In his book Hungry Start-up Strategy (Berrett-Koehler, 2012), management consultant and venture capitalist Peter S. Cohan explains how to create new game-changing ventures with even limited resources. In this edited excerpt, he describes ways to attract the right people to your startup.
Startups are born hungry. Their demand for money exceeds their supply. So they need a different currency -- a powerful emotional magnet that draws in talent.
Why would anyone go to work for a startup? The hours are sure to be longer than they would be at a more established company, and the pay is likely to be lower as cash will be in short supply.
The simple answer is that some talented people are able to defer short-term economic gain in exchange for meaningful work with the possibility of a longer-term payoff. Of course, this puts entrepreneurs in the difficult position of persuading talented people that they should stop whatever they are doing and work for them instead. Entrepreneurs must also persuade capital providers to part with their cash to invest in their start-ups.
To recruit talented employees, entrepreneurs must mint emotional currency by way of three hungry start-up goals. These three goals answer the basic questions a talented potential employee might have before going to work for your start-up.
1. Have a clear and compelling mission.
The mission is the entrepreneur’s most compelling case for why the startup is going to achieve greatness. At the core of this case is a passionately held belief that what the start-up aspires to do is important. As we’ll see, that passion might come from the desire to make the world a better place, the excitement that comes from being certain that the start-up could capture a great economic opportunity that nobody else has seen, or the simple desire to solve a problem that perplexes the founder.
2. Be able to articulate the startup's long-term goals.
How will an employee get a return on the stock they receive in exchange for giving up their life to your startup over the next five years? Long-term goals describe a tangible way that the entrepreneur will measure the venture’s success, say, five years into the future. Long-term goals include being the leader in an important new market, becoming a big public company, being acquired by a bigger company, or remaining permanently private and independent.
Related: How to Build a Brilliant Team
3. Create short-term goals as a series of 'real options.'
Short-term goals are specific milestones that the entrepreneur sets over a period of months, and the idea of real options means that each short-term goal is a frugal experiment. Setting good short-term goals reflects how effective the CEO is at getting stuff done. Many of the startup founder I meet tend to view these short-term goals as a sequence of go/no-go decisions. For example, the first short-term goal might be to figure out the startup’s business model, the next might be to get customers to use or pay for the product, and the third to expand success from one market to five around the world. If the entrepreneur can figure out, say, the first goal -- that is, the start-up’s business model -- then she continues on to the second one. Otherwise, she shutters the venture.