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Hiring Your “Best” Friend as a First Employee, at Your Startup – Pros and Cons

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Hiring Your Best Friend as a First Employee

Many startups have co founders who are best friends. I have heard of many cases when that has worked out well and a few cases when it did not. I would say in more cases than not, it has worked out (anecdotal).

Hiring your best friend as the first employee has different connotations for your startup. You want to hire so that the person is individually proficient and collectively efficient.

The word “best” indicates to me that you know each other very well. There are secrets you’d keep from your family and other friends, but not from your friend.

The word “friend” indicates someone you know for a long time. This person is not someone you worked with for 1-2 years, but typically someone you either grew up with, studied with or worked with for an extended period.

Sometimes this can apply to your spouse or significant other as well.

Your best friend comes by and you start to think, why dont I ask her to join my company?

Even if they are not a “perfect” fit for the role you are trying to hire, you think you need a utility infielder anyway, so why not get them on board.

First the pros:

1. She knows you very well, so it is likely you will have a good relationship and be able to talk about anything about the business. Even if you have a co founder, running a startup is a lonely business, so having a sounding board, who wont judge you is a great advantage.

2. She can help you see things you dont see. Most entrepreneurs (not just Steve Jobs) create a reality distortion field around themselves, so having someone who can objectively point out the flaws in your argument, without you getting defensive will help you go a long way in your ability to grow as an entrepreneur.

3. You trust the person instinctively so it is likely you will be able to have them take on any role and be supportive when they make mistakes. This helps a lot when you have to explore new markets, attempt a new technique to sell your product or investigate a new architecture framework to use.

The other advantage is that the journey is a lot more fun when you like and enjoy working with the people you interact with daily.

Now the cons:

1. If you are both alike, (regardless of what people say, I think most people are best friends with people who are *very* similar to themselves), then it is likely you will see things the same way. This makes your company fairly uni-dimensional. Opportunities are best created when there is a good mix of different skills, talents and perspectives. Diversity creates dissonance, which leads to new ways to think about the same problem.

2. They may not be the perfect fit for the job – either because you need a front-end UI person and they are a back end developer, or they are a marketing person and you need a quota carrying sales person or if they dont have connections in the industry you are trying to tackle.

3. They are more likely to take liberties in the company (rare, but happens). This creates an environment where other professionals you hired will feel a sense of resentment towards the employee, since they believe your best friend will snitch on them.

In the last 3 years, I have seen about 120 companies go through our accelerator programs and looking back I notice about 10 cases where a best friend was hired as an employee (as opposed to a similar number of cases where the best friend was a co founder).

I cant think of a single case where it ruined a relationship even though the company did not do too well.

In my own personal opinion, bringing on your best friend to work with you at your startup is one of the best things you can do.

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Creating Artificial Constraints as a Means to Innovation

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Artificial Constraints

Many of the entrepreneurs I know have created new innovative startups thanks to real constraints they had. For example, I was hearing AirBnB’s Brian Chesky, on the Corner Office podcast and he mentioned that when he and his cofounder were trying to get some money to get started and the only way to keep afloat was to “rent” their air bed they had in their room. That, then led to Air Bed and Breakfast, which is now AirBnB.

This was a real constraint they had – no money to “eat” so they had to make it happen somehow.

I have heard of many stories of innovation where in the protagonists had real constraints of either financial, technology, supply, demand, economic, social or any number of other characteristics.

The interesting story that I have also recently heard of how Facebook has “pivoted” from being a desktop offering to getting a significant part of their revenue from mobile is how they were given the arbitrary constraint of only accessing Facebook via the mobile phone.

So there are ways that you can create “artificial” constraints to force innovation to happen.

Most larger companies and some smaller ones as well, have to constantly find ways to create artificial constraints – to find a way to innovate and be more be a pioneer.

While some constraints are good – lack of funds at the early stage for example and lack of resources, there are entrepreneurs that are stymied by these constraints and those that will find  a way to seek a path to go forward.

I think this is a great way for you to think about innovating in a new space. If you have constraints, find a way to use it to your advantage.

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The Great Mobile App Migration of March 2020

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Mobile App Migration

Over the last few weeks as many in the world have been in lockdown, there has been a temporary “mobile app migration” happening. There are new apps downloaded and they replaced existing apps on the “home screen”.

While some of these apps are likely temporary use, for e.g. I have 6 “conferencing apps” – Zoom, Uber Conference, Webex, Google Hangouts, Blue Jeans and Goto Meeting. That is because of the many people I have conference calls with – each company seems to have chosen a different web conference solution.

Other apps seem like they will have staying power – Houseparty, for e.g. which has games, networking and video conferencing all built into one app to keep in touch with friends and relatives.

Houseparty

The apps that have moved away from my “home” screen, which I expect will come back once the crisis will be behind us include – Uber, Lyft and all the airline apps from Delta, Alaska and United.

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Perseverance with the Ability to Pivot on Data: 21 Traits We Look for in Entrepreneurs

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Perseverance with the Ability to Pivot

There are 5 key inflection points I have noticed which makes founders question their startup, to either make a call to continue working on their startup, pivot to a new problem or quit their startup altogether.

It is at these points that you really get to know the startup founder and their hunger and drive to be successful. I don’t think I can characterize those that choose to quit as “losers” or “quitters” because of many extraneous circumstances, but there is a lot of value that most investors see in entrepreneurs who face an uphill part of their journey to come out on the other side more confident and stronger.

These five inflection points are:

  1. When you have to get the first customers to use and pay for the product you have built after you have “shipped” an alpha / beta / first version. Entrepreneurs quit because they have not found the product-market-fit – because the customer don’t care about the product, there is no market need, or the product is really poorly built, or a host of other reasons.
  2. When you have to start to raise the first external round of financing from people you are not familiar with at all. Entrepreneurs quit because while it is hard to get customers and hire people, it is much more harder to get a smaller set of investors to part with their money, if you do not have “traction”, or “the right management team” or a “killer product”.
  3. When you have to push to break even (financially) and sustain the company to path of being self sufficient. Entrepreneurs quit at this stage because they have now the ability to do multiple things at the same time – grow revenues and manage costs, and many of them like to do one but realize it is hard to do that without affecting the other. So, rather than feel stuck they decide to quit.
  4. When you have to scale and grow faster that the competition – which might mean to hire faster, to get more customers, to drive more sales, or to completely rethink their problem statement and devise new ways to grow faster. Entrepreneurs quit at this point because they are consumed by the magnitude of the problem. They overassess the impact the competition will have on their company, give them too much credit or focus way too much on the competitors, thereby driving their company to the ground.
  5. At any point in the journey, when the founders lose the passion, vision or the drive to succeed. Entrepreneurs quit a these points because they have challenges with their co founder, they don’t agree with the direction they have to take, or encounter the “grass is greener on the other side” syndrome.

While I have observed many entrepreneurs at these stages at  discrete points in time, I have also had the opportunity to observe some entrepreneurs in the continuum, and I am going to give you my observations on 3 of the many folks I have known, who, have quit.

Perseverance separates great entrepreneurs from good ones
Perseverance separates great entrepreneurs from good ones

One went back to college to finish his MBA after getting a running business to a point of near breakeven, another found the business much harder than he originally thought he would and got a job at a larger company and the third was just unable to have the drive to go past 11 “no’s”‘ from angel investors.

Over the last 8 years, if I look at my deeper interactions with over 90 entrepreneurs, who I would have spent at least 100+ hours each, I would say that of the 24 people that are not longer in their startup, the one thing that stands out among the ones that persevere is that it is not “passion” or “vision” at all.

It is the inherent belief that they are solving a problem that they believe is their “calling”. They also don’t believe that there is any other problem that’s worth solving as much, even though there may be easier ways to make money.

So most of my questions of entrepreneurs to test whether they will pivot or quit are around why they want to solve this problem (which I am looking to see if they know enough about in the first place) versus any other one.

The answer to that question is the best indicator I have found to be the difference between the pivots, the leavers and the rest.

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