - vacation time is a key critical role to keeping motivation and is standard to build into employment agreements. To up it a bit, I offered 6 weeks per year of vacation time to my key employees. One year, I sent the strong performers on a vacation full paid for completely out of the blue. The issue here is your shareholders and how they will react to this. They think everyone should work with no time off until they see upside, and if you are taking time off, you have misused their money, and then the nightmare starts! I myself, being Founder and CEO, have not had a vacation in 7 years, yet, I still wake up every morning at 6:30am, and go to sleep at 3am, non-stop. I suppose it depends on your level of motivation as to whether or not you want to take vacation time. For myself, work is my vacation time! lol
Peter Jones [LION: li.blueoyster~@~gmail.com]
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Peter Jones creates solutions for product USP, market messaging, team building, venture and other commercial capital
Something to do with Lakota.

Maybe try the videos referenced 80% of the way down.

One of the most passionate broad ranging pieces of prose I've ever seen. Very difficult to take on board due to many inferred connections that many of us may struggle to reference without some quite detailed research.

I know only one other who operates on that kind of level, maybe not even he...
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