Hello TechCrunch true believers, and welcome to another edition of the most expensive zoom call you'll ever be on. My name is Jon Shieber. I'm a snow TechCrunch. And I'm joined by Sarah Smith, a former music teacher turned Managing Director at Bain Capital. Sarah, thanks so much for taking the time.
It's such a pleasure to be here with you.
It's such a pleasure to be here with you, I really appreciate that. So we're going to talk about hiring and scaling, which is super exciting. And I understand to set the stage four is you're going to walk us through a few slides, a brief presentation while you're you'll lay out some tips and tricks. But before we get into that, I just want to let everyone know on the call, or who's watching on on hop in that I am really here for you. So I would love it if you would send in your questions because I really haven't prepared any. And I'd really appreciate it. If you could send whatever questions you may have to Sarah, about HR, hiring practices, scaling up all of that really fascinating stuff that brings the startup from zero to one, on the or from one to 1000 on the on the hoppin link that you will be have access to actually so with that, without further ado, I'll let Sarah take it away. And then we'll get into your questions. Thanks so much.
Great. Well, I'm thrilled to spend this time with you. I'm guessing many in the audience are facing this daunting question of how do I build my team? How do I think about the first few hires, and if you've woken up in some cold sweats over recruiting, you would not be the first founder to do so. So my hope today is that this information gives you at least some tools and frameworks, some points of reference to feel like you can take some action today this next week and feel a little bit more empowered and arms and how to build an amazing team to accomplish the mission that you're on and building your company. I'm going to get started. But as I do, it'd be really great if you wouldn't mind throwing in the chat yourself, you know how big your company is in terms of people. So if you're a two founder team, just type two in the chat if you're at a 30 person, company, type 30 in the chat. If you're in a 4000 person company, and you're thinking about starting a company, put one in the chat, I would think of you as like an early founder. But that will just give us a sense of who's on the call. And then please add questions as we go, we can make this really conversational, the slides are really just a starting point for conversation. So first of all, why was it to me, I mean, there's lots of people, you can read lots of articles, I thought it would give you a little bit of my perspective and the lens I come with. So John's right, I was actually a music teacher in Wisconsin over 20 years ago, definitely not the typical background of a venture capitalist. But I found a way to California, and worked in private education for a number of years, and then went to Stanford GSB, which is where I started to learn about this whole startup thing, investing and venture capital and fortunately joined Facebook in 2008, when the company was about 500 people, and that might sound kind of big, but considering the company's over 50,000. Now, it really wasn't early, early stage and a time of rapid scaling and rapid hiring I'd probably spent over 60% of my time interviewing people and hiring people, in particular went out and started the Austin office and started that from zero people to about 250 people. So a lot of lessons learned from that experience and helping teams globally. And then I went over to Cora right after the Series B when it was about 40 people to run HR and recruiting directly and hop scale the company to about 250. So that informs a lot of my lens, as well as the founders that I work with today where I've invested in their companies, and I'm coaching them and it's something I really love to do. So let's just start with a few what kind of a framing figure the next slide, three key areas I would have in mind. And a lot of people when they are ESA, you've gotten your fresh seed funding, you're ready to go ahead and make your first few hires, a lot of people are tempted to just go right up that full stack engineer job rack, throw it on lover, get it up in some postings and start interviewing, I would really encourage you to take some time though, to think about what kind of company you want to make first before you go out and start interviewing people. So that really is going to be about understanding and defining your culture. And then the second thing I'd be thinking about when you're scaling from, you know, five people up to you know, 50 and beyond is that managers really are the key to your success as a company there's it's hard to overstate how important managers are to great managers are to the success of your company. So we'll talk a little bit about how to think about that as there's a lot of questions around helping people grow into management for the first time you as a founder might be managing people for the first time so how to think about setting up the company for success. And then lastly, just Little bit of hiring paste and process that comes up a lot for founders just like, you know, how fast should I be hiring, thinking about your burn rate? Should I go seniors? Should I go Junior? or What should I do? So we'll spend a little time talking about that. And happy to answer questions there. Next slide.
Yeah, I know we need some we do some background music. Alright, so culture, everyone talks about culture, culture, fit culture. And what does that mean? What How do you know what culture is? How do you know if you have a good culture or a bad culture? There's really no one right culture, it really has to stem from you as the founder and leader in the in the company that's really authentic to you, and how you want the company to behave. And so the best definition I've ever really heard around how to think about culture is what are the unique set of behaviors that are different about your company as compared to other companies. So like, if you walk into Google, or you walking into figma, or you walk into Uber, you would probably feel slightly different cultures in each of those places. And the the key is really thinking about what are the really specific unique things about those places? That's different from the others. And then taking that thinking about what is it that you want your company to feel unique about? And I just throw a list here of a few things that you might that commonly come up like, for example, when I was at Facebook and Cora, we had really different cultures, even though there were a lot of Facebook alarms at Quora, the two companies definitely had distinct cultures. So in the case of Facebook, they really prioritize speed, for example, shipping quickly, the whole classic like, move fast break things. Versus Cora was much more about polish and being very thoughtful about you know, we could we could ship quickly, but we really thought about what, what we wanted out there. So thinking for yourselves like, are you really more about speed? Are you more about polish and refining the details? Thinking about hierarchy versus a flat culture? things? Like how transparent Do you want to be versus kind of having things on a need to know basis, this has come up a lot, like what are people doing around how we work like, are we gonna be in an office together and the hacker house together, we're going to be fully remote and distributed around the world. Those are those really have major implications for your culture. And then what are the non negotiables for you, you know, like, people may have things where there's like, I won't hire someone who, you know, XYZ pick whatever attribute it might be, some people have really low tolerance for arrogance, and they want really low ego people in their company. So taking some time, just think about what the culture might be. And the reason for this is that this is going to be a funnel of the universe of people who could join your company. And your goal is to really like refine that, refine that and make sure that you're hiring people who are going to be really aligned with who you are as a leader, and what you want your company to be, because they are then going to go out and hire more people. And you want to make sure those those people are all aligned. So next slide. I won't spend too much time on this. But it's important and related is defining your vision, your mission, your values. And these often get intertwined, but they are pretty different. So your vision is what is the future you want to see in the world as a result of your company. And the mission is to go make that vision possible. And then your values are the kinds of things that guides that guide your decision making, how you work together, how you manage trade offs, and what you celebrate as a leader. And a lot of people do when I went to court, actually, we didn't have these things actually written out on paper. And it showed because everyone was sort of talking and recruiting conversations slightly differently about the company. And when you get this nailed down on paper, and it can change by the way. So just like I would encourage you to get this on paper, know that it could change in the future. And then that means everyone will be signing up for the right thing, if they're looking to come join your company. And when you're you and others in your team are recruiting people, you're also saying similar things about what you are aspiring to do. This, this takes time, this isn't probably something you'll pencil out in an hour. It does take a little bit of time to do this. But it's really worth the effort to like establish this framework so that when you are hiring people, you're selecting for the right, the right believers in your company. All right, I think we can go on to the next unless, john, there's any questions on culture values mission, that kind of stuff, we can come back to the to. Yeah, me? Classic.
There's always one, right? There's always one person on this zoom calls. And unfortunately, that person was me. I'm the asel. There was one question about how do you scale culture remotely. I would think that grounding the conversation in those values that you lay out in a document First, if you have something that you can refer back to that would be probably one of the most helpful ways to ensure that that culture is is is established, but any other tips that you have?
Yeah, I would suggest you think through a lot about what you want your norms to be. Around communication and decision making, it usually comes down to kind of those two things when you're running a company if you're in person or remote. So with communication, for example, like, Are you an always on culture? Like, do you expect people to kind of be on slack or available at all hours in the day? Or do you have more of a culture of, we want people to generally be on these, this four hour window and available to brainstorm and chat. But outside of that we trust people to do what they need to do to get stuff done. And we want people to have healthy, balanced family lives like there's no one right Ray, but I think thinking through what are the communication norms? Are you on slack? Or teams? Are you doing stuff by email? are you how are you communicating as a full company? I do think for no matter what company you are, no matter what size you are, having the entire company get together for an all hands at least once a week, while you're remote, is just a really good way to make everyone feel like one team. A lot of companies have done this as they've shifted to remote or even started from remote. And, you know, that's a chance to fill everybody in on what's going on across the company, what shipped last week, celebrate successes and talk about things that aren't going as well as they could. But it's just it's a heartbeat, that you start with a company on a weekly basis by doing some kind of company all hands. And then I think having a, you know, a CEO, or founding team q&a, even at like 10 or 15 people, it can be really helpful just have a half hour every week that people can be on on zoom or whatever platform you're using. Ask questions just get a chance to where you want to just call out any concerns really early, and not let things fester. And that's what can happen when you can't see each other in person. There could be stress, there could be things on people's minds that you don't know about because you can't see them. And so I think being able to pull those things out, there's a really cool tool I just came across, called hate kona.com, which lets managers actually get the pulse of essentially just emotionally how people feeling on the team each day, like a very simple red, yellow, green light. And there's a few tools like that out there. I think implementing something like that also can really help people feel emotionally connected, which is the hardest part of remote work.
Let's move on, and then we'll get into some of these other questions.
Great. So we were on the next slide. And this gets to the point of managers. So you as a founder will certainly be managing pretty much from day one, the first hire, and you will eventually hire more managers. And the reason this is so critical to scaling for growth is that every manager, you know, typically has five to six direct reports. So by the time you have five managers in the company, they're probably managing about 30 people. That's that's enormous impact that each of those people have on on the enormity of your company. So it's in critical that you find people who have strong instincts around people management, empathy, and really building that emotional connection, especially in a remote world. And the reason that's so critical is we just there's been a number of studies have shown this, the most famous one probably is Google who Gale could actually really understand the impact of this and they studied 180 teams, they found that psychological safety was the number one driver of team effectiveness. And managers sit at the intersection of creating psychological safety, which is making people feel that they're not going to be humiliated, they're not going to be punished for speaking up with ideas, questions, concerns, or mistakes. And so you want to make sure that as your hiring managers are promoting people from within the management, that this is something that comes really naturally to them, and it doesn't to everyone. And that's okay, I think this is the mistake a lot of early stage companies make is we hired this person early, they've had such an impact, we want to reward them by making them a manager. But actually, they're just not well, they're a great individual contributor, they're just not well suited to managing people. So I'd be looking out for folks that really seem to enjoy building that emotional relationship and connection with people on the team. Another way to find this in interviews is asking, you know, hey, if we were to sit down a year after you started leaving this team, what would you like Phil to say that you've accomplished, and you want to be hearing them talk about things about what the team has accomplished? Not necessarily they themselves. So looking for people who really think about team first is really critical in hiring managers. And I think I was gonna mention is that if you are a younger founding team, and maybe you haven't managed people before, as you build out that initial leadership team, it can be really helpful to try to hire at least one person who has managed larger teams in the past, because that manager of managers, they can really help mentor and, and bring up other managers in the organization and maybe even you as founders, if it's your first time. But I think a lot of early stage companies promote, you know, their friends or their peers and everyone's it's kind of like the blind leading the blind. So getting someone who has some management experience in that first You know, a few managers can be really critical to helping the scale up. Next slide. And I think we talked about remote, this is definitely a reality most are living in and actually can be, I think strategically a great way to get a company off the ground is if you can start from scratch as a remote company. But what we do find is that when people are managing remotely, the soft stuff is the hardest part. Like when you ask people, what is the hardest part about managing remotely? relationship building is, is the biggest thing that people note. So again, having managers who like innately love to build relationships, they love to spend time with people, that's really critical to be looking out for when when you hire those managers or you promote people from with us,
sir, there is one question that came from the audience that I think now would be a good time to ask. So I'm going to pose it right now. What do you do if someone early that you hire turns out to not be a fit for the culture that you want? Or perhaps, let's say there's someone that you've hired, and then brought into a management position? Who isn't well suited to the role of management? How do you disconnect from from that? How do you either disconnect from that person? Or how do you move that person into a position where again, they can they can operate most effectively?
Yeah, great question. And most companies face this at some point, as you scale, it's just inevitable that you will have either a mismatch in role or hiring mistake or something like that. So every call, every situation is unique. But in general, I would say the most important thing is that you, you get very clear and specific feedback to the person about what what it is that you expect of them in terms of culture, and what you're seeing and outline the gap. And a lot of times people will say, I've been giving feedback, I've been telling them and you sit down, and it's pretty clear that actually, that maybe was not particularly clear. And these are really difficult conversations to have. But the more concrete examples, you can have saying, Hey, you know, we really value giving people space and time on the weekends to like, recharge, and you keep sending people emails to asking for things. And that's just like, really not culture lobby building. So we need to see like, I really need you to stop doing that. And can you can you accomplish the same thing by doing that on Monday instead, or whatever it is, but pulling out the specific behaviors that are not aligned with your culture and making sure that person stands. If they're not receptive that feedback, that's a really great signal for you that it's probably not a good fit. And that's where I, you know, really optimize for giving people a chance to correct their behavior and be aligned with the culture. If you aren't seeing that, though, within a week, I think it's, it's time to cut ties, like you don't need to give people three months to adapt. Like, if someone told me, I wasn't aligned with Baynes culture, I wouldn't be fixing that tomorrow, like or tonight. I mean, I it's if you think about it, like any kind of feedback like that, you'd expect immediate, immediate change or improvement. Certainly for a manager, you could definitely explore the option of an individual contributor role, if and that may actually be a welcomed conversation that, you know, oftentimes when people aren't performing, then most of the time they know it, and they're more stress than you are about it. So looking at different alternatives for where they can be in the organization can actually sometimes be very welcome to conversation. But if it is, if it is time to stop part ways, then I think having a conversation about that you want them to be successful in a role where it is a better fit. And My take is always to make sure they can live with their head held high and they can feel respected by the organization. Be very gracious and thankful for their contributions. And give them a couple weeks to find something else. And maybe be generous severance. But but but act on it quickly. It definitely people let this fester for far too long. And it's really costly on your time and your stress and everybody around you.
Thanks. That was great. Let's go back to the slides, I think Yeah,
yeah, sure. Next, I know we're rolling right along here.
We're just doing it.
Alright, and then the last is actually I think we're in the last slide. So we have a lot of time for questions. But if we can go to the next the next slide, this is really around this whole point on hiring and pacing. So people, the main question I get from a lot of founders at the early stages, when should I hire a recruiter? Like how and when should I hire a head of sales? And when should I hire and my my point usually is think about trying to hire 20% sooner than you need to. And the reason for that is, it always takes longer than people think like they think it'll maybe take a month for me to find this person. It usually takes three or four. And so I would get going and always be sourcing for the roles that you want. And by sourcing that means sitting down blocking time out of your calendar every week, thinking and there are also by the way, great companies that have emerged That can help on the sourcing front if you need it. But it is really impactful for a founder to reach out directly to potential candidates, you're gonna get a much higher response rate than, like a hired out recruiter. But thinking about what are the key roles that you really are going to need in the next three to six months, reaching out to those people on on LinkedIn, on Twitter, by email, if you can find it, making it personalized. And with a lens, actually, I would, I would say, of also making sure you build for diversity really early. So I've got another classic mistake people make in hiring and scaling for growth is they just hire a bunch of their friends because they know them. And Surprise, surprise, your friends probably look a lot like you. And you could look up and find that, you know, in by 10 people, you have, you know, very, very demographically similar group of people. And that really is going to set you up for challenges in terms of building a more diverse group later. And there's huge payoffs to having a diverse team, you get more perspective, you get access to wider network when you're hiring the next realm of people. So really being intentional about trying to hire a diverse group and that first 10, it will pay off hugely in the long run. But it won't just happen, you have to go out encourage people, especially if they're outside of your main networks, to consider joining the company. The last two points I'd make on the hiring process. This is also really important. One critical change we made at Quora that was really helpful to us was getting clear on who's actually making the decision and how do we make decisions on hiring. So when you're four or five people, it's very tempting to go with like a consensus style of decision making. It's like we're all we're all friends Kumbaya, we're having this great like hacker house startup journey, we don't want to like, ruffle any feathers. So we got to all be on board with every single hire. The problem with that is you often find like kind of a sub optimal decision making process and it can really slow things down as well. So the best thing to do is to be very clear on who is the hiring manager who's ultimately going to manage this person is at the end of the day up to them to decide whether or not to hire that person, because they're also then going to be accountable for the consequences of that decision. So they'll be accountable for their success, as well as their failures. And you want to make sure there's one person, the rest of the interview team are there to give input to that person to make a good decision. And so even if you don't think you should hire that person, you want to state that, but no one be comfortable, the fact that they may still decide to move forward. And if they do, then you are 100% behind that hire, because now they're on your team, and they're in your company. So as soon as the decisions made, everyone has to get on the bus. So that decision, but make sure that you focus on a very clear owner for the hiring decision, it will save you a lot of time and make things and also make things clear to the candidate as well. And then the last one on on this point on when do you hire recruiter or an HR person or both. Most companies that are growing have about two to 5% of their headcount is in recruiting and HR. So if you're 100% company, you'd probably have about a five person, you know, three, four, or 5% Hr recruiting team. If you if you kind of apply this, like knowing that it's inevitable, you will need a recruiter, if you're, you know, if you're fundraising and you're bringing in revenue and things are going well and you're growing, then it's inevitable, you will need a recruiter. So I encourage people to roll that back a little bit and start thinking about hiring a recruiter. You know, by the time you're about 13 1415 people and it will be a real game changer for scaling your team. And I think that is all the sides I have whenever the next slide. I have my contact information there if people have questions, but we'd love to just continue the conversation with other questions people have around around hiring and scaling a team.
Awesome. Um, there have been a bunch of great questions that have gone to that have come in through the audience. So we're gonna have a lot to talk about. And they sort of range the gap from what to do at the earliest stages to as you scale the team, how you think about certain specific issues around compensation, some of these other things. So I want to get into all of it. But I thought we'd start from the bottom. Now we're here. So like, let's start from the earliest stage questions, and then move our way into some of the things about when you have a bigger team, what you need to do. And the first question is, really gets at the earliest stage, how should someone think about hiring a co founder or reaching out to a co founder of their company if they have sort of either business acumen or technical acumen and are looking for the other side of that coin?
Yeah, it's a great question. And, and it is, like trying to get married. I mean, it's a really big deal, too. Get to know your co founder, because you're going to go through thick and thin, I really would circle back to that initial exercise I mentioned of outlining the vision, mission and values that you personally would want to hold for your company, because that's going to be authentic to you, the culture is going to stem from you, and looking for people who have alignment along those things. And you can tell a lot by how people represent themselves online with their LinkedIn profiles, their Twitter profiles, you I would look at, there's like, it's a classic thing, you want a Venn diagram, like you want expertise in one area, and you want to find someone who complements with different expertise. So like, I actually get nervous sometimes when I need a founding team where two founders have almost identical resumes, like they're both engineers, or they're both business people. Because over time, like you really need to, you need to divide and conquer to build the company, and you want to ideally, bring complementary skill sets. So a really winning combination is someone who brings different expertise and you have and where, but where the overlap is in is in the values and the way that you communicate the way that you make decisions, the way you handle conflict. And you need to, there's no way to really rush that. But I would say spending a lot of that time with that person and trying to develop trust with that person, get to know them personally, like, you know, what's their working style? Some things we talked about earlier as well, like, are you? Are you an always on person? Are you someone who wants to build turn off your computer at five and go spend time with your family and maybe get back on line? And the other night? Like, you know, just talking through past work experiences is also a really great way to gauge you know, how do you actually like to work talking through managers you've liked to managers, you haven't liked teams, you've liked teams you haven't liked? What was it about them. But it is it is something you just really have to spend a fair bit of time and a number of conversations to figure that out. I've been pretty active with the ondeck community, which has been a great place for a lot of people to go meet, I'm fine to co founders, you can look for alarms from your university that can be sometimes a helpful place, things where people maybe chose some similar paths in the past might be some indication of their values can can be a way to go?
Well, I think Yeah, let's move on from that too. And those are all really amazing insights. Super, super helpful, I think for Well, for me and everyone else, I'm sure it's listening. But I moving on from that. How do you look at sort of personality tests, or some of these other ways that people use to to gauge you know, how, what a person is like, like, how useful are those? How often should people turn to them when they're hiring? And at what stage of a company? Do you start using them? If at all?
Yeah, I didn't personally use them at Facebook and Cora, I have looked at a few from an investment standpoint, I think it can be a really effective tool, especially now that we're remote, I think candidates willingness to jump through a few more hoops is just higher, because they don't break through the time they would have spent driving to an office or flying to to interview like they get all that time back. And so I think you have a bit more of a window of opportunity now to do extra types of assessment. Could be a personality assessment, certainly an engineering, you know, doing coding assessments, like things that don't take up actual hours of time of the team are incredibly helpful. Usually people don't implement those things until a little bit later on when they're a little bit bigger. Because they think the fit around one of the cultural values are really important often stressed out with numbers of conversations with people on the team. But yeah, there's there's a slew of these tools. Now. pemetrexed is probably the biggest one and most well known is another called plumb die. Oh, searchlight is doing a number of things. There's, there's a number of companies that can help with this. So if someone's found something they like, like, by all means, and I think it can be a helpful tool.
Um, how soon should people think about diversity in hiring? So when you're a team of like, one or two people, and you're really sort of grinding on product, or whatever, um, you you may want a more of a unity of thoughts or like, sort of a perspectives that are more aligned. At what point do you start bringing in more diverse hires? And is there a way to ground that sort of from the earliest stages? Or how do you think about about when diversity needs to be sort of highlight or highlighted or should it be from the beginning?
Yeah, so it's no matter what it's important that from day one, you have an eye on how to build an inclusive culture where in an ideal world, even that first person you're bringing onto the team, you could walk in and feel fairly welcomed. And again, back to the psychological safety piece where you really want people to bring their best selves and they bring their perspectives and their ideas. And, you know, I think it's pretty common that a team might grow to like four or five from within the network, including the founders, I think once you get to like number six, if you don't have some type of gender, or racial diversity yet, like, it's gonna start to get really tough. Because if you imagine, like, you know, I'm actually the first female partner at Bain, like I walked in, and there's eight male partners like that, I could do that, because it's not the first time I've been the only one in the room. But it's definitely something where you think about the experience of that person walking in and being one of the other, once you start getting above five people, six people, seven people, now it starts to feel, it's just an extra burden that they carry. And then what a lot of the best practice actually is to try and go to hire two or three people who maybe are, you know, like, diverse. And then that way, it's not just on the shoulders of one person to sort of be in a diverse voice in the room, but that it actually feels spread out a little bit and, you know, doesn't rest on any one person. So that's pretty critical. The other thing I would also caution people early on is, it was really tempting for companies to say we want to, we want to feel welcome, we want to hire more female engineers. So let's, let's make sure that there's a female engineer, interviewing every female engineer on the loop. And then before you know it, you're one female engineer spending 50% of her time in interviews and can't get her coding done and can't get promoted. Right. So make sure that you aren't inadvertently creating a diversity tax on the few You know, sometimes, if there's a few diverse members in the team, you should be even extra careful about protecting their time and, and reducing them, you want them involved in the process, but like reducing any unnecessary time for them to be involved in trying to continue with the diversity efforts of your company.
This is great. And on a similar line around around hiring and hiring for growth. How should you think about hiring for the needs you have now versus hiring for sort of needs down the road? Do you want to try and get someone who can can grow into some of these positions? Or? Or? Or do you just hire for what, what you need now?
Yeah, I think it depends on it definitely depends on the role and the function and how critical it is to the success of a company. So for example, I think on sales, you'd ideally find someone who has sold to an Arr, that's, you know, at least one to two years ahead of where you are. So if you're, you know, let's say your I 300k of error, and you want to be getting to 10. In the next two to three years, ideally, you would hire someone who had been inside a company that was at 10 million in ARR. Because they will have seen that movie before and sales, especially in go to market, it's just a really tough thing to try to learn on the job by yourself. So someone who's had that mentorship and training and best practices is pretty critical. On engineering, I think that's an area where again, having people who have engineering management experience is really helpful or even attack lead, you know, in the team. But if you are, especially if you're trying to build new technology, sometimes having people with less experience can be even more helpful, because they may be a bit more open minded, like less constrained by prior technical limitations. So that could be an area where you don't actually need to optimize as much for particular, you know, experience for 10 years. So I do think it depends on the role. You know, HR, I had never run HR before a Gen four, I just but I had managed lots of teams, and I've worked with HR a lot. And, you know, I think that's another area where you know, someone with good people skills and judgment, you can pair them up with an employment lawyer, and they can, you know, grow into being an HR recruiting leader. So it does depend a little bit, but I tend to think about at the earliest stages, like finding people who can get you to at least like two years out, especially given the rate that people are coming and going out of companies, like most people aren't staying for three or four years anymore, maybe they will, but if you plan for two years ahead of where you are, that can be a great gauge.
Um, now that let's talk about compensation. Um, how much of someone's compensation should be equity at the early stage when there might not be enough revenue? And how should founders think about maybe pie slicing to help with recruiting or using more equity compensation at an earlier stage? Let's start there. Yeah.
Many thoughts this could be its own session. We'll do another follow up on compensation but
let's do yeah, careful. You're locked in No.
IV Super Game for that. I love compensation and thinking about this. So Now, again, this is so dependent on who you are as a company, you're where you sit in the market, your ability to raise capital, because, you know, obviously, if you didn't all salary and no equity, like you might burn through your capital in six months and you'd be dead, so it's always a moving target in terms of managing your cash and managing your equity pool. I will say the thing that we learned I Korra, that was interesting was equities, just very hard for people to value. And for good reason, the timescale to liquidity is totally uncertain at the earliest stages. And to be able to tell anyone with any definitive, you really can't with any definitive language, tell them what this will actually be worth, you can guide them and you absolutely should, you obviously should be clear with them, what the equity represents in terms of percentage of the company. Or if you want to do it a number of number of shares and per share price at the last valuation. But definitely be clear about how they should somewhat think about the equities value today and what it could be in the future so and don't, don't let some lawyer or legal person tell you that you can't reveal that information. That's just, that's just absolutely not true, you absolutely can reveal that it's your decision as a founder. And you're shooting yourself in the foot if you are not clear with people about about their equity stake. That said, what we did see was that because it's very hard for any individual to value the equity, especially in, in markets, like the Bay Area, or other higher higher cost of living markets, cash really does matter a lot more in many cases, because they have higher rent, mortgage payment, whatever. And, and the timescale is so long that they often individuals who value equity is like a lottery ticket. They think of it as like, maybe it'll be worth something. And that's cool, but maybe not. And if you look at what people want a lottery ticket, the expected value is basically zero. And that is kind of if you ask people around different your friends at other companies that are public yet, if it's early stage, you ask them, What do you think this thing's gonna be worth someday, they literally will be like, I have no idea, which means they're essentially assigning a value of zero. So if you have investors who are willing to invest capital into the company, we have a longer time horizon, right? We don't have necessarily a mortgage to pay next month. So we can better value that equity than maybe an individual employee can. So it's worth taking the time to think about do we raise a bit more capital and pay a bit higher salaries, because that's a better trade basically, in the marketplace, then having an equity when our employees may value it is almost zero. So I'm not saying go to the extreme of like giving no equity, but I just think you realize that you may be giving equity away that people aren't really valuing appropriately.
This is actually my question. Um, so apologies, y'all, but I think it's, well, whatever I'm gonna ask, um, what's your take on on, like these tools that are out now that automate a lot of the hiring process, or purport to automate a lot of the hiring process? versus having someone on staff who is dealing with it? And is sort of baked in with the company culture? So?
Yeah.
I mean, certainly, I think you need to, you do need the process to feel fairly personal to get great people on board, like most people can sniff out like an automated outreach, or, you know, and there are, by the way, really great tools that have advanced and making things feel personal. So by all means, for sourcing, you know, using a lot of those tools can be can be extremely helpful. You know, things like scheduling, things like a coding challenge, of course, like, if that can be automated, it makes no sense for you to go back and forth four times on email to schedule an interview like that, that part of it should absolutely be automated. But at the end of the day, like people are going to sign up because of the people they're going to work with, and they do need to meet you and to think that you can automate. The whole thing is I just think is not realistic in the early days, like the people you hire, and the first people in your teams are probably the most important part of building a successful company. So you should be spending time there in conversations with those people. But definitely a lot of the logistics for sure can get automated and certainly should be.
Um, I think that's about all the time we have one last question for you before we go. Um, you mentioned in your bio that you are a pretty avid player of board games. What board game are you playing right now?
My husband and I have been addicted to Terraforming Mars. So if people have played any German any German strategy board games like settlers of Qatar, this is like that time 1000 it's definitely a time sink but we absolutely love it.
Well, there you have it. As Terraforming Mars, you and Ilan are going to be well equipped to to move to the red planet in the future. And with that, I think we're out of time. I really appreciate y'all tuning in in the audience and listening to my jibber jabber and the really insightful comments from Sarah. And with that, I will let y'all go have a wonderful rest of your day. Bye. Thanks, sir.