Founder Resources
How VC funds evaluate and identify strong startup leaders and teams
This article is the second in a series of three articles about building a team that will help you raise $10M+ in Latin America.
Founders have three main jobs:
Most founders recruit in a haphazard, unorganized way, hiring to put out fires. You can get away with being disorganized at the very first stage of your startup, but it’s a big mistake to neglect HR, People, and Talent structures and strategies until they’re so broken you 100% have to fix them.
Early-stage startups can’t afford a head of people, and later-stage companies sometimes grow faster than their team and processes can handle. Hiring the wrong people can be even worse than not recruiting at all! This article will help you understand how to build a strong foundation before you start recruiting high-priced executives who could make or break your startup.
It’s nearly impossible to build a great company without a great team. People are outcome multipliers for your company, and your goal as a founder is to hire as many of them as possible.
Outcome multipliers are team members who don't just directly add value to your startup’s success, but they create ripple effects that multiply their positive impact on the company. They multiply the chances that your outcome will be successful. Outcome multipliers help you:
Hiring outcome multipliers allows you to delegate, freeing up your time so that you don’t have to micromanage and can spend more time focusing on important tasks that help your startup grow faster.
Top talent attracts other top talent. Outcome multipliers are talent magnets. The more top talent you have on your team, the more likely others will want to join in the future.
Outcome multipliers elevate the performance of your entire team both by leading by example, but also by helping your other team members learn and execute at a higher level.
Fred Wilson says, “I like to invest in companies that smart people are joining. Capital should follow talent, not talent following capital.” Build a great team, and the capital will follow. Great team members are even more important for underestimated founders in Latin America. Underestimated founders need to surround themselves with high-level team members that will not only be outcome multipliers in the team, but also make investors feel comfortable backing them, knowing that the team around the founder is supporting them well.
Another way to think about outcome multipliers is Founder’s Fund’s Keith Rabois’ Barrels and Ammunition framework.
Early-stage startups often hire based on job titles rather than specific tasks they need to get done.
They come to me with the same question: “Hey Matt, I need to hire someone to be the CFO (or whatever other C-Level) ASAP. Where can I find the best person for the job?”
95% of the time, founders don’t really know what they are looking for. Founders rush to hire someone to fill a role as fast as possible, rather than thinking about the tasks they need someone to do in the company.
Founders think “I’m having trouble on my tech team, I need a CTO.” They might need the CTO, but many times they need a VP of Engineering, a Head of Product, a Product Manager, or some other role. Instead of starting with a title, start with the functions you want the person to fulfill and needs you have, and work backward to title.
Here are some recent examples of what founders have thought they needed versus what they actually needed:
The startup thought they needed a Chief Commercial Officer (CCO) because growth was slowing and they were having trouble adding new clients. When we talked about the startup’s problems, we found that they truly needed a tech-savvy Growth Lead to own user acquisition, customer retention, and revenue growth for a specific channel.
A CCO would be better suited for a larger, more mature company, where they could manage diverse revenue channels and senior relationships. This startup was nowhere near ready for a CCO, who would have been 2-3x more expensive. The CCO would likely have failed in the role, leading to disruption and an expensive firing a few months down the line. Not understanding what you need is not fair to the person you’re hiring, or your current team, and is a waste of resources, time, and energy that can derail a startup.
The founder was overwhelmed with manual tasks and day-to-day operational work and thought that they needed a Head of Operations to take work off of their plate. After discussing the founder’s pain points, we found that collections was the main challenge. Bringing in an expert dedicated to collections would alleviate > 80% of the founder’s current operational pain points.
Bringing in a Head of Operations would not be helpful, as a head of operations probably doesn’t know much about collections. So the founder would have invested big money into an expensive role that would not even solve the problem! The startup hired a Head of Collections, took most of the work off the founder’s plate, and increased collections by 3x.
The non-technical founder thought they needed to hire a CTO because the startup’s product was iterating very slowly, with consistently delayed product deadlines, resulting in customer churn. The non-technical founder assumed that a CTO could help the team execute the technology roadmap. When we dug into what was really the bottleneck for the tech team, we discovered the real issue was that the existing team was junior, and needed someone hands-on to help with the daily execution of the founder’s vision. They needed someone who could lead the engineering team directly, manage product development, and focus on turning their MVP into a scalable product.
A CTO's role is typically more strategic, and better suited to a mature company that requires technological leadership and high-level decision-making. For this early-stage startup with a small team of developers, a CTO would have been an expensive hire that would not address the immediate problem of implementing the technology roadmap. Hiring a CTO would have been at least 50% more expensive, and would have been skipping steps in company evolution. A strategic CTO might be what the company needs in 12-18 months, but a Head of Engineering is who will get them there. The difference between a CTO and a Head of Engineering may seem subtle, but this nuance can make all the difference for your startup.
As the startup planned its expansion into a new country, the founder knew the first person they needed to hire was someone in Sales to generate traction in the new country. The existing team was all based in a lower-cost country, and the founders were taking far below-market salaries. They were extremely cost-efficient and wanted to hire within a specific price range that would only afford them a relatively junior hire.
They envisioned that the new country would contribute to 50% of their total revenue in two years. So, hiring a junior sales lead could have been risky, as they would have struggled to build out a sales pipeline, close deals, and probably would have damaged the company's brand in the new market. After talking through different scenarios with the founders, we agreed to look for a more senior Sales Executive who had an established network and considerable experience in the new country's market.
Even though this new hire was 3x more expensive than their initial price range (and had a base salary 2x higher than the founder!) within the first three months, the revenue generated by the new hire more than compensated for their higher salary.
Founders typically rush to look for candidates because they are in one of the two following scenarios:
If this is how you hire, you’re going to waste your time interviewing candidates who aren’t a fit, and you may have to fire and re-hire for the role in the future, or even worse, hire someone who is really good but isn’t going to actually help your startup. As Tony Robbins says, “If you don’t know what you want, the chances that you’ll get it are extremely low.” These types of hires poison your culture, waste money and waste everyone’s time. This isn't to say that you’ll never make a hiring mistake… you will. But make them by choosing the wrong person for the right role, rather than hiring someone for the wrong role entirely!
To avoid aimless recruiting, before posting your job description and interviewing candidates, you need to define and align your:
When I work with a founder to help them get clarity on the type of person they need to hire, I ask 14 guiding questions. Answering these 14 questions is part of what I call ‘precruiting,’ a process that comes before attracting candidates, reviewing applications, and interviewing.
Investing just one hour in 'precruiting' to answer the following questions can save you countless hours down the line. If you want to have an efficient and focused company, you need an efficient and focused hiring process.
Some founders prefer to fill out the below questions on their own, while others prefer to have a call with their Head of People or hiring manager to discuss. If you don’t have a Head of People or hiring manager or just would like help in the process, I’d be happy to help you. Try to answer these questions as specifically and detailed as possible:
After answering the 14 questions above, use them to guide you through the next steps of the recruiting process. You’ll likely find that what you thought you needed is different from what you actually need. At a minimum, you will have more clarity on what your company needs.
Here are the next steps to build out a best-in-class talent flywheel:
Not all of your needs are equally important. Define what the non-negotiables are that you need from a candidate versus what is ancillary. Keep this in mind when you review and interview candidates.
These answers make up 90% of your Job Description for the role. You have clear expectations for the needs at a business, role, and cultural level. Use this to build a JD that makes top candidates want to work with you.
If you don’t have one, check our Magma guide and start building one today.
You know what you’re looking for. Target the right candidates by creating a recruitment roadmap and don’t waste time interviewing candidates that don’t fit with the expectations you have set for the role.
Most startups struggle to determine “what good looks like” during the first months of a new hire. You now know what success looks like in the role, set clear expectations, and judge against this.
The team you build around you can make or break your startup. Recruiting top talent requires absolute clarity on the business, role, and cultural needs.
Answer the 14 questions in the article before you start recruiting, and you’ll begin to build a team that fits seamlessly with your startup's goals, culture, and long-term vision from day one. Do this, and you’ll save time and build a team of outcome multipliers that gives you a leg up against your competition.
Founder Resources
Paying off HR and people debt is not about adding bureaucracy, it’s about allowing you to move faster. Think about your minimum viable process: the minimum amount of HR you need to help your company move quicker and more efficiently.
