A Start Up’s Biggest Investment
What is the biggest investment a start up makes? – The people it hires!
I recently sat in a pitch where the start up was raising $5 million in an “A” round. When we drilled down in to the use of cash here is what we found – $120,000 was going to be spent of hardware (servers, bandwidth, PCs, office furniture, etc.); $2.5 million on people; and $2.0 million on purchasing traffic to their website. Wow, 50%of the raise is to be spent on people.
That is a huge investment in fact it usually is the biggest investment. Just like a factory filled with machines you the factory foreman must care for and maintain your machines except in this case it is not a cold piece of iron and parts it is a living breathing person with hopes, dreams, aspirations, a family made up of aging parents, spouse, children and pets. The number one skill for a founder or a management team to have is their ability to attract, retain, and inspire talent. How you handle the soft skills of talent retention is going to be the biggest determinant of whether your company will prosper.
Here are my top five things you should do today to “maintain” your factory of machines:
- Make sure they do not feel like machines in a factory! – Really – they are people- Get to Know them at a personal level and understand their hopes, dreams, and aspirations and help them achieve those things. The biggest thing a manager can do to absolutely insure the success of their company / team / department is to align the goals of the individuals making up the team to those of the company / team / or department.
- Communicate – constantly the goals of the company and how the company is doing. We live in a creative society (as Daniel Pink has reminded us) in order for your team to think and apply their creativity they need to know what is going on and the direction the company is heading. They also need to understand their role in helping the company get to where it is headed – so communicate!
- Listen to their input – The first step in great communication is to listen. Many founders simply do not listen to their teams. This is crazy as the team usually has the greatest contact with the customer. Also think about what you pay them. From the neck down the average worker in the US is worth approximately $14,000 per year. If you pay them more than that then you are paying them to think. Why would you not listen to what they think?
- Become the Servant Leader – In this day of jumping from job to job and shortage of talent, top talent – I mean the best of the best – the cream – the people who make things work – the ALL STARS – CAN GO ANY WHERE! So you must become more interested in their success than your own success. That is a key to being a great leader. Remember it is not all about you.
- Have fun! – Winning is fun. Hard work and accomplishment is fun. We play as children. We play as teens. We all certainly play in college. Most people still need to have fun when they are working adults. I am not talking about the foosball tables, and ping pong tables of the dot.com era. I am talking about creating an atmosphere where the all star talent comes to work with their best friends and enjoys the effort of helping the company grow. Every culture is different figure out what yours is and make it a fun place to be.
You simply must be able to hire and retain the best people in order to win the game. Remember the biggest investment you will probably make in your company gets up and walks out the door every night. Make sure they want to come back… Besides being a place where people want to work creates a great environment for you, the leader, as well.