A startup's first hires: What to look forNovember 1, 2012: 11:49 AM ET
The first employees of a new business must be up for more than just what's written in a job description. Here are a few things to consider when hiring or if you are considering joining a new company.
By Frank Gruber and Jen Consalvo
FORTUNE -- There are people who start businesses -- entrepreneurs -- then there are the ones who take the risk of working for those entrepreneurs, before the companies are established.
Early startup employees may not have the same direct financial risk in the business as a company's founders, but they are certainly taking a leap of faith and putting their trust in a young entity that could crash and burn at any time. These people are critical to startups and small businesses around the globe.
The first employees of a new business must be up for more than just what's written in a job description, because a startup is not the same as an established business that already has a foundation.
While skills are important, if the team is still very small, cultural fit is essential. Within a small team, there is nowhere to hide and good morale is an essential ingredient when you are dealing with all the many stresses a startup faces. These first employees will become part of the company's cultural foundation.
Blake Hall, the founder of DC-based TroopSwap, can speak from experience. "It is vital that I feel comfortable about a core addition to the founding team with respect to five areas: passion for the mission, work ethic, risk preference, dedication to customers, and comfort level with failure."
New businesses are filled with ups and downs, so employees need to be ready for the rollercoaster ride. In some cases, the best candidates on paper may not be the best fit at a new business.
The majority of startups cannot offer competitive salaries or benefits, so they have to offer something else -- a strong vision and story that people can really get behind. Early employees must believe in that vision and have the passion to follow. "Early employees have to believe to their very core in the vision, even if that means sometimes challenging … the founders," says Kristen Galliani, founder of meshin.com.
Just like with potential customers, if the company cannot articulate its vision and value to potential new hires, it will be very difficult to persuade them to come along on this new adventure.
Aside from passion and belief in a vision or idea, it takes a certain kind of person to stomach the startup lifestyle. "There are plenty of smart, hardworking people out there but the people you need to take the long bumpy startup ride with you need to be survivors in the face of ambiguous obstacles," says Yapp CEO and cofounder Maria Seidman. "Before hiring someone, I explain to them all of the risk factors and make them sound even worse than they already are for an early stage start up. Then, I watch their facial expressions closely."
But passion is critical as well. "It's hard to take the long slug of a startup without an authentic passion for the mission."
Judgment and flexibility
Beyond cultural fit and passion, a growing startup needs people who can get things done. According to Rachel Sklar, founding editor at Mediaite, and now founder of TheLi.st, ideal early startup employees can exercise good judgment and keep things flexible. "You're going to be needed everywhere and no job description can capture all you're going to have to do. You'll need to know where and how to do it all. And a sense of humor couldn't hurt."
When hiring, Ross Kimbarvosky of Chicago-based crowdSPRING often looks for communication cues to help find the best early employees, "People who ask 'why' questions (rather than 'what' questions) tend to show a greater degree of interest, a more creative potential, and typically reflect employees who don't need to hear themselves talk all the time."
Keeping things transparent
Once an employee is on board, founders need to make sure those new hires remain motivated, happy, and productive. For the most part, early employees joined a startup because they wanted to be part of a business project where they get to see things grow from the ground up.
"As the first person at Mediaite," Sklar explains, "I loved the idea of building something completely from scratch. It's enormously satisfying to point to something that exists and say, 'I made that happen.'"
Even if an early employee has the passion, the employer still needs to manage them well enough to keep that flame going amid the rough patches, which can be one of the biggest challenges for founders.
How do you pull this off? Maria Seidman explains her philosophy, "Treat every early employee as they were a founder. Be totally transparent with your team and share with them the ups and downs along the way. This way, everyone has context for what's happening, and while there are many things you can't control in a startup, you can foster a culture of transparency and trust which is in itself motivational."
At the end of the day, many talented people are looking for a more meaningful work experience, which is why some people join startups over bigger, more established companies. Many early startup employees are willing to trade the perception of stability and more money for that added sense of purpose. "Life's too short to feel like you're doing nothing," says Justin Thorp, an early employee with both AddThis and HelloWallet. "I wanted to do something where I was thriving."