PeopleIn every entrepreneur’s life, there comes a moment when a bulb goes off, “Darn! We are a real business.” You’d think that having embarked with much thought (or for some of us with little thought) on the path of entrepreneurship, learning that you are a real business wouldn’t surprise you. Of course, such a realisation usually occurs when the problems of running a real business put in an appearance.

When you first start your business, it all seems more fun than work — figuring out what you want, whom you are going to make the journey with, whom your customers are and what they want and if you have raised capital, what prospective investors want. Notice, but for the first day, you haven’t had time to think about yourself.

However, soon each new day seems to bring up a number of issues, ranging from life-threatening cash-flow problems to stumbling product development, stuttering sales and marketing and the inability to hire good people fast enough. We will look at each of these issues, and how best to address them over the next few weeks.

Let’s begin with the good news – you are not the first entrepreneur to go through this. The bad news is that this knowledge does not make it any easier to get through this period. As with adolescence that every one of us has had to go through, companies too go through an equivalent phase. Only this seems to appear a lot sooner for entrepreneurial firms and, at times, more than once; as with any hormone-laden teenager this will be a time of monumental emotional ups and downs for your company and you.

The one thing that can help you navigate your way through these emotional rapids is having great people on board with you. I spoke of business being all about people earlier and this is truest in such times of corporate hormonal sloshing. Hiring, retaining and motivating great people is far easier said than done and fixing hiring mistakes always takes far longer than we’d like. The truth is companies that learn how to do this well are the ones that grow and prosper in the end.

Hiring people

Hiring even in the best of circumstances is time-intensive and can be emotionally draining. Nevertheless, it will be hard to over-emphasise the importance of hiring well. Brent Gregory, Fellow at Synopsys, and an ex-colleague said it best, “You can let 10 potential good hires go, but you don’t want to make one bad hire.”

Most of us, especially early in our careers, tend to focus on skills and competence when hiring. In times of great demand, we may end up lowering this talent bar, which is a mistake many an entrepreneur has come to regret. It is vital to first test for cultural fit and team skills – domain skills and competence are critical but insufficient indicators of a good hire. Paul Hawken, founder of Smith & Hawken, goes as far as to say, “Hire the person not the position.”

This may seem radical at best or naïve at the worst, particularly for those of you who are hiring for highly technical positions. All too often, interpersonal and team skills get overlooked when hiring for specialised jobs and the organisation invariably pays a high cost due to the resultant cultural and interpersonal conflicts that arise. This is truer still when hiring for senior or leadership positions.

As an entrepreneur, you should be personally involved in hiring the first 50 or even 100 people, as they will go on to build the DNA of your organisation. It is critical to get a large number of people, including the interviewee’s future peers and direct reports to interview a prospective candidate. Many companies make the error of hiring folks based solely on face-to-face interviews.

Hal Rosenthal, author of The Customer Comes Second believes in “placing candidates in situations beyond the normal scope of their work or in environments away from the work place – sports, driving or informal gatherings.” I have found taking a prospective candidate to the company volleyball game often reveals a lot more than two hours in a conference room. And for every hire, from the mail room boy to an executive director, always ask for and check references. More often than not you’d be glad you did.

People – Letting go

In a previous article, I spoke about how hard it is for most entrepreneurs to let go of a paying customer. The only thing that is harder is admitting that you have made a hiring mistake and letting go of that person in a timely manner. Despite the best hiring practices, you occasionally end up hiring the wrong person. Wrong, because mutual expectations were misunderstood; or the incorrect assumptions made by either party about attitude, competency, culture, the job or working in a team. Usually, the causes of such a mismatch are less important than rectifying the situation, at the earliest. No one enjoys firing or letting go of people – especially in small start-ups where there are few secrets and you get to know a individual at a personal level. This is the very reason for rapid corrective action.

The smaller your company, the greater is the need for zero tolerance of any violation of core values by a team member or worse yet, for being a deadbeat. More than the shock of termination of a poorly hired individual, the cost of delaying decisive action is far higher due to the loss of morale, the damage to your credibility as a leader and the overall emotional toll other employees pay. The upside of definitive action is that it communicates your values and beliefs in a manner no number of posters or lectures can and reinforces the expected behaviour in your organisation.

Growing together

Once you have built a team of fine individuals, hiring them would seem simple compared to keeping them happy and growing them with the business. Studies show that when a person joins a new job, he or she does so with high morale and much motivation to make a difference.

The onus is upon you to ensure that you do not demotivate them or undermine their morale.

The best way to achieve this is to provide clarity of purpose for both the organisation and the individual, provide them the tools and resources to do their jobs and remove the roadblocks or regulations that would hinder or disempower them.

For an entrepreneur who never met a problem that he didn’t love to tackle and solve himself, it takes some practice to let go and allow others to get the job done. This requires trust and confidence in your people, which, if you have done a good job during hiring, should be easy.

It is also important to create a learning environment, so that your team stays fresh, is challenged continuously and, in turn, creates a self-reinforcing milieu of teamwork, sharing and continuous learning.

Finally, ensuring that recognition and appreciation are a way of life in your business, will cement the whole team.

It’s worth keeping in mind Paul Hawken’s words about the people you want on your team, “… it makes no sense whatsoever to hire any but the best people you can possibly find. Your employees shouldn’t admire you. That is kid stuff. You should admire your employees.”

(The writer was founder and CEO of Impulsesoft Pvt Ltd, which grew from a boot-strapped organisation of two people to a global leader in Bluetooth wireless stereo music prior to being acquired by SiRF Technology Inc in 2006. Srikrishna, who has an MS and a PhD from the University of California in Berkeley, has more than 18 years of experience building and marketing semiconductor and software products. He writes for The New Manager on the travails and triumphs of being an entrepreneur. He blogs at

(This article was published in the Business Line print edition dated March 24, 2008)