Get All Access for $5/mo

People First You could have all the gigabytes in the world at your disposal, order processing that plucks cash right from customers' pockets and a product or service that people literally can't live without--but it would all be for nothing without quality employees.

By Melissa Campanelli

Opinions expressed by Entrepreneur contributors are their own.

The prospect of launching a dotcom business can be very exciting, with its promise of riches and potential fame. But before getting ahead of yourself, it's important to remember that no entrepreneur can do it alone. Hiring the right personnel-who can, let's face it, make or break your new venture-is one of your biggest challenges.

Unfortunately, many dotcom entrepreneurs don't devote enough attention to hiring, believing their companies will survive merely on the strength of their business smarts and, in some cases, the amount of money raised to launch. If you're one of those netpreneurs, beware: Most experts believe this approach is fraught with peril. As with all companies, human capital and managerial skill are assets you need to survive . . . and prosper.

"Entrepreneurs don't recognize how crucial it is to bring people in, or how difficult it is in today's tight labor market," says John A. Challenger, president and CEO of Challenger, Gray & Christmas Inc., an outplacement firm in Chicago. "They don't view the job of bringing people on as a top priority." It's vital to understand that it takes constant effort to find the right people and get them at a reasonable price, he continues. And hiring has got to be a strategic part of your company and its business plan.

"The entrepreneurs that have taken a structured approach to hiring are the ones who are succeeding," says Paul Villella, president and CEO of HireStrategy.com, a Reston, Virginia, company that helps start-ups and fast-growing companies hire employees.

Growth Strategies

Villella says that the most successful dotcoms have specificgrowth strategies. "These companies don't just say,'We need 600 people, let's go get them,' " hesays. "Instead, they plan out their human capital, but alsounderstand that that plan is going to shift and that they have tobe flexible."

In general, Villella says the most successful dotcoms hire inthree stages: In the first stage, shortly after launch, thefounders hire key executives and key technology and financeofficers. In the second stage, two to four months later, they hiremidlevel executives, technology staff, and sales and marketingemployees. Then, in the third stage (usually around the time of acompany's one-year anniversary), they flesh out the teams ineach department.

But entrepreneurs should also take a measured approach to growthas they fill out their teams. EBags.com is a good example-thisonline retailer of bags and accessories, based in Denver, uses aparticular formula. Peter Cobb, 43, co-founder of the 90-personcompany, says that eBags.com bases hiring decisions mainly onsales. "When we hit [our] revenue objectives, then and onlythen do we hire more employees," he says. It seems to work forhim; however, experts insist there's no hard and fast ruleabout how many employees are needed for smooth operations. Mostsuccessful dotcoms do, however, have this in common: They haveexcellent business plans, and within those plans they map out theirrate of growth, or what they expect to net, and how many peoplethey need to support that growth and potential profitability.

As for the types of employees to hire, there's no magicformula. It is possible, though, to study-and evencontact-the companies you admire and determine theirattributes for success. Or align yourself with a mentor or expertin the industry who can provide advice. Or follow eBags.corn'sexample: A typical dotcom start-up, the staff is made up of about20 technical employees, including application developers, technicalinfrastructure staff. Web designers and management; 15customer-care employees; and various sales, marketing,merchandising and management employees.

Dotcom Employees vs. Traditional

One mistake not to make is thinking that hiring for your dotcomis just like hiring for a traditional company. No way. As a resultof the shakeout that occurred in the dotcom world earlier thisyear-when many well-funded dotcoms went under-there isa trend now toward hiring sales employees and jack-of-all-tradetypes vs. solely research-and-development employees.

"We are entering into a new phase of how dotcoms areevaluated," says Challenger. "They're being evaluatedmuch more strictly on their ability to post earnings. As a result,they're focusing less on research and development and more onacquiring customers. They're hiring more salespeople who can goout and sell products or services, or more employees who can domany different tasks."

Even if you haven't experienced a shakeout, you should stillhire multitalented employees. "As a dotcom company, thechallenge is to-at least initially-do with less, sohaving good people with a lot of different skills is what'snecessary to really thrive and move to the next level," saysMichelle Burke, CEO of ExecutiveCounterparts, a San Francisco consulting and trainingcompany.

You'll also probably have to hire more technical employeesthan you would at a traditional company, and when it comes tohiring them, you have to explain your business model in a way that"savvy technology folks agree is a sustainable businessmodel," says Villella. "A year ago, dotcoms-nomatter what they were-appeared interesting. Now, people arelooking at companies and wondering if they're going to bearound for a while."

Challenger is in agreement. "If you find people coming outof school with state-of-the-art experience, you have to getthem," he says, "Create an environment where they want tocome to work for you." Also, unlike traditional companies,it's important to hire emplovees who mav not be as concernedabout big paychecks as a chance to be part-owners of a successfuldotcom company in the future through stock options.

This means you'll probably hire a group of energeticindividualists who, in many cases, will be young. For example,eBags.com's employees have a median age of 27. At a dotcomcompany, you'll also generally give employees significantlymore responsibility than you would at a traditionalcompany-which means snagging responsible individuals who areexcited at the prospect of owning a project.

"I don't have the time to micromanage here," saysCobb. "Therefore, I have to trust my employees to get aproject that fits in with the company's goals and objectives upand running pretty much on their own."

Another dotcom difference: Unlike traditional corporations(Cobb's last job was as director of marketing for Samsonite),where the people hired are all alike, dotcoms like eBags.com seekout variance. "Since we're doing something that really hasnever been done before, we look for people who see the world alittle bit differently," Cobb says. That means he's notconcerned about appearance when hiring: "We tell people theycan wear whatever they want, and if they want to wear shorts or anearring, that's OK."

When to Outsource

A key part of your dotcom business is customer service.Depending on your company's size and budget, you'll have todecide whether to outsource that department or hire an in-housestaff. At eBags.com, Cobb firmly believes in keeping hiscustomer-care staff in-house. That way, if customers call withquestions that the customer-care representatives can't answer,his staff can ask someone else in the company and respond to thosecustomers quickly.

"Our customer-service area is within 30 feet of ouroffices," says Cobb. "It's important to keep themnearby, especially since we have well over 170 brands and 6,000products they have to keep track of." Right now, Cobb says,his company doesn't offer 24/7 customer service. Instead, itshuts down for about six hours every day. So even though thecompany is working toward round-the-clock service, he insistsit's not always necessary.

"We know exactly how many people visit our site every hour,and we didn't feel there was a need for it," says Cobb. Inaddition, experts say that 24/7 is not always important in thebusiness-to-business world, where no one expects 24-hoursupport.

So while there is indeed a trend toward bringing custornerservice in-house, Villella says that today, most dotcoms choose tooutsource functions such as benefits administration, Web hostingand project-based functions, such as those done by writers,editors, artists or technology consultants. Cobb, for instance,outsources Web hosting and benefits administration. In addition,his company outsources consultants who assist the company inapplication development.

Find the Talent to Fit Your Company

As with any company, the best way to find employees is bynetworking with your colleagues, contacts and friends. But it alsoa good idea to keep in close contact with marketing advertising andeven journalism professors from nearby colleges. Says Cobb,"I'm familiar with a lot of professors at ColoradoUniversity at Boulder, so when I'm hiring employees, I callthem up and ask for the best and brightest."

But in order to be "the right employee," that personhas to share your vision and understand your culture."Start-up companies need to find employees that obviously havethe functional skills to do the job," says Burke, "Butmore importantly [they need to] fit into your company's cultureand support your vision." The best way to achieve that goal,she says, is to consult with existing employees and make sure theymeet with new hires. They'll know best whether that person willfit into the new environment.

It's also important to communicate clearly the company'sculture to future employees, and one of the best ways to do that isby hiring human resources executives. Ethan Berman, 38, is CEO ofRiskMetrics, an Internet start-up on Wall Street thatsells risk-measurement solutions. According to Berman, "One ofmy early tasks in setting up the company was to find someone whosemain function was to recruit and retain employees and maintain ourculture."

But eBags.com, which already has its own in-house HR manager,goes even further: Cobb says that before his company hiresprospective employees, one of the company's five founders mustmeet with them at least once. "No one is hired without afounder meeting with [him or her]," explains Cobb. "Ittakes time out of your schedule, but we think it's worth it.Having an employee that doesn't work out is time-consuming andexpensive."

And then there's the obvious: Netpreneurs still rely on theInternet to find talent. Sites such as Monster.com, HotJobs.com,ComputerJobs.com and Techies.com are regularly used by many dotcomentrepreneurs.

Retain Employees

Although hiring employees is a crucial part of dotcom success,it's even more important to keep those employees.Unfortunately, even after hiring the best and the brightest,retaining good help can be a challenge in a dotcom environment,where the office hours are long and the payoff is far, faraway.

"Working for a dotcom isn't easy," says Cobb."It's a lot of long hours and a lot of commitment. But wetry to do everything we can to make it fun and enjoyable."

For example, Cobb says that the company frequently has"Bagel Days," when free bagels and coffee are brought into the office in the morning for the staff. Plus, every night thecompany buys free pizza for staffers who work past 7 p.m. Thecompany also took its entire staff to a screening of AustinPowers: The Spy Who Shagged Me when it opened inDenver-several employees even dressed up for theoccasion.

Villella says there's a whole gamut of incentives like thatnow in the dotcom world, and they're designed to help create"a team-like environment, where people come together anddevelop a passion for what they do." And incentives don'tstop there. Many companies, including eBags.com, also offeremployees three-week vacations and stock options. But before youoffer incentives, make sure they fit within your budget. "Manystart-ups are doing small things, like giving employees a day offwhen they finish a project that they've been working on24/7," says Burke. "This can be really motivating at avery low cost."

A New Page

The Five Temptations of a CEO Need some inspiration tohelp you through the hiring process? Try The Five Temptations of a CEO: A LeadershipFable (Jossey-Bass) by screenwriter and business coachPatrick Lencioni. The book, which is currently being circulated inrecruiting circles, uses a self-help approach to guideentrepreneurs through the common workplace "temptations"to jealously guard career status, consistently remain popular withsubordinates, unfailingly make correct decisions, constantly strivefor an atmosphere of total harmony and always appear invulnerable.(Sound like you?)

Surfing For Staff

The best way to find talent? Hit the Net.

Online entrepreneurs are using the Internet for recruiting moreand more. According to an independent study of 141 small businesses(many of which were dotcom startups) conducted by Auburn, Maine,Advantage Payroll Services, 63 percent of respondents believe thatInternet recruitment is growing dramatically, relative totraditional methods such as newspaper advertising or face-to-facerecruiting. In addition, the study found that 57 percent ofentrepreneurs use the Internet for recruiting and 32 percent expectInternet usage for recruiting to increase 21 to 40 percent.

10 Things

Top tips dotcom entrepreneurs should know when hiring

Paul Villella of HireStrategy.com offers the following tips fordotcom entrepreneurs on the hunt for new employees:

1. Create a "staffing blueprint." This planwill help you avoid the mistake of random hiring. It should includewhat sources you need to consider before hiring a specificcandidate, whether you can afford to hire that candidate andwhether you can get the candidate when you want.

2. Keep your options open. Don't make the mistake ofundervaluing networking and other grassroots opportunities toidentify candidates.

3. Establish a culture. Help your employees identify withtheir work environment and give them a reason to be part of theculture. Then, don't stray from the fundamentals of thatculture.

4. First interview: Plan tactically. At this stage, tellthe story and share the vision of your company-and don'tdwell on any conflict between the two. Talent is quick to see thatas a red flag.

5. Second interview: Sell your company's story.Before signing on, candidates must be drawn to your vision andculture. Ask a key employee to take the candidate to lunch and talkabout the company. Don't let a good candidate slip out of thehiring process by using intimidating "teaminterviews."

6. Use PR. As an unknown organization, use the power ofpublic relations to build your company's image. Getting yourdotcom in the press provides a positive push in a way thatexpensive advertising sometimes can't.

7. Recognize the dotcom world is in its second phase.Today's candidates, aware of the new pink-slip phenomenon, wantto know if your business plan is sustainable.

8. Recognize that cash is king. Stock options are nolonger valued as a core compensation. Your best candidates knowbetter than to think stock options mean "money in thebank."

9. Capitalize on crossover hiring. Look for candidateswho have successful track records in other disciplines. Look beyondstrictly dotcom experience.

10. Don't hire too quickly. Even if it takes time,hire people who understand your company's vision. Besides,venture capitalist take into consideration that you'reminimizing future risk by looking for the best.


MelissaCampanelli is a technology writer in Brooklyn, New York, whohas covered technology for Mobile Computing & Communicationsand Sales & Marketing Management magazines.

Melissa Campanelli is a technology writer in Brooklyn, New York, who has covered technology for Mobile Computing & Communications and Sales & Marketing Management magazines. You can reach her at mcampanelli@earthlink.net.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Side Hustle

This 26-Year-Old's Side Hustle That 'Anybody Can Do' Grew to Earn $170,000 a Month. Here's What Happened When I Tested It.

Stephen Alvarez was working at a dental supply company and following his passion for cars on the side — then an Instagram ad changed everything.

Franchise

How These 5 Beloved Restaurant Chains Are Making a Comeback After Nearly Disappearing. Is Your Former Favorite on the List?

Through innovative business models, strategic partnerships and rebranding efforts, these iconic chains are poised to reclaim their positions in the market.

Franchise

McDonald's Is Turning Jobs into Degrees By Helping Employees Earn College Credits Just for Working

The fast-food chain is working with community colleges to translate job skills into academic credits.

Fundraising

Watch the Pitch That Landed $10K in 60 Seconds

On this family-focused episode of 'Elevator Pitch,' see which entrepreneur scores an unexpected payday.

Business News

Mark Zuckerberg Says an Upcoming Meta Product Left Testers 'Giddy'

Meta is almost ready to show this gadget to the public.