Hiring for a Boostrapped Company

What I’ve learned from hiring for two companies.

This article was published on February 16, 2011.
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Creating jobs is my second favorite thing about startups, next to having customers using the service. What makes me qualified to write about the hiring process for bootstrapped companies? I hired three full-time people in my first company, TypeFrag (sold in 2007), and four and growing in my current company, Carbonmade. Throughout the past eight years, I've also assisted in hiring a dozen contractors, including web designers, developers, copywriters, and illustrators. Hiring for a bootstrapped company is an entirely different process from hiring for an angel or VC backed startup that's flush with cash.

Hiring for a Boostrapped Company

Why's a Bootstrapped Company So Different?

Before I get into how I hire, let's think about why it's so different to hire for a bootstrapped company like Carbonmade than it is for a VC backed company like Foursquare, Quora, Asana, and the like. The difference is cash flow. While they have fat bank accounts filled with investors' money, we are only able to spend money as it trickles in from customers.

We work with the equivalent of $12/month investor checks, financed by our users, deposited to our bank account not at one time but across the month. Fortunately, we're getting a lot of those checks; but this approach calls for a ramp-up process that prevents you from filling all the positions you need at the start of your company. For example, we couldn't hire a "complete" team just to be in closed development for two years, as Asana was able to do. We have to do our best with what we have, and grow our team in proportion as our company grows with earned assets.

Hire for the Moment

Fortunately, Carbonmade started with a very well-rounded team of three: designer, developer, and an everything else guy. (See Three's Company and why I think three co-founders are better than two.) This meant we were able to get by with the minimum we needed to build a product throughout the initial phase of our development, but work began to get out of hand as we grew beyond a certain point.

When you're involved with the day-to-day in a startup, you'll know when it's time to hire your first person and for what role — hopefully around the same time the money lines up. You're running the equivalent of a machine and you can feel when a component in your machine is lagging behind the others. For us, the first pieces of our machine to start making those ominous overstressed noises were handling customer service and design.

Sure, we could have hired a customer service person from the start of our company if money hadn't been a factor — it was — but what would we have put them to work on? And, yes, we could have had a second designer helping us plow through user interface design, illustrations, layout, etc., but when you're first designing a product, a single mind making decisions gets the work out the door faster.

You shouldn't — and can't when bootstrapping — go out and hire for all the positions you'll need in the future. Do you really need that Community Manager when you have no users? What about that Head of Sales? Are you selling a product that's not ready? Is that System Administrator really needed when your service is only used by a few thousand users? My point is that there's a lot you can get by with working as a small team — there are even advantages in having one — and efficiency trumps everything early on. You'll know when your efficiency breaks down and when it's the moment to hire someone to keep your machine humming.

Hire Friends of Friends

Don't hire friends, but hire friends of friends. I've broken this rule with two of the seven people I've hired over the past two companies, but as a general rule I think it stands up well. While you can get away with hiring friends at a VC backed startup — the larger team will help the person blend in — a smaller, bootstrapped team ideally has one level of separation. Friends have a tendency to be distracting and to be more difficult to direct. Also, hiring a friend makes for a tricky situation if you have to fire them.

Hiring through your network is, and always will be, the best way to find people to work for you. Your friends, while they probably shouldn't be hired, will know and recommend people that you should hire. That's how we got Michael Sigler (via Pasquale D'Silva), Alex Penny (via Wesley Verhoeve), and others. You can assume that your friends are referring talented, good people — who are available. Being friends of your friends, they should prove to be folks that you can not only work well with, but also get along with.

Often a Contractor Will Do

There are plenty of jobs that you can get away with hiring a contractor for. Specifically, at Carbonmade, we've hired contractors to write copy for us, to help us prototype projects, design internal tools, to help code components of our video player, and other things. Contractors can be hit or miss, but they're far less of a commitment, and if things don't work out, it's a lot less money, time, and effort down the drain. They limit the damage if it's a failed experiment.

The only drawback to working with a contractor is if you're expecting to work on more than a small project. Larger projects require a contractor to be fully invested in the idea and to be able to see things through from start to finish. Not all contractors are built that way mentally.

Bringing contractors up to speed on long-term projects can also lead to problems. That's why, since we hired Michael Sigler, Mike Minnick, Kyle Fox, and Alex Penny, we ask our contractors only to work on one to four week projects. Still, early on in your bootstrapped company, contractors can be life saving.

Where's Your Jobs Page?

Carbonmade doesn't have a Jobs page. That doesn't mean we're not hiring. It's a combination of not having exhausted our Friends of Friends network and continuing to hire for the moment. We'll see if that shifts when we get larger, but for now it's been working just fine, and limits the number of incoming resumes that could slow us down.

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