Skip the Free Snacks – Here’s What Your Tech Startup Should Really Be Investing In
You’ll run into problems down the road if you under-invest in this area.
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Is HR generally underrated by tech startups? Short answer: Yes.
For reasons related to speed and cost-saving preferences in the early days.
But things change quickly.
In an interview in Elad Gil's High Growth Handbook, Marc Andreessen, who has been a successful scale-up founder and has also overseen many high growth startups as a VC, suggests hiring an HR head when the company is at size 50-150. I am inclined to agree with him especially coupled with my own advice to startups that they pay for a good startup lawyer.
A good startup lawyer can help prepare the scaffold for the early crucial hires, especially since these are likely to get equity based compensation as well. She may also be able to help the startup stay compliant e.g. safety and accessibility regulation, setting up workplace pension (a requirement in the UK for employers to offer to those between 22 years old and retirement age and earning over 10,000 a year).
As the company scales, the people who come to work for it may not bring the same risk appetite as the very early hires. These would, for instance, be people to whom other steady benefits and perks matter, who may want flexible working etc. which creates an administration workload. Further, as the numbers grow, it may be harder to scale the early bonhomie in the founding employees' group - which means more conflict may arise requiring resolution and intervention - and more formal processes are needed.
A competent HR partner in the company would bring experience to build the infrastructure and processes but more importantly as Patty McCord writes in her book, a strong culture where people would be happy to work (employees) as well as proud to have worked (alumni).
One startup I have known has ended up with a patchwork quilt of employment contracts in its team - an outcome of enterprising solutioning in early days but also a problem that was avoidable by using a lawyer once. As hiring takes more and more time for enabling crucial functions, it definitely cannot do without an HR partner with vision and startup experience for long.
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