Scaling Session - Startup Hiring, with Maren Kate Donovan

Welcome to the Founder Insights podcast from the Founder Institute. I'm Jonathan Grecian, co-founder of the Founder Institute, and on these podcasts we try to bring you useful startup insights from our global network of entrepreneurs and mentors. In this episode, you're going to hear from Maren Kate Donovan, a Silicon Valley FI graduate and currently the founder of Avra Talent Partners. Maren has helped build several startups in her career, some startups with some very, very large teams. And in this interview, she's going to share some of the important lessons she's found on how to find talent, how to keep talent, and how to build a well-rounded team. The interview was done by Mike Supovichy, who is an EIR at the Founder Institute and the leader of our grad support group.

Enjoy. For those of you who don't know me, my name is Mike. I run the Graduate Success Team here at the Founder Institute, and our entire job is to basically help your company grow. And, you know, we do this in a variety of different ways. And one of the ways we do this through these monthly graduate master sessions where we try to go through and cover all of your bases with regards to specific topics. And in this case, we're going to be discussing hiring and onboarding early on. Early employees and potentially co-founders. And we brought on an expert on this topic, Maureen here. And, you know, we're looking forward to help asking, answering any sort of questions that come up. So maybe we can start with Maureen. Maybe you can introduce yourself, a little bit of your background and so on. That'd be great.

Yeah, absolutely. So I, kind of started my career in entrepreneurship in college. I bought and sold jewelry. I bought it in bulk and then resold it on eBay when I was like 19. I think I was one of the first power sellers in that arena and did that for a few years and just started getting really interested in internet business and the idea of like building things that had a little more leverage than just like a jewelry reselling business. So I tried my hand at a few different internet-style businesses. They always kind of had to do with people. One of them, I was helping other entrepreneurs or small business owners find virtual assistants in the Philippines, or like, you know, website developers in Pakistan, using these old-school job boards that used to be all over the place. And Craigslist obviously as well. And so that actually spun into what became the company that I joined Founders Institute for, which was called Xirtual. So I had kind of a fuzzy idea of what I wanted to do. I wanted to connect people with talent that was remote. Joined Founders Institute with kind of a different idea. And then by the end of it, after I graduated, decided I was really going to focus on helping connect entrepreneurs with virtual executive assistants. So we grew that for about 5 and and learned a ton in the process.

At our peak, we were about 450 people spread all over the US.

And then after that, I traveled for 2 years. I did a few interim COO roles at a company called calm.com, at a remote co-living company, and tested out different business ideas in the, during that time. Time, um, really figuring out what I wanted to build next. And what I kind of landed on was just that there was a thesis to all the work that I had done. It always had to do with connecting people, um, and I really enjoy helping people hire. I really enjoy, uh, helping people figure out where, where their best skills are. And like, I think work is a really integral part of life, so I decided to launch a company that helps mission-driven startups find great people. So we're like talent advisors, but we also do manage the whole acquisition side of things. So we kind of embed with companies and handle a lot of their hiring.

That's, that's terrific. You know, so basically you've been from, from zero to one all the way up through scale. So you can provide pretty much a pretty answer, pretty much everyone's questions here with regards to, you know, hiring and onboarding. So maybe Maybe what we can do as kind of a, just a first, as a start here, you know, is, you know, how, you know, when you first started, let's take a company, maybe Xurcho, how did you try to determine what the right type of, you know, employees or potential co-founders were? How did you determine what that need was?

So I think the best way to do that is figure out what— well, there's two different things. Figuring out who your, like, leadership team is or co-founders is one thing. And then depending on where you are at your business, employees can be slightly different. So I'll start with, like, co-founders or your first employees. What you really want to do is, as a founder, you want to understand where what you're really good at, what you're really bad at, and what you're like okay at. And then, and a great way of doing this is asking a lot of people that work with you, ask people that will give you really honest, brutal feedback. And then you can use that to figure out where your weak spots are that other people can fill. And that's the best way to go about figuring out how to kind of bring on first people because you want to understand where your leverage point is. Like everyone has one or two things they do really well and everything else you need to kind of help balance out. When it's early, you're still going to be doing most of the stuff by yourself, but just starting to approach things like that is a way to build and scale into your business early on. And then in terms of employees or co-founders or whatever, assessing who could be the best fit really comes down to what goals the company has and what the objective outcomes you want to see in an actual period of time. So 3 months, 6 months, 12 months.

What is—

what is this person, if they're successful, what are they actively doing? So, you know, kind of put yourself in the position to think like, wow, my dreams have come true. I have this amazing co-founder. What does he look like at 6 months? What does it look like at 12 months? And then once you have that written down, you can actually vet people based on do they have the skills, do they have the willingness, do they have the personal traits to be able to reach these milestones? So it's a very quantifiable way of hiring versus saying, I feel like I need a VP of marketing or I need a CTO. You shouldn't ever say I need a title. You should say I need these outcomes and then back into what the actual title looks like, because usually it's different than what you think.

So this is really, really interesting. Now, now you were essentially almost kind of describing like a, almost like a framework or something like that. And, you know, so you're recommending that people basically write this down more or less and then kind of use that as a way to bring people in. Or maybe you can give an example of how you, you know, how you went about doing this in the past.

Yeah, I mean, I think there's, so my company now is called Avra Talent and our blog is blog.avratalent.com. And there's actual frameworks we post of like anonymized job descriptions. And we have one post either there on Medium, it's super easy to find, um, of like our framework of building a job description. And our framework of building a job description is done in a way that actually sucks out all this information if you follow it like to the letter. And then from there you can build out what I call a recruiting funnel, which is what you use to test against the qualities, the skills. So it's like there's— so a good example would be, oh, so we're hiring an interviewer. The way we do our hiring is we have 5 different disciplines versus a traditional recruiter that does everything. We break that role up into 5 unique disciplines, and that's a coordinator, an interviewer, a headhunter, a strategist, and a domain expert. And for an interviewer, what really is important is they have to be high EQ. They have to make people comfortable when they're talking to them. They have to enjoy engaging with people, but at the same time, they also have to be detail-oriented. They have to be able to kind of put their investigative journalist hat on. And when people give an answer, dig in and figure out where, what exactly are they really saying? Um, and follow like little trails and not just follow a script. So when we build a job description for the interviewer, we will say these are the objective outcomes. This is what success looks like as an interviewer. You know, you are processing applicants, but you're also interviewing them and you're, uh, weighing in on whether or not they're a fit. You're looking for patterns. Um, yeah, I don't have it in front of me, but pretty much it works across the board as long as you take the time. Like I would say take days, take whatever amount of time it takes to really think through what what success will look like. And because that's the easiest thing, um, most people, especially in early stages, we're really good at getting excited about stuff and running with it, but we're not good about pausing and saying, what does success really look like? What are the goals we're achieving? And if you don't have those guideposts, it's almost impossible to hire the right people and to vet properly because you just don't know what you're looking for. Like, you can't find a street if you don't know what it's called.

No, it makes sense, right? Like garbage in, garbage out, right? It's the same kind of concept here, you know. So that, that's really interesting. So for everyone here, I mean, if I was to summarize, uh, this, you know, basically understand exactly what you need, uh, before you go out and try to, to hire somebody, right? And this is a really important thing. And this is— I'm glad you brought this up because we see this all the time, right? So one of the common things that we get requests is like, I need to hire a CEO, I need to hire a person that's in charge of sales, but You know, what does a CTO look like for you at this stage of your company, for example?

So instead, you'd say, instead of you say, I need to hire a head of sales, you'd say, I need— we're doing $10,000 a month and I need to in the next year get it to $75,000 a month. And I think I need to, you know, use X, Y, and Z to get there. And these are our customers. And then from there you back into, okay, that's actually someone who's more junior and is, let's say, dialing for dollars. Or, you know, maybe it's someone who is more senior, but it's also like, can you afford it? So yeah, so you start with the objectives and then you back into the title from there. The title should be the last thing that is done.

And that makes the job description, by the way, for everyone significantly more exciting, right? Every job description you see out there is like, we need engineering, blah, blah, blah. And they're all like the same. So you don't even stand out. But if you make it like this, it starts to sound much more exciting and, you know, to want to potentially join, join your company.

And the other thing we do, and I can provide a link, I can send you guys the template to like our most up-to-date job description, um, uh, like template. But the other thing we do at the very, very top of any job description, we do about a small paragraph of what we call what's in it for you. So it's where you're really speaking to the candidate directly before you get into any of the nuts and bolts. You're saying like, do you want to disrupt the recruiting? Do you Do you think the recruiting, um, you know, market is fucked? Obviously maybe you don't use that language, but we would. And like, or maybe you do, we actually do because we're like, do you think the recruiting model is fucked? Like, well, you know, then this may be really interesting. Do you really enjoy working remotely? Uh, do, do you align with our 3 core values of authenticity, alignment, and extreme ownership? Um, do you want to, you know, get shit done? And do you also want to be part of a distributed team that like has a ton of fun and has a lot of autonomy? If so, read on. And that immediately engages people that are really good fits for us. And it turns off a bunch of people, which is great because we don't want— like a good job description should be relatively isolating to the people that really engage with it.

You know, piggybacking off this, you know, since we're still kind of trying to figure out kind of who the right person is and so on, Corey asked this question, you know, early on, you know, does it make sense to, to look for very experienced people, uh, and, and in parentheses, he has to pay for it, right? Or try to find talent that, that needs growth but is more willing to work for less cash and, you know, maybe greater equity? Like, how, you know, how do you look at that, you know, from your perspective?

Obviously it's, it's case by case, but I would say in general, um, you want to hire for a high— we call it an high FSO quotient, which is a high figure shit out quotient. Any day I would take a more junior person who has grit, who has character, who has hustle over a more senior person, especially a more senior person depending on— a more senior person that has built startups before could potentially be good because they're going to understand the rolling up of the sleeves. They're going to understand that like you do all the roles in the beginning. A more senior person that comes from a traditional world, corporate world, corporate consulting, whatever, is gonna have a really hard time with the ambiguity and chaos of an early stage startup. So far better usually to get someone who has the raw talent and help them grow with you, um, and be able to mentor them up yourself, or maybe lean on some of your advisors than bringing on someone who's like a suit or whatever. Um, Yeah, that's just what I've noticed in the last 10 years.

I agree 100% with that. You know, the other thing, Corey, too, is when— if you bring in someone that's too senior early on that doesn't have a significant amount of startup experience, you know, that's used to having a certain lifestyle, I mean, they're gonna have a really hard time in your startup, right? Because, you know, startups are hard. Nobody's getting paid a lot of money. You don't get to fly. It's just everything's hard, right? And so it's just really easy for them to say, well, This was kind of an interesting thing for me to experiment with, and then I'm out. I'm going to do this other.

It's also, you can pay for experience by the hour. There's several expert networks you can get advisors. I really strongly suggest founders to pay for experience, but don't pay for a salary, pay for it by the hour. There's earn.com, there's clarity.fm, there's some other expert networks where you can go and pay someone $250, $300 an hour, but for an hour, and they're going to give you more value in that hour that will maybe Maybe what you do is you think you need a head of marketing, so you find someone who's a current CMO. You take your job description and what you think you need, and then you let them rip it apart. And maybe you have a meeting with them once a month and your outlay is super small, but you're getting very tactical. Yeah.

And this is also a good opportunity to bring in some advisors in your business as well, right? And to help you in various areas that you may need help with in a similar way, which is also really interesting, an interesting concept too. Uh, as you scale, um, you know, you know, so, okay, so we have— we figure out kind of what we want, we know kind of the target demographic market or whatever type of, uh, people that we want our startup. Now, you know, how do we— how do we go about like sourcing? Where do we look for— for— for people? And I— I get that it's the stage specific, but maybe— maybe we can focus on kind of like the very early stages. Let's say like like pre-Series A where, you know, where you have actual budget to go out and recruit people, let's say like, you know, seed, you know, pre-seed, like just, you know, maybe small little team, like how do you even go about doing this and how do you source for candidates?

So it depends if you're looking for remote work or if you're looking for people in a certain city. I'd say AngelList is still, is a really great place to find talent, you're able to do outbound searching for free, which means you can put a job posting associated with your— like if you're an early stage company, forget LinkedIn and LinkedIn Recruiter. It's super expensive and it's like, whatever. It's way more corporate. Focus on AngelList. Put job descriptions up. They're free. You don't have to pay for them. Build out your AngelList page. So it really tells a good story of your, your startup and what you're interested in. And then use AngelList to reach out to people directly and say, hey, you look interesting, would you like to chat? Another good investment is ZipRecruiter. ZipRecruiter is a job board aggregator. It'll blast for like, I think it's like $140 or something for 30 days. It'll blast your job description to a ton of places. Now this is where building a recruiting funnel is really important. You have to have some filters so people, you won't just get 1,000 resumes. You have to ask people to do certain things. But if you build a recruiting funnel, with a few barriers to jump over, you can cast a really wide net. Obviously, like friends and family, reaching out to people. There's several groups on Facebook and different places, meetups, Reddit. It just— think of in terms of like, where do the people that I'm looking for live? Like designers live on Dribbble and Behance and Instagram versus salespeople are going to, you know, be involved in sales organizations or meetups or going to be looking at job boards versus, you know, young, super scrappy people that want to get involved in startups are going to be on AngelList or reading blogs or Medium. So there's a lot of ways that you can do it with minimal outlay. You just have to be able to kind of have a simple process set up. If you want remote jobs, if you're able to hire remote talent, Remote.co is really good. It's $200. So it's pricey, but it's high quality. If you're looking, if you kind of a social good company, Idealist is a great job board. I think it's $90, really high quality people that are looking to make a positive change in the world. Also Google whatever your sector is plus job board and then Google type of role plus job board and you'll find a lot of smaller ones that can sometimes be free or are relatively easy to get involved with. And then another, like an oldie but a goodie is Craigslist. Like 90% of people from Craigslist will be absolute garbage, but 10% will be really good. So, It's worth it.

Yeah, I second that. And you know what, one of the things I used to do when I was recruiting and using Craigslist, I would put to you, I would basically make people take a survey to qualify folks before they even applied for the position and so on. So that's another way to filter through the noise there.

You can use a really basic ATS like Breezy, and there's free ones out there too. And Breezy is pretty cheap if you only have a few roles up and you can say, push your thing to Craigslist and say, to apply, go to this link. And if they don't go to the link, you just ignore it completely. And once they go to the link, you put a few screening questions, you know, maybe a test task after a phone screen. And yeah, with a hiring, you get what you get from it, what you put into it.

So, so let's, let's, let's dive in a little bit more into process. So, okay, you found out where to, the right job boards and things like that to go and post your, your your description, you have a really good description because we followed the entire framework we discussed at the top of the call, you know. So, you know, now how do you, how do you manage that, right? Like, what are some of the best practices that you've encountered throughout your career for managing that entire process once you've posted the job ad?

It's just following the process. So the best way to manage any process, whether it's project management, whether you're building something or you're following like Agile, is just have one place. That's the point of truth. We use a Google Doc. It's super simple. We have a recruiting funnel. We have if-then framework. So if they get past this stage, then they go to this stage. If they get past this stage and then just follow it, follow it religiously. Don't let anyone drop through the cycle. Don't be like, this person's really awesome, so I'm going to skip doing reference checks. Or this person's really great, so I don't want to ask them these basic questions. You never want to make it too difficult, but what you want to do is you want to make it engaging enough for someone who's interested in the space or interested in your type of business that will— they'll get a kick out of going through your process. Yeah, so the best suggestion on that is just follow it. Create a process and then follow it for every single candidate. And if you do that, you can't really You know, you can't go too off the path.

The keyword there is truth. Follow the truth. I love that. That's awesome.

A point of truth.

Yeah.

So like our recruiting funnels, each document is the single point of truth. So if two people are like, oh, and then also ask the same questions for every single person you screen, create phone screen questions. Don't just go in and think that you can wing it, like create specific quick phone screen questions. Take a few hours to think about what is going to actually get to— I mean, all of this flows from your job description. What's going to actually get to the, um, you know, to the root? What's going to show if they do have the skills, if they will be a culture fit, if they, um, could—

can out—

make the, you know, objective outcomes? So create anywhere from 7 to 10 questions and ask the same ones of everyone, and then you're able to compare across people. Um, and then never forget to do reference checks. That's a huge one that really helps screen out people that are just really good interviewers.

How, how, how do you, how do you do reference checks? I've seen a lot of different interesting kind of people going through the various different ways on this. But what are some of the best practices from, from your perspective with reference checks?

We do what we call backchannel references as well as given references. So the references people give you, uh, the thought on that is no one's going to give you a reference they know is going to talk badly about them. So what we'll do is we'll let them know that they're in reference check. We will talk to the 3 references they provide us, but then we will, uh, go get anywhere between 4 and 7 backchannel references. And the way we like to break this up is people that they worked for, obviously, but also people that they worked with with, so peers, and then people that worked for them, which is a great one, especially a slightly higher, uh, role. And then you, I mean, it's just a few hours of research on Google, reach out to people on LinkedIn or Facebook, or you can find their email. There's a bunch of email scraping services and just be super authentic. Be like, hey, I'm thinking about hiring this person for blank blank job. I saw you work together at XYZ. Uh, do you mind hopping on a 5-minute call? Most people will say yes, and they're really, they're pretty good about giving honest feedback, and you'll notice patterns. So if you notice that all the given references give raving reviews, but the backchannel references are like, meh, like that's gonna be a really big thing.

Barbara asks a question here that's somewhat related to, you know, filling in the funnel here is, you know, when, when you're at a competitive, like, recruiting event or you're just searching for, for senior talent, you know, what are some of the best 2-3 points about why a startup is a, is a great option?

Like, convincing someone that doesn't necessarily think their startups are great options, or why your startup is a great option?

So I'm going to interpret this question. I'm assuming, Barbara, you're, you're basically talking to some folks that maybe haven't considered a startup yet, uh, and you know, you're trying to convince them that your startup is the best option. Correct me if I'm wrong in the chat room.

Um, it depends on what type of person. If it's a person that's slightly more senior, I would be wary of trying to convince them that startup is a good option. Um, that's usually gonna come with a lot of baggage, especially if you're more early stage. There might be a pretty steep, not learning curve, but like startup learning curve, I guess. If you're talking to someone who's more junior, I don't think you're going to have to do a lot of convincing. I think maybe across any type of talking to someone at an event, it's spending the time to figure out how you pitch your startup, but to a candidate. So how you say, this is why our opportunity space is really big. So it's not just we do X for Y and here's our secret sauce or whatever a deo is like like little thingy is that we had to fill out. It's more like, this is the size of the space. This is how our team approaches it. This is what's really exciting. This is where we see the company going. So it's a different type of pitch, but whenever you're talking to someone who you potentially wanna engage, I really always think, look at it from the framework of what's in it for them. Yeah. Dig in a little bit to psychology behavioral sociology and, you know, do a little reading and try to kind of understand how to get in people's minds and understand what their motivations are. And then it's a lot easier to sell them on your idea in a way that aligns with what's good for them too.

That makes, that makes a lot of sense. And Barbara said, yeah, that's, that's, that's, that's kind of what I'm looking at, that she's got an executive that's considering a startup versus kind of a later stage company. They're not quite senior level yet, but they're almost there, right? So it's just, you know, like trying to balance that out.

Yeah, I'd be cautious, but like, but yeah, I mean, again, it's case to case for sure, for sure.

All right, so everyone that's, that's in the call now, you know, feel free to ask questions, right? Like this, we're doing this for you. I've got plenty of questions I find this conversation super fascinating for my own self, but like, I'd love to hear kind of what questions you all may have, uh, because we want to try to address them as much as we can. So, okay, we, we've gone through this, we got a funnel, um, found some interesting potential leads, uh, you know, I guess the next step for you at this point is what is interviewing them, right? You go through the interview process, um, and you know, you probably have some interview process that you've kind of are filtering people go through, you know, is there any advice and some best practices on how to go about the interview process? And, you know, what has that looked like, you know, historically through the startups that you've been part of?

Well, you want to start with an application. So you want to start with something super simple that catches name, email, maybe resume depending on the role, um, and also ask them anywhere between 2 to 3 questions that, uh, align directly with the job description and is like, hey, this has to do with this exact, um, you know, role. So what really— something as simple as what really draws you to this role, what really interests you in this company, um, what do you love about product? They can be pretty simple, but it allows you to, uh, test, and it allows you to figure out what's going on in their, in their head, because before you actually commit to a phone screen.

So, so this is just, uh, okay, person, uh, to— this is basically, this is how people apply for a job essentially, right? Like you put together an application, open-ended questions, uh, and you— that's even before you, you schedule it or you just kind of move them away from, from the phone. Cool.

Yeah, that helps.

I mean, so let's say if one of the important parts of your role is, um, figuring out if people, people have to have really good written or oral communication. If they can't communicate in that application, no matter what their resume looks like, they're just filtered out. If they don't answer one of your questions, that just shows a lack of care, then they're filtered out. So after that, you go to the phone screen stage, and the phone screen stage is where you're going to actually be able to kind of dive into the meat of things.

Makes sense. Makes sense. So what does that, what does that phone screen stage look like for you? Kind of how can you walk us through maybe the process? You got this person on the phone now. How do you run that interview?

So again, that depends per role. If I'm talking to a technical, technical product manager, that's so much different than I'm talking to a sales intern. But what you want to do is you want to talk about behavioral questions. You want to talk about what, what experience they've had. You also want to Talk about what, you know, have them walk you through some behavioral things. Then you also want to gauge things like culture fit. What is their personality like? What do they really want? Do open-ended questions. Ask them to walk you through their history. And then pause at each role and say, hey, why did you leave that role? What did you like about it? What did you not?

So, you know, I guess on a higher level, right, like what are you trying to get out of this phone screen? One, you mentioned culture fit. Sounds like a pretty important one. And then you're trying to also determine— we can hear you fine, by the way, so on our end everything's all good. Okay. You know, and it's the world's most annoying beeping behind me. Yeah, that's okay.

Go ahead.

So, you know, so you're trying to determine culture fit, that's number one, and then you're just trying to determine if the person has the potential to have the role, because I assume after a phone interview you're probably gonna go into like a, you know, a face-to-face to face, kind of a face-to-face, a test task, a test project, depending where they are, um, in the role.

So, you know, maybe you— once after a face-to-face, yeah, it's like you're trying to— you're perpetually trying to like not waste either of your time while gauging true outcomes, true skills, two cultural things that will, um, that will impact it. And I mean, you can do like Google interview questions for X role and there's going to be hundreds or thousands of them, and then you can actually pick ones that are applicable to your job and you can tweak them for your own company and your own culture.

That makes a lot of sense. So maybe we can— maybe why don't we just run through a kind of a tangible example? Let's say I'm a company that's going to hire my, my first developer. I already have a founding team that's working on this as a first developer, you know, What, you know, what are some of the questions that you would ask in, in, in, uh, uh, you know, a phone interview? And then maybe we can go through and talk about—

so I would say pick a different example. Tech is the one thing that I do not do. We don't screen for, so we only do non-technical. So I don't know how to screen an engineer. I would say if you don't know how to screen an engineer, then you need to get someone on that call that does. So either pay for an expert Or you will ask to like have an advisor sit in.

Yeah, one of the things I do that on when I try to screen for engineers too, there's a lot of like test bank questions that you could use that are very specific to what you do. And that also helps you kind of screen, right? So it's basically you spend like, you know, $50 and you get like a, you know, a set of 4 questions that you think are very relevant to what you're doing. And then, you know, based on how they, how to assess those questions, you have a pretty good idea if they should make it to the next level. So that's just on my end, you know, maybe, you know, so in your case, let's say you bring in a non-technical person, or let's pick a role here, maybe a salesperson. Is that a good role to kind of use as an example for you? You're, you're on mute right now.

Okay, so you would ask them what their average close rate is, tell them about their last sales jobs, why'd they get into sales. You'd give them something to sell. It's super simple. Before you get on the call, say, hey, I want you to prep to sell me XYZ, and it should be something generic that you both know. And then you ask I ask them about what percentage of, you know, did they hit their OTE, their on-target earning, at their last companies? If not, why? What are their career goals within sales? How do they see this specific role flowing into those career goals?

Yeah.

No, that makes a lot of sense, and I like the idea of trying to get them to sell something.

Oh, that's a huge one. I mean, if someone's good, they're going to be like that. Or with executive assistants or customer support We always send them a task before or after a quick phone screen and we say, hey, this is something that will happen in the job. Please complete this test. It will only take like an hour. And then we look at how they format it. What are they doing?

That's, that's super interesting. So is this, so is this something you do over the phone generally, or is this something you do, you know, afterwards in You know, during—

it depends on the level of role. It depends on the seniority and the demand for the role in the market. If it's a junior role and there's not a ton of demand for it, you can ask them a lot of stuff up front. If it's a more senior role, you're probably going to wait till after the phone screen to ask them for an additional ask.

Got it. Got it. All right. So you did the phone screen, you did the in-person interview. You know, let's say it's only one in-person interview. I guess at this phase for you, it's what, it's the offer at this point? Let's say you like the person and they made it through this.

Yeah, then you do the reference checks.

After the reference checks comes back good, then you can do an offer.

All right.

Or you can do an offer depending on reference checks coming back.

Great. Yeah, you know, the next kind of phase of this conversation, and there's already some questions in the chat room on this, is, you know, like kind of thinking about compensation. So I'm assuming you probably have to think through compensation before you make the offer, right?

You should figure out what, uh, so it's easy to find market rates for different roles. You can go to PayScale, you can just Google like, what does an executive assistant in San Francisco make, um, and they're going to show you a range. Then you pick where you as a company land on that range. Are you in the 20th percentile? Are you in the 80th percentile? 80th would be Google, 20th would be a really bootstrap scrappy startup. And then you just kind of stick with that for most of your roles, and it helps, um, create consistency. There's also some really good things on, I think, um AngelHack, or there was stuff that it was like Naval and Nivi put out years ago that was around like for your different early, early stage hires. This is what you want to do in equity. This is what you want to do in pay. If they're willing to go down more in pay, they're willing to go up more in equity, yada yada. So there's a ton of formulas out there for that. You just have to pick one and kind of stick to it.

Yeah. You know, Barbara asked specifically about this is like, is there a way to figure out a mix of equity, uh, press release stage. You know, AngelList is good at this too, right? Uh, AngelList is pretty—

AngelList, AngelHack, or, uh, I'm looking at it right now. I think it was, was something like that. And the two guys— yeah, uh, no, I'll think of it and I'll send it. But yeah, there's like a, there's a ton of information on this.

Now, um, you know, you, you know, you, you make the offer, um, There might be some back and forth, right, with the negotiations of the potential salary. That probably happens more often than not. So, you know, how do you handle that and what are some best practices for everyone here?

I mean, like with any negotiation, you have to know what your walkaway point is, so you have to know your range. And then I would say best practices is try to get to a place where you're both walking away with a win, where you're both aligned. You don't wanna, like the happiest, the best time is when you guys are able to kind of, you know, you don't wanna hard arm people, especially in early stage. It will not leave a good taste in anyone's mouth for the future. And you don't wanna hire someone that's trying to really strong arm you, especially with an early stage startup. So I would say, you know, know your range, know what you're hoping for, but also know what your walk away is. So let's say if you're like, I cannot pay penny over $80,000 a year, and that's with this equity. And ideally, I would love to pay $65,000 or $70,000. So you know your walkaway range. If someone's like, I can't do it for anything less than $85,000, you're just like, hey man, this isn't gonna work, and this is why.

Barbara asked the question about, you know, I've been asked about benefits. Can we just offer everyone a cash amount, or do I need to find a benefit broker?

It's up to you. I mean, if you're super early on, a cash amount is totally fine. There's also a lot of benefits That there's a lot of places that do benefits for small companies. They just aggregate, like, you know, 3 to 5 person companies, they aggregate them all together, but they will be expensive. A cash bonus might be fine, especially if you say, hey, this is what this year is going to look like, and at the end of next year with the open enrollment, we'll reevaluate it. But for the time being— and that's great with early-stage companies, I say that all the time— this is the rate we're paying right now, we'll reevaluate at the beginning of next year. Or this is what we're doing right now, and you know, this isn't written in stone, it can always change. Change, but for the time being, this is what we're doing, and just making sure they're okay with it. And then there's no, like, surprises down the line.

That's terrific advice. And you know, when, whenever you raise money, right, you're raising money for 12 to 18 months anyway, so it, like, works out perfectly, right?

Exactly. You can tie other things to raises. Hey, when we close this, then we can renegotiate salaries within this range. But trying to have, like, some sort of basic, like, scale in the beginning is really helpful. 'Cause then it's like, hey, it's just, it goes more like, hey, we can't do that. It's not that we won't do it, it's just like, that's outside of our parameters.

You know, and that's also another qualifier too for everyone here, right? Like, if the person is not, it really needs that, you know, it might not be the best fit, right? Like, you're at this point all about like, trying to conserve your cash as much as possible so you can have the longest amount of runway, right? And so that, that starts to kind of play a role to a certain extent, right?

I would say think about it in terms of alignment. Everything you do, think about in terms of alignment. And when you— no matter how much you may want someone, if you guys aren't aligned, you need to let that person go because it will come back to haunt you sooner or later. And I say this from personal experience, from doing this wrong time over time.

Time.

Yeah, you know, and the reason— and one of the main reasons it will come back to haunt you is because it creates this, this, uh, you know, this weird, uh, situation within your team, right? Like, you know, like maybe someone has this and then someone else doesn't have that, and it's like, why don't I? And so it puts you in this like really tough situation you have to manage moving forward, right?

So yeah, it's one thing that's kind of nice about if you're okay with transparency for equity and It helps negotiate with people too, because you're like, hey, you know, you're negotiating for this huge salary. This is our range. Just to let you know, everybody kind of knows what everyone else is making. So if that's like that, just it sets a different tone. Obviously, that's a commitment you have to make too, but that's one that is, you know, potentially beneficial. Like at my company, everyone knows what rate everyone else is at and And there's like a reason for that. It's like some people have a lot more experience and others don't, but like it's very clear. And then if you want to level up, then you just do the work to get there.

How did you come up with the, you know, the framework to kind of set up like, okay, this compensation for this level of experience, because there is a little bit of leeway in between, right? Like, so how did you do that?

At the end of the day, you just— and I always tend to try to go higher than lower. So I'd rather err on the side of paying more when I can than less because I think it engenders a lot of reciprocity. People really like feeling like you're taking care of them and you're not trying to nickel and dime them. But again, those all have to be backed into by your finances. Like we did this new company, I literally was like, this is the net profit we want to make from every dollar. And using that framework, we backed into this is how much we can pay because this is how much time it takes to fill a role and get paid ourselves. So simple, but it works pretty effectively. And granted, like, I'm in a services business, so that's slightly different. But there's— if you take the time, there's always a way to create a formula or a framework before just doing one-offs. And that's the smartest thing. Like, if you can create a mental model for something, a framework like that will benefit you over and over much more than if you just are kind of attacking a problem from a fresh start each time.

The key word here is alignment, right? Like, you need to make sure that everyone that's involved in your startup, all the way from employees to co-founders to investors, everyone that's involved is ideally kind of, you know, aligned with the goals, because otherwise it creates a lot of issues. And, you know, when you're a small team, if you think about it, it's like, well, you got like 5 people, maybe 10. Let's say you have 10 people on on your team, right? That one person you bring on is 1/10 of your company. It's a pretty big impact on the business, right? So you want to make sure everyone is, because if you bring in people that are like not good hires, right, like then it causes— it can cause a lot of issues, right?

Yeah, the, the cost of a bad hire is astronomical, um, and it can literally tank your business. So I always say like you're never too small to put time, money, and effort into this, and you're never too big to pause and like take a step back and get it You know, one of the, you know, the processes of seems to—

of getting it right is that, okay, you've gone and done all this work, you've basically onboarded, you basically, you know, made the offer and stuff, but then you have to think through this onboarding phase to make sure that you retain the person because you put so much effort and so much money into retaining this, this, this hire. So, you know, do you have any advice and some best practices on onboarding, you know, hires so that you can maximize the retention of that potential employee?

I mean, if you're super early, instead of trying to build out some robust onboarding thing, which you're not going to have the time to do, I would just say have the person shadow you, have them learn as much as possible by actually being thrown in the deep end, but not thrown in the deep end of like, hey, I need you to do this project and they don't know how the rest of the company functions. Have them, you know, even if it's like you're like, oh, I need this head of marketing, I need this paid marketing person yesterday. Yesterday, it's easy to say paid marketing person starts, you're like, great, go do this, create all these campaigns for us, let's get sales. But what's smarter is to take a week up to 4 weeks and say instead they're going to shadow each person in the company. They're going to ask a lot of questions. That person is going to take time to really sit with them and let them soak, like steep in like the juices of your company and learn through that osmosis. If you're small, that's the best way to do it. As you're bigger, building out training is really smart and having functional onboarding teams, but all of that's going to come from that, like, if you're 10 or under, that kind of steeping them in the culture, in the day-to-day, having them ask questions. And then the one thing I give people often is like every person who's the most recent person to be onboarded, each person that's onboarded, they get steeped in the culture, different people shadowing, yada yada, thrown a lot of stuff thrown at them, but we don't ask anything of them except just to learn and to observe and give feedback. And then we also give them a document. We say, you're going through this without any documentation, write up notes as you go on that could be turned into documentation for the next person. And then that document is handed to the next person that's on boarded. And eventually it gets to a point that it's like a really robust onboarding doc.

Basically, that's your playbook, you know, and that playbook gets better and better over time.

You know, exactly.

If, if, if, for everyone here, in case you haven't noticed, there's a theme here. Here, right? It's like having these playbooks for all these processes is really critical. And the earlier you get through this, the better and the more efficient your, you know, your hiring process will be. You know, Brandon asked this question about, you know, how, you know, you know, what about remote unpaid interns?

You know, that's illegal. Don't do that. Remote unpaid, it's illegal to, in any state now, it's illegal to have people work for you and not pay them. If you do that and they flag you with the DOL, the Department of Labor, the IRS, anything, it's a world of pain. So instead, just have interns pay the minimum wage and, you know, that's totally doable. Or you can even say, I'm going to pay you a set amount per project. So I'm going to pay you $250 per project or something. But definitely be careful about not paying people because you can get in a lot of trouble down the line or in the near long-term.

Yeah, that's 100%. I'm 100% agreeing with that. You know, the second part of his question is more about like, you know, bringing them on to see, you know, kind of what they're made of. You know, my personal opinion, there's this another approach, which is to basically bring an intern to potentially a full-time employee that sometimes works.

To hire.

Yeah, to hire, which is also an interesting approach. You know, what are your thoughts about interns in general?

I love interns. I think they're phenomenal. I think scrappy people are epic. I'd like to not be ageist and not assume that an intern or someone who is starting from the ground floor is any particular— they don't have to be young even though that's what we normally connotate. There's a ton of college job boards that you can post internships usually for free. But I would say be very broad and say, hey, if someone wants to learn the startup world, learn the industry, like this is a great opportunity. And you want to run them through the same hiring process as anyone else would. There's a book by the founder of TOMS Shoes. I forgot what it's called, but you can Google it. The book was good, but the single best part— I literally cut out the chapter on interns, and it was brilliant. And TOMS is a completely bootstrap profitable company. So he had a team of interns without having any investment money to pay them. But he figured it out, and he pretty much says, like, I built a lot of my company on interns. And at my company, OfferUp, a lot of the people that join are coordinators, which are, you know, they're the most junior roles. And they learn, and we throw a lot of responsibility on them. And the ones that do well just slay it and then eventually become, you know, do more and more in the company. And I always tell people, like, you know, there's no— like, you can go as high as you want. You just have to kind of make it happen. Happen. And the idea of extreme ownership is another. I think it's an incredibly powerful core value to have as a company if you really own it. That means that people will push back on you. That means that, you know, as the founder, not everything you say is going to be right. But as now, as doing a few companies at this point now, I love that whenever anyone tells me I'm wrong, when someone, you know, throws up a flag and is like, hey, Maren, I don't think this is the most optimal thing of doing it. I'm like, epic, cool.

Tell me how it's better.

And then we, you know, it's a meritocracy versus me telling people what to do, which is not scalable and definitely not the best way to build a company.

So everyone here on the call, you know, we're getting to the top of the hour here. So just out of respect for Maren's time, you know, I want to make sure we get all of your questions in before we log off. So feel free to keep adding questions now before we wrap up. You know, Corey asked the questions, you know, why call it an internship and not just a junior role? Is it because there's a finite term of the hire?

No, I mean, there's no real rules to it. You can call something an intern, you can call them a collaborator, you could call it an associate. I think an internship, like a true internship, is usually something that's for a specific period of time, like 3 months, 6 months, usually a summer internship. If it's a role that you see not as just being a 3-month engagement engagement, then you may want to do associate, collaborator, whatever.

How do you think about, you know, like titles and things like that? You know, I know that it's kind of like the sticky point, right? Like if you overtitle somebody, it's hard to bring them down and hard to move them up. Like, you know, what is your experience with that and how do you think about it?

I think in early stages of companies, titles should be very functional. I like to use, like, let's say you have a head of product or product designer or whatever. I like to use as functional as possible. Like if you are, like we have coordinators, we have strategists, we have interviewers. Like what they do is their title. It's not head of blank or VP of whatever or director. I think as an early stage company, like you should avoid director or whatever level titles and above as long as possible unless someone's actually come from another company with that title. And then even that, I mean, people are over-titled all the time. I see VPs of whatever and head of whatever and I look there on LinkedIn, you're like, you're not, Like I even feel like a jackass calling myself CEO a lot of times.

I'm like, really?

Like there's so many people that are like so much more experienced than you are. So it's nice to have titles that are more functional and that's gonna be different for each person's startup. But if it's like, you know, if you think of what they're responsible for and then what the functional roles are, you can usually, and if you have to think, if someone needs a, if someone's leading everything, make them the head of marketing versus the VP of marketing because then as the company grows and if you you need a VP to come in from an outside company, you can say, hey, Julie, you were the head of marketing. You're awesome. But like, you know, we need someone to do these functional things and we need someone for you to learn under. So maybe you can eventually grow to that role. And if someone's humble and doesn't have a lot of ego, they'll do that. If not, they'll leave.

And yeah, you know, I like team lead a lot too. That's a good one. That's another really good one.

Marketing lead. Yep.

A lot of engineers like that too, because, you know, like, it just, it shows a little bit of leadership. And then, you know, one of the things I do is like, look, at this point in the company, like, basically, you know, most people don't really have titles. We're just too early anyway. And it's more about just like responsibility. This is kind of how I generally like try to pitch it along the same line as Maren here. So, you know, I would say just be careful with that because it's really hard to demote people. And also, if you're out raising money and you're raising money with a VP of engineering, VP of finance, investors are going to be like, what is this? And God forbid that you get into diligence and they actually look at their credentials and they're like previous iOS engineer at PayPal or something. It's like, no, it's a completely different thing. You know, do you have any, you know, last question here from Brandon. Do you know any good websites where I can learn more about like, you know, internships and things like that and to find interns?

To find interns?

Yeah, and learning more about it, you know, and, you know, this idea, this thing about them being illegal. Brandon, I don't know if you're in the United States or not, but here in the United States, it's definitely true. So just—

So yeah, it's illegal to have unpaid internships. So you can— the IRS has, and the Department of Labor has documentation on that. Where you can find interns is there are several major job boards that aggregate posts across a bunch of colleges. I'm spacing on the name of them, but like just Google like largest college job boards and the top 3 will come up and you can just blanket your internship. There's also some internship—

not as much to go off of anyway, right? So the more projects you have, the better. Um, awesome. Well, look, uh, Maren, thank you so much for taking the time to do this. This has been, uh, terrific. You know, how can people here on the call, you know, find you if they have, you know, any questions or learn, read more about some of the things that you've written about and things like that?

Yeah, so you can pretty much just like, if you Google my name, you can find Maren Kate. You can find a lot of things I've written. I've been blogging for over a decade now. I like also there's a little site we spun off called the Hire Smarter Project, and it has all of the documentation that I've been talking about. We just put it in a bunch of templates. It was because we, we have seed stage companies that come to my company a lot in can't afford us and shouldn't, they shouldn't hire an entire team to do their hiring. So we just put all of the templates in one place. So you can find stuff there, or you can tweet at me if you have any questions. And that's @MarenKate too. So pretty much Maren Kate everywhere.

Perfect. Well, this was a terrific, terrific master session. I learned a lot personally. I really want to thank you so much for taking the time out of your busy schedule to do this with us and dropping all this terrific knowledge on everyone here. So thank you so much.

Awesome. Cool, cool.

Have a good one, everyone. Bye.

Have a good rest of your day. All right, goodbye.

Thanks.

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Thanks.