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Hire Magnets Within Your First 10 Hires, Early Stage Funding Tactics - Tactician: #00139

Hire Magnets Within Your First 10 Hires

Author

Alexander Lowell Small
June 12, 2024

Hiring capable people is like planting a garden.

You start with one strong plant, and soon enough, the whole place is blooming with talent.

Just make sure you water them with appreciation and sunlight - or, you know, paychecks.

Hire Magnets Within Your First 10 Hires 

Key Concepts and Tactics:

  • Allocating Equity Generously to Early Employees:

    • "In the early days of Sun Microsystems, Vinod Khosla recruited elite talent, hiring people like Andy Bechtolsheim, Bill Joy, and Eric Schmidt. Many people from Sun went on to start or run billion-dollar companies."

    • "When his son Neil founded the AI startup Curai Health, Vinod advised him to keep only 15% of the company rather than 45% and try to hire one or two people at 15%. Then he advised him to leave 30% of the pool for non-founders."

  • Attracting Top Talent with Generous Equity:

    • "Even though they're coming in later and they didn't come up with the idea, they will be incredible resources, especially as magnets to attract other people. If you believe a company becomes the people it hires, then your task becomes attracting the best people, and selling depends on magnets."

    • "Bill Joy was an incredible magnet. People wanted to work with Bill and Andy. And even if Bill didn't do a day of work, he was more than worth it because he helped attract Eric Schmidt. I don't think Eric would have come work for me as a 25 year old."

  • Prioritizing High-Quality Early Hires Over Ownership Percentage:

    • "I think this is the most important piece of advice we've talked about among many important things today. Being super generous with early employee equity and getting founder-quality people in the first 10 employees—I think all the evidence is on the side of doing this, and yet almost no one does. So there's a huge edge if you're willing to do it."

    • "It's the single-most important thing to do in the first six months of a company. The best people can start their own companies. If you want them to join your company, you have to be generous with equity."

Early Stage Funding Tactics

Why Read:

  • Learn effective fundraising strategies, including creating emotional excitement, selling an ambitious vision, and persevering through challenges.

Featuring:

  • Nakul Mandan (@nakul), Founder and Partner, Audacious Ventures

Link: 

Key Concepts and Tactics:

  • Creating Emotional Excitement During Pitches:

    • "Your job in that first mtg is to get the VC emotionally excited about you and your startup. It's not enough to get them rationally excited."

    • "Whoever creates emotional excitement won that first mtg."

  • Selling an Ambitious, Passionate Vision:

    • "Be ready to sell the larger than life vision. Don't be shy about your ambition. Show the passion behind the vision and mission statement. Let the ambition come through. They're betting on you!"

  • Emphasizing "Why Me?" or "Why Now?":

    • "Two things drive investor excitement in most early stage fundraises: "Why Me?" or "Why Now?""

  • Treating Fundraising as an Enterprise Sales Process:

    • "Be intentional about the entire process: pipeline of intros, which partner at which firm, who's making the intros, the scheduling… everything. It's an enterprise sales process. Don't be casual about any aspect of it."

  • Managing Mindset and Using Rejection as Fuel:

    • "Be ready to manage your psyche thru the process: The No's come before the Yesses. The best No's can be an input to your thinking. But there are some people who will be dismissive of you or your idea - let those No's become fuel to your fire."

  • Evaluating VC Partners Thoroughly:

    • "Don't underestimate the importance of quality of partner. Will matter a lot in the end. Do backchannel references and ask pointed questions."

  • Persevering Through Challenges:

    • "Fundraising is hard. Company building is harder. BUT... people like you and me have done it before and will do it after us. Just remind yourself: "If not you, then who?""

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