Considerations For Your First Employee

When you’ve been building a new business, hiring your first employee is a special milestone.
Everything seems…very real.
There’s now somebody employed by your baby; the thing you invented now has a staff member.

This is a crucial moment for a startup, in ways you may not expect.
You’ve previously made plans about the kind of culture you’ll create and the systems you’ll have in place by now.
I bet you either haven’t implemented them, or you find that they change very quickly.

Your new person is simultaneously cheap and expensive – they’re going to be a constant expense but are also probably being paid below-market rates.
They are a blessing and an obligation – you can delegate tasks to them, but also have to train and maintain them as they learn.
They are a time sink and an investment – requiring a lot of time with you, but will also be the one to train your next hires in the coming years.

Having seen this play out a number of times (and having been the first employee of The Difference Incubator), I can offer some useful reminders.

1. Your first employee doesn’t believe in your business – they believe in you.
You have a vision for the business and where it’s going, but that’s locked entirely within your own head.
No staff member can fully grasp this vision, but they instead picture what they can learn from you.
This might be practical skills, like public speaking or financial modelling.
This might be soft skills, like talking with potential clients or creating a positive culture.
This might be personal direction, wanting to emulate the kind of work and impact you’re involved in.

2. Time near you is their main source of development.
Unlike other jobs, this one isn’t measured in terms of output, but rather their closeness to you as a founder.
For example, you might hire someone to write content for your social media channels.
This person might create excellent content while alone in the office, since you’re on a business trip in Hong Kong, and they’ll have a terrible week.
They might create flawed work that requires your feedback, over a coffee and a whiteboard, and they’ll have a great week.
Face-to-face time, not just being in the general vicinity, gives them clarity, confidence and helps tune them to your mental frequency.
Constructive help in-person is more valuable than praise from a distance.

3. As your business grows, you won’t have time to repeat this process.
You’re going to get bigger, and your time doesn’t scale.
Since you can’t clone yourself, you need the next best thing – someone with a good sense of what you would want in a given situation.
Guess who is best placed to make this a reality?
For this reason, you want to hire someone you believe in, because getting this wrong becomes enormously costly over the long run.

4. Compensation = Salary + Development.
I am guessing that you’re not paying this person a huge salary, and that’s fine.
They’ll be measuring value in terms of what they earn plus what they learn.
This is important: if you drop the focus on their development, it will feel like a pay cut.
You can use this to your advantage, increases to their skills will feel like a raise when money is tight.

5. The jump from intern to paid employee is dangerous.
It makes a lot of sense to promote a great intern – they get a better job, and you get an employee that you already know and trust.
The danger is if their role changes to be more focused on administration, and less on the interesting parts of the business.
Yes, this makes sense financially, but the compensation equation is neutral.
They now get an income, but their development slows right down.
For the first six weeks this will feel like a win-win arrangement, but soon the employee will sense that their progression is stalling.
I recommend naming the issue upfront, and then looking for ways to continue their professional development.

6. You probably don’t know what their superpower is yet.
The nice part about your first employee is that they will have to do a bit of everything.
While there will be some tasks that aren’t done to a high standard at first, it’s also your chance to spot the rare and valuable skills that can be refined into something useful.
Perhaps it’s a talent for social media marketing, or customer retention, or product design, or workshop facilitation.
Either way, if you can spot it early, you both get a lot of benefits that you otherwise would not have been able to afford.

7. Don’t put all of your eggs in the one basket.
While you’re starting with an individual, it helps to think of this as the first of three hires.
That way, when you find this person’s weaknesses, you can be planning for who to bring on next, ideally someone with a complementary skillset.
This avoids creating a dependency on an individual, especially one without an equity stake in your business.
It also changes the idea of “I’m spending a lot of time on one person” to “This is the first part of us building a larger team”, a much more exciting prospect.

If you’re a young person, I highly recommend being the first employee in a new business – as long as you trust the founders.
You’ll have so much pressure, uncertainty and opportunity weighing on your mind.
With the right crew, it will accelerate your development like crazy.
With the wrong crew, it can threaten your mental health.

If you’re an entrepreneur about to hire their first employee, I recommend thinking about the skills that are non-negotiable, and hiring for those.
Everything else can be learned from you.
Keep in mind that your relationship is part of their salary, and can be a tremendous investment for you both.