Despite this, I find it hard to recruit good people.  Landing a job at a startup offers a career breakout opportunity.  You’re on the frontline, creating an impact, making a name for yourself, working with a small, ambitious team.  You’re help build a product you love and will share in its ownership.

The ability to sell yourself seems obvious, yet I’m astounded by the inability of most applicants to achieve this.  Most people approach the application and interview process with the same lacklustre indifference usually reserved for a job working for the government.

If you’re one of those who applied for a role at Posse in the past month, and especially if you’re one of the twenty or so who made it to the interview stage but didn’t get a call back, then you may see some of yourself in the stories I’m about to tell.  Please don’t be offended — this is just my experience and I hope my feedback will help you in the future and lift the quality of applicants for other startups.  I also hope it will save founders (including me) from trawling through time-wasting applications and interviews with people who just aren’t right.

When I think of the applicants who impressed me — particularly the ones I’ve hired, it’s clear to see a few simple things they did right.  I can imagine most young job hunters would be intimidated to know that more than 80 people applied for the same position.  Yet from the employer’s perspective, at least 75 of the 80 applications will be hopeless: misspelled, badly punctuated and so on, often to the edge of illegibility, so you’re really only competing with a handful of people.

Before you apply to work at Posse or any other startup, read these tips.  They’ll help:

1. If you don’t want to work at a startup, don’t apply.

Landing a job at a startup is a special opportunity but it’s only right for a few people.  Startup teams consist of ambitious, creative people who’ll do whatever it takes to succeed.  You’ll be thrown in at the deep end and expected to swim without much training or support.  You’ll need to hustle for an organisation that no one has heard of and motivate yourself when things get tough.  The upside is that there’s very little process – everything is agile, you get to make-up what you do every day and there’s often a big payoff both financially and in terms of skipping several rungs on the career ladder if you’re successful. This lifestyle isn’t for everyone, so before you apply for a job, think long and hard about whether it’s for you.

I look for people who are seeking this kind of opportunity and they’re easy to spot.  They’ve usually created some kind of project early in their career.  Perhaps they started a business themselves, built a blog following, or created something in the not for profit sector.  If you’ve done something like this, make sure you lead with it in your cover letter.  I look for people who are obviously ambitious and have accomplished something difficult where they’ve had to overcome barriers – preferably something they’ve created themselves.  I look for evidence that they’re hard working, so lots of extra circular activity is a good sign.  When you get to an interview, don’t ask about the office hours (startups don’t have any, and if you ask then you’re the wrong kind of person).  And don’t, as someone admitted in an interview with me last week when I asked what his biggest weakness was, reply, ‘I’m a bit lazy.’ Although I gave him credit for being honest, I deduct credit for being stupid by admitting it in an interview.  Startups aren’t the place for lazy people!

2. Make your application stand-out

The job market is competitive and even though I’ve said 75 of the 80 applications I received for my recent role were rubbish, someone still has to trawl through all of the applications and notice your one.  There’s a good chance that a great application could be missed, so it’s worthwhile doing something to make yours stand out.

The best way to apply for a role at Posse is to find a contact that I know and get them to tell me about you.  We have more than 60 investors, lots of partners, tens of thousands of merchants, and I even have some friends.  Just find one person who knows someone at the company and get them to put in a good word for you.  This time, three applicants came with referrals from people I knew and I made sure I paid special attention to them.  They all got an interview.  If you can’t find anyone then do something special.  We often get weird and wonderful packages delivered to our office with someone’s CV inside.  It won’t win you the job but it will make sure someone looks at your stuff.  At the very least, make sure you write a punchy cover letter to accompany your application.  It needs to grab me within the first paragraph because I won’t have time to read the whole thing.  This must be personal to the company and sell why you are the right person for the role.  I always delete any application that comes through without a cover letter – if you can’t be bothered writing something that outlines why I should consider you then it’s a good sign you’re not the person I want to hire.

3. Take care in responding to questionnaires

I always send out a questionnaire to everyone who applies with a cover letter.  The type of questions vary depending on the role – for example, our engineering team has a problem-solving exercise to assess logic and coding abilities. We set a deadline for the questionnaire to be returned and any that come in after the deadline are not read.  The first aim in the recruitment process is to test the applicant’s integrity.

I am astonished at how little effort many people apply to these questionnaires.  They are our first tool in assessing you for the position.  Many come back with one-line answers when the questionnaire specified 200 words.  Others are littered with spelling mistakes and grammatical errors.  If you’re applying for a Communications role where writing is a key part of the job description then you’d better show that you know the difference between ‘their’ and ‘there’ in your application!

4. Present well

So you’ve made it to the interview.  Again, it’s shocking how many people with strong resumes and who’ve done a good job on the questionnaire, mess up their interview.  Startups are looking for people with a lot of energy and enthusiasm.  Show that passion during the interview: don’t talk to the ground as if you’d rather be somewhere else.  If you’re nervous then learn how to fake confidence.  Speak clearly, smile and engage your interviewer.  Try to form a personal connection.  If you’re a woman don’t wear too much make-up, and do wear an appropriate quantity of clothes.  If you’re a guy don’t wear a suit (even if your Mum insists), but don’t wear a tracksuit either.  Just be normal and well groomed!  I should also note that most interviews take place one on one in a small room, so think about how you smell.  It’s not a good idea to smoke right before an interview and it is a good idea to wear deodorant!

5. Think about the company and the questions you might be asked.

I only want to hire people who sincerely want to work at Posse.  It’s going to be a tough gig and I don’t want someone who’s likely to give up.  I test how much people want the role by finding out how much they know about the company.  If they’ve read every press article on us, all of my blog posts, have spent time using the product, discussed it with their friends, and have spoken to someone involved in the company then I know they’re serious.  But when I ask them if they have any questions and they come out with something like, ‘So how did you get started?’ then it’s obvious they haven’t done any homework.  Make sure you have questions prepared that show that you’ve thought about the role and how you would succeed in it.  It’s ideal if you can subtly make the employer sell you the role; it shows you value your ability and want to be sure that this is the right company for you to invest your efforts.

There are some questions you’re going to be asked in every interview.  For example, what are your strengths and weaknesses and where do you see yourself in five years time?  Think about good answers before you come to an interview and test them on people you know.  I’ve seen candidates who I thought were exceptional completely stuff up these basic questions and reveal things about themselves that would rule them out of contention for the role.  Be honest: make sure you describe a real weakness because you need to show that you’re self-reflective and are aware of what you need to work on.  Just, don’t say anything stupid.

6. Follow-up

Startups are for hustlers and so we appreciate when people hustle us.  I’m busy and I admit I often don’t reply to emails from people I don’t know.  But if you email me several times, find my phone number, contact me on LinkedIn, Twitter and Facebook and seek out someone I know to make an introduction then there’s a good chance I’m going to notice you.  This is not an open invitation to hustle me for a job.  I’m simply stating that this is what I do when I want to get a meeting with a potential client or investor.  It’s what I’d like members of my team to do and so if you do that during the recruitment process then that’s a good sign.  So long as you can back it up with talent, otherwise you’ll just be annoying.

Of the 80 people that applied for our recent Communications Manager role, approximately 20 were ruled out instantly for not including a cover letter.  Half of the remainder we struck off for not returning their questionnaire on time.  That leaves 30, and half of these I didn’t read because they had too many spelling and grammatical errors.  Half the well-written ones didn’t put much effort into coming up with well-considered answers, leaving seven whom I interviewed last week.  One of the seven is coming back for a second interview along with another two candidates who came through contacts.

I decided to write this post out of frustration with time wasted sifting through terrible job applications.  For startups to succeed we need great teams.  For ambitious team members, one year in a startup will teach twenty times what you’d have learned in the corporate world.  But it’s hard work and requires a special combination of passion, determination and talent.  If you have that, then I hope these pointers help you in landing the job of your dreams, which may even lead to you starting your own thing one day.

Applications for our Communications Manager role have closed, but if you want to work at Posse in another capacity and are the right person, you’ll work out how to find me.

‘I’ve read my fair share of business books and have friends that work at places like Google, so I know something about the steps that major companies take to keep their employees happy.  Big conferences, overseas trips, bonuses and fancy offices all help to make people love their job no matter how boring the actual work may be.  Start-ups have to compete with large, established companies for staff.  We have little time, money or resources.  We can’t employ an in-house chef, pay big bonuses, construct slides between floors or send team members to stimulating overseas conferences.

Startups recruit team members who have vision, passion and the drive to make a difference.  It’s hard but possible to hire people from companies like Google; it’s tougher to develop a culture that sustains team enthusiasm during hard times.  I believe all startups can be successful if they have the money and energy to power through obstacles, to learn and evolve until they hit the right formula.  We’ve heard the stories of Airbnb who, after two years of struggle, sold cereal at the 2008 political conventions to make money, keeping their startup dream alive.  Or Twitter, who floundered for three years as a podcasting company before pivoting to the concept we now know as Twitter.  Imagine the culture in those companies during the tough years.  We’ll never hear the stories of team members who left for jobs with better conditions when times got tough.

We had a hard year at Posse.  We’ve been working hard for two years and launched our latest product in March at SXSW.  I spent the next six months in New York, raising capital and building a community of US users.  The team stayed behind in Sydney.  The lease on our office expired, so they temporarily moved into a garage underneath a friend’s office.  I ‘met’ with the team on Skype most nights NY time and could see they weren’t enjoying the premises, which were cold and lacked natural light.  I couldn’t be there to lift morale and was often exhausted myself.  A couple of people gave up and left, which further deflated the team’s resolve.  It was brutally hard to keep going!

I came back in August, ultimately successful at raising both money and our profile in the US.  I felt more positive than ever about our chances, and was excited to return, working directly with our team again.  When I arrived at the office I found a tired, miserable group.  People were coming in late, leaving early and productivity was low.  It was obvious that, after closing the funding round, my next challenge was to rebuild our company culture.  Here are five things I did to shake things up.

Team breakfast (when we were still in the garage)

1. Productivity & Community.  

The first issue I had to address was low team morale and lack of productivity.  I’ve found that one of the best ways to lift morale immediately when you’re in a slump is – communicate with everyone every day.   This enables you to reinforce the company’s objectives, ensure that everyone’s ideas and concerns are heard, and create transparency. That’s easy when your team is small.  And I had to address the team’s low productivity, caused by people coming in late as much as lack of motivation.

I solved this by holding team breakfasts every morning at 9am.  I’d buy cereal, fruit and baked treats; we met as a team and chat about life and work.  It was a great opportunity for me to hear everyone’s ideas as well as get the team back onside with our goals – and the last person to arrive was responsible for washing up.  It was rare for anyone to arrive after 9.30, though I can’t imagine why.

Our beautiful new office

2. Location.

Only recently did I realise the importance of office environment.  I worked in the garage office for six weeks and hated it.  Even I couldn’t wait to escape at the end of the day.  I started looking for new premises as soon as I returned to Australia, and with a bit of effort found an awesome spot on Oxford St, in the heart of Sydney’s trendy shopping and cafe district.  I cut a deal with the council, which wanted to encourage creative young companies like ours into the area, and paid less rent than for the garage.  We ran an online competition for interior design students to fit out our office on a budget of $2000.  More than ten entered, and the winner has completed an amazing job, making our space feel like a palace.  It’s a delight to arrive at work in the morning, and I often find myself working late into the evening with several members of the team.  People want to stay behind and work because it’s an awesome place to be.

Dev team hacking together a new feature idea at the offsite

3. Offsite events.

Every 3 – 6 months we hold a company offsite, renting a house in the country and spending a couple of days discussing our progress and planning for the future.  A few weeks ago, we went to the Blue Mountains and were there when the fires broke out!  Being trapped between two large bush fires is pretty powerful for team bonding!  Other than calling the RFS to track the fires close to us, we spent two days reviewing our company values and user personas, brainstorming user stories, featuring ideas for the product, and prioritising the next few months of marketing and development.  We had a great time together and returned to work excited about the future.

4. Progress.  

No matter how great your culture may be, a smart team only remains motivated if they feel they’re making progress.  Nothing is more disheartening than slogging it out on site, then marketing a product that people don’t use.  We’ve been lucky; our cultural changes have coincided with a major release of our new iPhone app, on which the team have worked for four months.  It hit the app store on Wednesday afternoon and we surged to #10 in our category on the Australian & NZ App Stores and #1 in Singapore.  I can’t express enough how motivating this is for the team; it trumps every other initiative.

Our office party last week

5. Celebrating wins.

Every start-up has a mile-long list of desired achievements.  Every time we finish something, I’ve mentally moved on to other things that haven’t yet been completed.  It’s hard to stop and celebrate victories, but it’s incredibly important for team morale.  Last week we threw an office party to celebrate the launch of our new app and invited friends, investors, ambassadors, media and retailers to check out our new premises.  More than 80 people packed out our office, the dev team demoed their creation and another exciting new feature that’s not yet launched.  It was a great way to get the community talking about Posse, and gave the team an opportunity to be proud of the company.  Magners sponsored the drinks and Mad Mex served up tasty Mexican food.  The whole event cost us less than $200.

The dictionary definition of company culture is:  ‘The behaviour of humans who are part of an organization and the meanings that the people attach to their actions.’ Some companies define the success of their culture by a ‘Net Promoter Score’ which measures how likely an employee is to promote working at the organisation to a friend.  I think culture determines how excited team members are to come into work in the morning.  How hot is the fire in their belly.

Culture can’t be dictated.  For instance, I’ve learned that mandating work hours doesn’t lift productivity but inviting everyone to a team breakfast does.  Startups can’t afford the time or money to build culture in the same way as Google.  We have to be creative, using what attracts people to work at a startup in the first place.  People join startups because they want to make an impact, for their ideas to be heard.  They want to be a part of building something they believe in, to sense rapid progress and be part of a tight team that has fun and respects each other.  None of this costs much money – just a bit of effort and creative thinking.  Two years in, I agree with the investor who encouraged me to focus on culture.  Culture determines what else is possible.

Celebrating our superstar designer’s birthday last week

Wow. That took me a couple of minutes to process; I’d never thought of honesty like this.  As a child, I learned that telling lies was bad.  To be good, I should tell the truth.  As an adult, I don’t tell outright lies but there are times when I’ve been guilty of exaggerating or omitting facts for my own advantage.  I’d only ever thought about honesty as bad verses good.  Peter views honesty as the access to ultimate power.

If we were honest about it, we’d admit we all lie every day.  A recent study of 2000 Britons found that the average man lied six times per day and the average woman three times per day.  The same study found that 40% of people lied on their resumes and a whopping 90% of people looking for a date online lie in their profile.  The study didn’t investigate the number of lies told by entrepreneurs looking for investment, but it would be interesting.

Peter asks the same two questions after every pitch he sees.  “What is your customer delight story?” and, “What’s the lie in what you just told me?”  He says there’s always one, and as soon as the entrepreneur admits it and opens up with the truth, they can start managing what to do next.

Some lies are big and others small.  Children lie to avoid punishment or impress other kids in the playground.  Adults can lie to gain respect, like a former coffee getting intern who told an employer he’d worked with us as a ‘research assistant’.  People lie to stave off the consequences of making a mistake or to spare someone’s feelings.  Their heart may be in the right place, but they’re still telling a lie.

Peter thinks telling lies is the #1 reason why entrepreneurs fail.  Not because telling lies makes you a bad person, but because the act of lying takes you out of the present moment and prevents you from facing the truth about your business.  Every time you exaggerate a metric, under-report a cost, or are less than transparent with your team, you create a false reality, and start living in it.  In that moment when you told a lie you knew the right action and chose another.  You separated yourself from what was happening around you, lost control of the situation and soon focused on managing the fallout from the lie.  I know people who appear to spend their entire careers inflating the truth and fighting to meet the expectations they’ve set.

Peter’s philosophy is based on Buddhist teachings: the present is a more peaceful, creative and productive place from which to operate.  Everyone knows the right actions to take; by having the confidence to accept your surroundings you can make right decisions and be open to opportunities that come your way.  His commitment to remaining in the present borders on spiritual; only by remaining in the moment, being honest with yourself and others, can you trust that the true outcome will emerge.

Our conversation inspired me to test the theory over the past couple of months.  I’ve focused on telling the absolute truth all the time and being ultra transparent even when I didn’t need to be.  It wasn’t easy but I have to say it transformed my sense of peace, and coincided with the company’s most productive period yet.  Coincidence?

Two weeks ago, I experienced the dark side of dishonesty.  I’ve been involved in a charity organisation for a few years now.  We do a lot of great work in the community, but as a group we’ve always floundered, and our projects never reach their potential.  We’ve had a stream of difficult people in the organisation but I couldn’t identify the root cause of the problem.  Then it struck me: I discovered a senior member of the organisation lying.  Not a whopper, just insignificant tales about why someone couldn’t make a meeting, why emails hadn’t been read, why he was late and so on.  When I confronted him, he immediately admitted them, justifying his actions by saying they avoided irritating consequences.

As soon as I caught the first lie, it was obvious why the organisation wasn’t working.  Within it lay a culture of avoiding reality; no one trusted each other.  The result was a culture of obfuscation and back stabbing in which nothing was achieved.  Volunteers became disheartened with the politics and lack of progress, and eventually they left.

Truth and its relationship to creativity, peace and ultimately success have played on my mind in the past couple of months.   If you’ve read this post and thought, “that doesn’t relate to me – I never tell a lie,” then you’re probably lying to yourself.  For one week, try being honest and transparent about everything.  I’m confident you’ll find it both difficult and worthwhile, and that it’ll make a big difference to your business.  I seldom adopt esoteric business philosophies but its impact has been such that I believe this powerful secret should be talked about.

I’ve not been able to find other articles or books on this topic.  If you have, it would be awesome if you could share them on the comments below.

When I started Posse I didn’t know much about company boards.  A family lawyer helped establish our companies.  He suggested I set up a board and try to find some impressive-sounding people to join it.  His objective was to make the ‘team’ list in my fundraising presentation look more appealing to prospective investors.    So off I went on a mission to meet big name folks who’d look good on my deck.  It didn’t seem to matter how many, the more the better.

Within a month I’d assembled a board of eight, including myself, and we called a meeting.  A friend lent me his board room, a big office in the city.  I expected a casual, friendly affair where we’d chat about business and strategy and they’d agree to introduce me to some potential investors.  I was in for a surprise.  First of all they wanted to know everything.  How much money did we have in the bank?  What were the liabilities, the budget, how many people had visited the site last week, last month, how long did they stay for, how much money had we made?  And so on.  I wasn’t prepared and it was overwhelming.

After a couple of hours of grilling, I gained a sense of what a board expects from a founder.  I’d run my own business for eight years and didn’t report to anyone.  In time I came to appreciate the rigour of reporting.  For the next meeting, I made sure I sent out the cash-flow report, budget, metrics, and a presentation outlining what I wanted to talk about — all in advance of the meeting.

Six months in, our group hit its first challenge.  The business had started well; we’d raised some money and gained traction.  Everyone became excited, then out of the blue one director presented us with a proposal involving a full-time job and a lot of equity.  The group wasn’t sure how to react.  He left the room while we discussed his proposal, and when we rejected it he was hurt and embarrassed.  He quit the board and sent us a huge invoice for his time, which we spent a year fighting and eventually settled.

Some members of our original board were excellent and are still active in various capacities today.  Others drifted off: they had an expectation that we’d be a huge hit within months and when hard work set in they disappeared.  Some stuck around and were destructive when things didn’t go their way.

I learnt the hard way how bad things become when you have the wrong board.  I’ve also learnt how powerful it can be to have the right board behind you.  Here are five tips for start-up founders looking to build and run an effective board of directors.

1. Set expectations up front.

It’s easy to procrastinate finalising deals with advisors and directors.  Everyone is there to be helpful, and at the start it doesn’t seem worth negotiating to pay them a share of nothing.  The problems kick in after few months when things start going well, and you realise you and they have different expectations about payment.  Most start-up directors will expect to receive equity rather than cash, and in my experience the standard rate is 0.5% to 2% vesting over two years.

You must determine what you expect of the director.  How will they help with fundraising, strategy, introductions and the like?  If appropriate, you might want to agree on how much time they’ll commit to your business — although when you have the right people onboard it’s likely they’ll be bugging you with ideas and suggestions for how they can help.

2. Be transparent and organised.

Your board should be the one group of people with whom you can be completely transparent.  It’s their job to help you work through challenges; so they must understand those challenges if they’re going to add value.  I remember at one of the first meetings of our new board, I announced that the product we’d created wouldn’t scale.  We had to go back to the drawing board and try something else before we ran out of money.  No one flinched.  We put a process in place that would devise a better strategy.  I’ve also found that board meetings are much more effective when I’ve put time into thinking through the agenda and have written a presentation to talk through.

3. Make sure your directors have the right experience.

My original board sounded impressive, but many were impressive in the wrong industries.  They had no experience of the challenges of a start-up like ours.  So I received bad advice which led us to hire the wrong team and spend too much too quickly.  A couple of our early directors had never used Facebook or Twitter and wouldn’t even join Posse.

Everyone on our current board has incredible expertise in different areas of early stage companies in our space.  They know what other businesses are doing to grow, engage users, monetize, save costs and much more.  Almost every day, one emails me with an idea or opportunity that I wouldn’t have thought of.  And through them, we can access almost anyone we’d need to help our business anywhere in the world.

4. Keep the numbers small.

We have four directors on our current board, including me, and one regular observer who acts like a director except he doesn’t vote.  It’s a tight group: everyone knows the others’ strengths; everyone is committed to making Posse a hit.  I’ve heard that the reason to keep boards small is to ensure that as a founder you won’t be outvoted.  I suggest that if you even think this, you either have the wrong board or you’re the wrong founder.  For me, the benefit of having a small board is that I can spend time with each person regularly. Everyone is in touch with what’s happening and can contribute.

5. Make sure you like and trust people before inviting them to join.

Directors have much more influence than I originally thought.  They decide who leads the company, what deals to do and when to exit, so you must make sure you all share the same vision upfront.  You must know they’ll do the right thing, and that they’ll stick around and support you when you hit tough times.  I’ve heard many stories from founders whose advisors and directors vanished when it looked like the company might fail.  We’ve had hard times and I can honestly say that our group pulls together and digs in, no matter what the circumstances.

At my first board meeting I learned what directors expect from a founder.  It took me quite a while to work out what founders should expect from their directors.   Our board helps me refine our strategy and operation plans; they’re constantly suggesting new ideas and making introductions; they’ve been involved in fundraising; they hold me to account and oversee the governance of the company.

The names on our board are impressive but that’s not why they’re there.  I’ve learned that a top notch board of great people with relevant experience and a shared vision is a wonderful advantage and has made my founder’s journey easier and more fun.

Posse is my first tech company, and I like to draw on advice from a wide range of qualified people.  Outsourcing, it seems, is one area where everyone holds a different opinion.  I’ve tried almost every different outsourcing model — some were successful, some disastrous — and we’re about to build a significant second team in Manila.  Here are some of my stories and what I’ve learned along the way.

1. Outsourcing the development of a minimum viable product.

When I started Posse, I wanted to get a site up as soon as possible to see if the model worked.  I had no technical expertise and didn’t know how long it would take or how much it should cost.  I didn’t have enough expertise to hire my own developer so I outsourced to a dev shop in Sydney who then outsourced much of the work to their team in India.  I paid for a part-time product manager and part-time graphic designer in Sydney and around six full-time developers in India.   It cost approximately $50,000 per month and took around three months to get a minimum working site live.

This got us going, delivering a working site within three months.  It wasn’t great but worked enough to prove that the model had legs, enabling me to fundraise for the next stage.

But the approach was flawed and I wouldn’t recommend it.  Having a team of part-time developers in Sydney meant that no one was focused on the project.  A startup struggling to devise a new model needs focus and commitment.  I wanted smart people who’d wake in the middle of the night with brilliant ideas for the site design and implementation.  But for them, we were a one- or two-day per week project.  No-one cared that much, the design was poorly conceived and riddled with bugs.  The code was sloppy; it wouldn’t scale, and was abandoned when we put our own team in place.  It had to be.

2. Partial outsourcing of development.

As soon as I closed our first funding round, I hired a CTO to run the development of our product right here.  To develop as much as possible on the available budget he decided to hire two other developers in-house and outsource the rest to a different team in India.  The Indian crew were a dev shop that built products to spec.   We spent around $15,000 per month on the Indian team; that gave us six full-time developers including one who managed the rest of the team.  The entire tech team (Sydney and India) cost around $40,000 per month.

This approach worked slightly better as our Sydney team was more focused on the product design.  We started running regular user tests and developed agile processes, and the Indian team were quicker and more responsive in our direct dealings with them.

Again there were drawbacks.  The Sydney team spent a lot of time writing specs for the team in India.  It’s impossible for a technical spec to cover every decision that the implementer has to make.  For every major definition in the spec there were a hundred micro decisions left to the Indian developer.  We’d never met them; they didn’t speak good English, or understand the business problem we were trying to solve.  So, they often came up with wrong decisions.  For instance, they programmed the events database so it displayed events from furthest in the future first; closest to the current time last.  This makes no sense if you’re looking for something to visit next weekend.  The quality of the code wasn’t great and the site was slow as a result.  Developers would take longer to fix it because of the “shortcuts” they’d taken in the past.  The Sydney team members weren’t proud of the product, they were bored writing specs and we couldn’t build an innovative engineering culture as a result.  After about six months, we hired a new team, notably led by Alex North, and brought all our development in-house.

Me with Kaye and Jenny in our Manila call centre

3. Outsourced sales and database management.

One of the biggest lessons I learned from the music site was that we needed a scalable sales process.   I looked for a way to streamline the client on-boarding process so it could be done by anyone from anywhere at low cost.  Now, when you recommend a shop on Posse, a call centre in Manila contacts the store owner, lets them know you’ve recommended them and asks if they’d like to list on the site.  We obtain their details and design a hand-drawn Posse storefront, converting 95% of the shops that people list, and the entire process costs us $3 per store.  We now have over 35,000 merchants on the platform from all over the world.

The process works incredibly well for us.  We started by calling the stores ourselves, managing the whole process from our own office.  Once we had the script working to a point where one caller could onboard 100 stores per day, we outsourced the job to a call centre in Sydney.  They own a call centre in Manila and planned to get the processes running in Sydney first.  Once they could obtain the same result as us they’d train up their Manila team to take over — at a much lower cost.  Within a month we were ready to start handing over to Manila and a month after that we had a team of two callers, two graphic designers, one database researcher and one manager on the job for a total cost of $5K per month.

Manila floods almost every day at this time of year

4. Building our own team in Manila

Now that we’re growing, we’ve decided to launch our own team in Manila.  I went over there last week to scope out the scene and investigate different approaches.  I learned about Manila’s thriving startup scene and was shown two of the largest startup incubators, packed with enthusiastic entrepreneurs and engineers building their own products.  I was surprised to hear how many startup competitions, hackathons and meet-ups there are.  Google has just leased a five-storey building and plans to open a major office there.   It felt a very different culture from India, where developers seem to work more for pay than for passion.  Another advantage of Manila is that English is the main language of their education system, so communication isn’t a problem.

During my time in Manila I found a lead developer, an office and a recruitment company who’ll help us assemble the rest of the team.  For around $20,000 per month we can employ six engineers, four callers, a database and customer support person, a graphic designer and a manager.  We’re building the team in partnership with the Sydney company we worked with to outsource our callers, and aim to have the whole operation up and running in November.  The team will compliment our in-house development, design, community management and sales team in Sydney; we plan to send our lead designer and two lead engineers to work with the new team in Manila, at least for the first month or two until they get going

Encouraging a great Manila developer to join our team

Through trialling different methods of outsourcing and learning from others who’ve done it well, I value the time and effort put into getting it right.  My trip to Manila was eye-opening: I never visited the Indian teams and as a result thought of them as existing in cyberspace, rather than as real people.  I never took the time to understand who they were, their motivations and challenges — I just became frustrated when things didn’t work perfectly.  I never thought of them as being part of our team.

In a startup, every team member makes an impact and a team member in another country is no different.  Now that I’ve spent time in Manila, met the people who make the calls to retailers, and engineers we’re looking to recruit, I’m determined to ensure that the Posse culture is the same for our Manila team as it is for our Sydney team; we’ll all be spending a lot of time there to make sure it works.  I’ll write back in a few months and let you know how it works out!

If you’ve outsourced successfully or unsuccessfully I’d love to hear your experience and tips in the comments below.

Before starting Posse I ran a music company, Scorpio, that I founded by myself in 2002.  Four years into that company, I decided I wanted a co-founder.  I said that I wanted someone to compliment my skill set but the truth is, I was lonely.  It’s hard to run a company by yourself.  Even though I had staff, it wasn’t the same as having a partner with whom to share things.  The experiment was a disaster.  We had different styles, work ethics and visions for what we wanted to achieve.  I hated it, and within two years we went our separate ways at considerable cost of time, money, energy, and reputation.

This experience influenced my decision to run Posse solo but lately I’ve considered bringing in a partner.  I’ve spoken to many friends and advisors, some with co-founders and others who’ve done it themselves, to assess the benefits and risks of solo vs. co-founder relationships.  There’s no right answer: both setups work for different people at different stages of their businesses.  As I reflect on my own decision, here are what I think are the top four reasons to work with a partner or go it alone.

Why to be a sole founder

1. You set the culture.  There’s nothing more frustrating than being in partnership with someone who isn’t nearly as driven or hard working as you are. Imagine slogging it out day and night to get your business off the ground while your partner is at the beach.  This not only feels unfair but it also affects the culture of your company: the rest of the team follows the leaders, and if one of the leaders is lazy then it’s hard to create an ambitious and hardworking culture.

2. It’s easier to make decisions quickly.  No one is right all the time, but if you made the leap to start a business then you obviously are confident enough in your own ability to back yourself.  Different people have different visions and different priorities.  Start-ups have to move quickly to gain momentum on a tight time frame.  It’s good to deliberate but it’s important to make decisions quickly.  One of my favourite things about being a solo founder has been my ability to draw on a lot of advice from talented people, make a decision and go for it.

3. You can’t fall out with yourself.  One of the top reasons startups fail is the founders fall out.  They often start out as friends and it’s great when things are going well.  It’s when times get tough (which they almost always do) partners squabble.  Each blames the other.  One isn’t as smart, made the wrong call or won’t put in the work.  It kills confidence with the investors, the team and very often kills the business.   I’ve seen this happen several times with friends’ companies and founder divorce has to be one of the most painful and draining experiences you can go though.

4. Sole founders learn more.  Other than the joy of creating something of value (team, product, and so on) and the prospect of an eventual financial payoff, the great reward from being an entrepreneur is the degree to which you learn and grow throughout the process.  Certainly, being a sole founder is harder.  You are responsible for everything, not just the bits that you like or are good at.  You need to understand financial modelling, team building, product design, sales, marketing, community, HR and operations.  When there’s a problem, there’s no one else to turn to.  You need to solve it.  Although this has been difficult and tedious at times, when I reflect, I’m glad that I’ve done it.  There’s no MBA on earth that could teach me what I’ve learned running this business over the past couple of years.

Why to have a co-founder:

1. You’ll make better decisions and are more likely to reach the right outcome faster.  Two heads are better than one.  As long as your co-founder is smart and approaches problems from a perspective that differs from your own, through a process of debate, you’ll arrive at better decisions.  If, for example, one founder is technical they may approach a strategy challenge from a data perspective while another founder with a background in marketing may be more insightful.  Both approaches are valid and together the two founders are likely to arrive at a better solution than either would achieve alone.   The decision-making process might be longer but a better strategy from the outset will save the company time and money.

2. It’s easier to lead a team.  For the past five months, our team has been split between Sydney and New York.  I’m presently in New York taking meetings by day, then Skyping with the Sydney team at night.  One key role of a founder is to work with, listen to the team, articulate strategy, and keep everyone motivated.  It’s hard to do this when you’re not in the same physical location.  Multiple founders mean that someone can lead investment discussions, someone can run marketing and PR and someone can be with the team at the same time.  With limited time to get a project off the ground, one of the biggest challenges is spreading yourself too thin.  A strong founding team allows everyone to focus on their strengths, and you can get a lot more done.

3. It’s more fun.  If you’re thinking of starting a company by yourself, don’t underestimate how lonely and dark it will be when times are tough.  When I think back to my lowest times I feel lucky I didn’t burn out or spiral into depression.  We’ve all heard stories of entrepreneurs who’ve committed suicide — there have been two high profile cases this year.  I would have loved to have a partner to balance out the hard times and to celebrate with when things went well.  When I look at friends with co-founder relationships that work, it seems like a lot more fun!

4. Co-founders are more fundable.  In the early stages of a business, investors back the team more than the idea.  It’s no secret that professional investors, particularly VCs, don’t like backing first time sole founders.  They know how tough the road is and think that multiple founders will pick each other up when one loses motivation, they’ll make better decisions and achieve more, all of which increases their chances at success.  If you pick a co-founder with complementary skills to your own, you share the same vision and you work well together, you’re much more likely to be able to raise capital.

I’m glad that I’ve gone it alone over the past couple of years.  We didn’t always make the best decisions first time but we managed to learn, pivot and have now developed a killer strategy and the beginnings of a great product.  I’ve grown a huge amount and have strengthened my personal resolve in the process.   Now I’m at the point where I’d like to bring in a partner.  For several of the reasons I’ve listed here, I think it’ll give us the best chance of success in the long run.

If you’re thinking about starting a business with co-founders, make sure you check out my previous blog about how to structure the vesting of founder shares.  Finding the right business partner is like finding the right life partner.  You want to make sure you really know the person and how you work together before you make it legal!

Here’s a couple of other good articles I found on this topic: Business Insider ”Loneliness & Startups’, Mark Suster’s ‘The Co-Founder Mythology’ and The Next Web’s ‘Startups with co-founders rather than a single founder are more likely to succeed‘.

And cautionary tales of nasty co-founder divorces at Foursquare and Pinterest.

I’ve struggled with this, in both Posse and my former music company ‘Scorpio’.  Sometimes at Scorpio, when our artists hit #1 on the chart I focused on the next goal, working through rather than celebrating.  As my team expanded, I learnt that this approach weakened motivation.  The team didn’t feel appreciated and productivity dropped.  Worse than that, we weren’t having fun!  I discovered the importance of setting goals and celebrating their achievement, every time.

The Posse team celebrating our app launch

Last week we hit one of our small goals: 50,000 signed up users (stores and people).   Everyone on the team has worked incredibly hard over the past few months in the lead up to SXSW.  It paid off at the conference: a number of media declared Posse one of the standout startups, and our user numbers exploded as a result.  We still have the next goal and the next – but won’t we always?  I decided that we celebrate this milestone.  I’m in New York just now, away from the rest of the team, so I sent in a massage therapist to treat the team, along with a box of champagne and chocolates.   We’d usually go on a group activity like bowling; that’s what we did when we hit the first 5000 users and we’ll plan an activity when I’m next in Sydney.

In the chaotic, pressure-cooker of a startup, where time and money are critical, here are five reasons for celebrating small wins.

1. It reminds people that goal setting works.

I want everything to happen all at once, but accept that this isn’t achievable.  Our team make steady progress because every quarter we agree on a plan and set of goals.  The goals are challenging but achievable, and when we hit them it feels great!  Celebration underscores the success of our process.  It motivates everyone to set and reach for the next goal.

2. It unifies everyone around a positive outcome.

In a small startup team, each person is often responsible for their own department.  On our team we have one Community Manager, one Business Development, two retail engineers, two mobile engineers, two web engineers and so on.  We set company-wide goals but everyone contributes differently.  Celebrating company-wide success rather than just individual achievements unifies everyone around the goal and reinforces that we’re working on something bigger than ourselves.

3. There’s an opportunity to look at the big picture.

Celebrating provides a great moment to reflect on the big picture.  What are we planning to achieve?  In previous blogs, I’ve mentioned our end of year goal: gaining a million users.  Stopping to reflect as we reach each milestone in the journey enables the team to reflect on what’s working, what’s not and where we should focus our resources next.

4 Everyone wants to be on a winning team.

Everyone likes to be on a winning team.  Success is the best way to boost team morale.  It can’t be faked but when it’s achieved, you should make the most of it by celebrating!  Our engineers slogged away for months when people weren’t using the website, and the community manager struggled to engage our audience.  Now that we’ve turned a corner and lots of people are using the platform, I’ve found that the team’s enthusiasm, creativity and productivity have exploded.

5. It makes everyone feel appreciated. 

Startup teams work much harder than regular people – well, ours does.  It’s vital that founders demonstrate how much they appreciate and value their team’s contribution, and celebrating is a great way to do this.

Team bowling last year to celebrate hitting the first 5000 users.

Everything about running a startup is hard.  I find the challenge of leading a team – keeping everyone motivated and focused in the right direction incredibly difficult.  It’s even harder at the moment when we’re in different countries.  I’ve tried everything I know to build a great culture: bringing inspirational shareholders to speak, running regular offsite events, and hosting regular team lunches are a few.  All these help, but there’s only one way to make a smart team happy in the long-term and that’s progress.  Regularly celebrating wins guarantees that progress is felt as much as possible.

Disclaimer.

I don’t claim to be an expert; I’m learning too.  Posse is my first tech company and we’re not home yet.  Please consider my suggestions, but form your own opinion.  These posts aren’t ‘lessons’; they’re my notes on what I think I’m learning along the way.  In fact, I’ve changed my thinking on some of the views I expressed in earlier blogs! 

I’ll clear that up later.

Hiring team members at a start-up is very different to hiring for a corporate or even for your own business.  My music company had a team of eight at our peak, so you’d think I’d be pretty good at hiring by the time I got around to my second company.  It doesn’t follow.   Hiring is very hard and when you find you’ve made a mistake, letting someone go is even harder.

When I had my own business, it was sometimes easier to accept an underperforming team member than it was to make a change.  But, once I had a start-up, I was spending other people’s money to achieve something in a limited period of time.  I had to be much tougher.  Rather than keep churning through team members – a huge distraction, terrible for company culture and a horrible experience for everyone involved – I focused on improving my own performance at hiring the right people in the first place.

I’m far from perfect.  The rate at which people we hire work out is still only about 80%.  My mentors run major companies; they have hired hundreds of people.  When I ask about their success rate, most come up with a figure between 80 – 90%.  Maybe I’m not doing so badly.  Here’s some of what I’ve learned:

1. The most important thing to look for in a start-up team member is the ability to MAKE THINGS HAPPEN.  In a corporate or less intense environment, it’s okay to set a bunch of targets and then come up with a list of reasons why something wasn’t possible. Maybe even write a report and present it at a staff meeting.  In a start-up there are two meaningful outcomes: success and failure.  No matter why a target falls through the cracks the outcome is failure, which is no good for the company.   The ability to make things happen has nothing to do with intelligence – I’ve found that even the smartest people procrastinate or buckle under pressure.  So when you’re hiring, always look for examples of times in the past where they had an ambitious challenge and overcame barriers to achieve.

2. The next thing to look for is creativity and intelligence.  As the founder, you always think your ideas are brilliant – if you didn’t then you never would have started this crazy thing.  I soon learned that my first ideas are often wrong and it’s important to surround yourself with people who are passionate about your product, smart and creative.  The whole team works together to strategise major business challenges and design the product.  More importantly, each member of a start-up runs their own department – for example there’s not a whole team on Search – there’s one guy.  There’s one Community Manager, one Retail Engagement person, and each of these people are essentially running their own companies within the start-up.  So they need to strategise and make lots of smaller decisions about the best way forward.  You’d better ensure they’ll make the right decisions; that they have the passion and aptitude to strive for an awesome outcome.

3. Hire slowly and methodically.  Almost every time I’ve rushed the recruitment process or hired for the wrong reasons (like someone else told me we needed someone quickly) I’ve made a mistake.  Check references!  I know everyone says to do this but it’s easy to get excited about someone and forget.  Then when they don’t work out everyone asks me what their references said, and it’s embarrassing to admit I didn’t check.  Ask lots of different people to interview a prospective new team member; obtain a range of perspectives.  I’ve learned which of my advisors are tough and which ones tend to like everyone.  I listen to the tough ones.  We ask candidates to complete a test before they join – no matter whether they’re an engineer or a community manager.  By giving a protective hire a list of questions and evaluating how they approach the answers you can see how creative and smart they are, and you also discover if they have a problem getting things done on time.

4. When you do make a mistake (and you will) act fast.  If someone is not right for us I generally can tell in the first few weeks, and have been pretty good at acting quickly.  It’s always a morale-breaker when the team loses a member but you can’t afford to have an underperforming person hanging around, bringing down the standard.

So, that’s my summary of what I’ve learned through the trial and error process of putting our team together.  I’m happy to report that we now have one of the most passionate, creative, smart and productive start-up teams around.  A start-up is a mission though a jungle.  You don’t want people who’ll sit around hypothesising – you want warriors who’ll get out there and try things.  People whose drive and ambition will overcome anything. When I think back to people who joined in the past and didn’t worked out it’s generally because either they were not the right cultural fit or were unable to make things happen.  Often, these mistakes stemmed from my rushing the recruitment process.

Team Posse at our morning standup

Team Posse at our morning standup