1. Building your Team
This presentation is made possible by the support of the American People through the United States Agency
for International Development (USAID). The contents of this presentation are the sole responsibility of Rick
Rasmussen and do not necessarily reflect the views of USAID or the United States Government.
2. Building your team
• People are absolutely your most important asset
• VCs name Team as the #1 Risk Factor
• The people you hire set the corporate culture
– How team thinks, feels and acts
– Provide a framework for behavior
– Set them free and they’ll do great things
3. Who is your “team”?
• Investors
• Board of Directors
• Co-founders
• Your executive staff
• Board of Advisors (optional)
• Service Providers
– Attorneys, Accountants,
Recruiters, PR firms,
Outsourcers…
Investors
Board
Advisors
Exec
Staff
Team
Service
Providers
You
Co-founders
4. Investors
• Passive vs. Active
• Passive investors have no active
roll in the company
– Friends and family
– Accelerators
– Some angels
• Active
– Most investors want to “actively
manage” the money they placed
with you
– Who is on the board and who is
not?
– Day-to-day advisorships
Investors
Board
Advisors
Exec
Staff
Team
Service
Providers
You
Co-founders
5. Active investors
• Once they fund you, you’re married for life – you can’t fire
them
• Many companies fail here
– The separation between the objectives of the founders and the
objectives of the investors
– Long term vs. short term
• Watch out if:
– They’ve never done a startup
– Don’t know the technology
– Don’t know the market
6. Board of Directors
• Shareholders own the company
• The board are their representatives
• CEO reports to the board
– Their sole role is to hire and fire a CEO
• Typically an odd number (3, 5, 7) to break
tie votes
• Chairman is optional and honorary
– Founder does not automatically become
chairman
• There is an art to managing your board
– Constant communication is key
Investors
Board
Advisors
Exec
Staff
Team
Service
Providers
You
Co-founders
7. Co-founders
• It’s OK to hire your friends
– Knowledge and trust
– As employees, not co-founders
• Be very cautious about declaring a
co-founder
– They believe they are equals
– They will expect certain rights
– Firing is extremely difficult
• Co-founders dilemma
• Situations that often happen
– What if something goes wrong?
– What if they want to leave
– What if they contribute less than you?
Investors
Board
Advisors
Exec
Staff
Team
Service
Providers
You
Co-founders
8. Board of Advisors
• Set up to Advise the company
• Part time experts to help in
their own vertical
– Engineering, Strategy, Finance,
Legal, Business Development
– Entrepreneurs that are looking
to give back
• People argue about the worth
of advisory boards
– Don’t do it for the sake of adding
“names”
– If you have advisors, take full
advantage
Investors
Board
Advisors
Exec
Staff
Team
Service
Providers
You
Co-founders
9. Board of Advisors Expectations
• Expect them to put in 2-4 hours/month
– Advisory meetings and calls, make introductions, strategic
advice
– Not expected to write business plans, presentations, travel
• Typically compensated through stock
– 0.25% is normal.
– Up to 1.0% if a luminary but must really contribute
– Have them vest from 1 to 4 years
10. Service Providers
• Professionals that provide assistance in
return for fees
– Attorneys
• Corporate
• IP, Patent, Trademark
• Employment, Visas
– Accountants
– Recruiters
– PR
• First consultations often free
– Can defer compensation until first funding
event
• A great source of referrals to Angels
and VCs
• Watch out for the Partner new grad
swap
Investors
Board
Advisors
Exec
Staff
Team
Service
Providers
You
Co-founders
11. Hiring Engineers
• Let your engineering team find the
engineers
– They’re building they’re own team
– Need to respect the work style of any
new recruit
– Talent but also philosophy
• There will be a tendency to want to
overpay
• You have the final say
12. Hiring Sales, Marketing, Business Development
• These are all social creatures
• Get to know their
personalities and work styles
• Research their social media
profiles
• Get them out of the office for
extensive interviews
13. Hiring Finance and Operations
• Needs to be your solid
backbone
• Trust above all else
• Research their
backgrounds.
• Strong reference checks.
14. Common Stock Ranges
These are rough ranges – not bell curves –
For new hires once a company has raised its Series A.
CEO 5 – 10%
COO 2 – 5%
VP 1 – 2%
Independent Board Member 1 – 2%
Director 0.4 – 1.25%
Lead Engineer 0.5 – 1%
5+ years experience Engineer 0.33 – 0.66%
Manager or Junior Engineer 0.2 – 0.33%
Stock should always vest for 2-4 years, even for founders.
15. After the job offer
• Continue to convince the candidate that your
company is the one they should join
– Investors should ask them to take calls with candidates
– Ask mutual connections to ‘backchannel’ them to hype up
your company
– If there are doubts, consider starting the person as a
contract-to-hire until he's ready to make a decision
