First 5 Hires As You Grow Ep 632

In a discussion on strategic entrepreneurship, Speaker A emphasizes the importance of hiring to buy back an entrepreneur's time for high-leverage activities. They outline the first five key hires: administrative help, customer support, a salesperson, marketing assistance, and a fractional bookkeeper or IT support. These roles are filled in reverse order of their value and replacement cost, with the goal of freeing the entrepreneur from low-value, time-consuming tasks. Speaker B, from acquisition.com, shares his journey in building a billion-dollar business, a process he wishes icons like Bezos and Musk had documented. Speaker A also touches on the concept of 'incurring debt' in various business aspects, such as management and technology, and the strategic choice of which debts to incur for accelerated growth. They conclude by advising entrepreneurs to be mindful of debt types and to scale their teams thoughtfully.

• Entrepreneurship is about investing in order to reclaim personal time.
• This reclaimed time should be allocated to high-leverage activities that drive growth and value.

"The process of entrepreneurship, if you think from a big picture perspective, it's always just buying back your time, right? So that you can level up the amount of time that you're spending on high leverage activities."

This quote emphasizes the concept that entrepreneurship is fundamentally about managing and optimizing one's time, focusing on activities that yield the greatest impact or leverage for the business.

• The goal is to sell more products or services to a wider audience.
• Speaker B is documenting their journey to build a significant business, inspired by what they wish other successful entrepreneurs had done.

"Welcome to the game where we talk about how to sell more stuff to more people in more ways and build businesses worth owning. I'm trying to build a billion dollar thing with acquisition.com. I always wish Bezos, Musk and Buffett had documented their journey, so I'm doing."

Speaker B introduces the purpose of their content, which is to share insights on expanding business reach and ownership. They express a desire to provide a documented entrepreneurial journey akin to what they wish renowned entrepreneurs had offered.

• The act of documenting and sharing the entrepreneurial process is seen as valuable for others.
• Speaker B is contributing to the entrepreneurial community by sharing their experiences.

"It for the rest of us."

Speaker A completes Speaker B's thought, reinforcing the idea that the documentation of their entrepreneurial journey is meant for the broader audience's benefit.

• Hiring strategy should focus on roles that extend the entrepreneur’s capacity.
• Initially, hires should handle time-consuming tasks that are less strategically valuable.
• The order of hiring is based on the cost-effectiveness and value of skills in the market.

"I'm going to walk you through the first five hires that you need to bring on in your company as you are growing and as a fundamental framework to think through this, you want to think about, especially for the first five, that they are really just helping you do more. And so think of them as extensions of yourself."

Speaker A outlines the strategic approach to the first five hires in a growing company, suggesting that these hires should be seen as extensions of the entrepreneur to increase productivity.

• The first hire often handles administrative tasks, which are necessary but not high-value.
• The second hire is usually in customer success or support, taking over repetitive but essential tasks.
• Both roles are about freeing up the entrepreneur’s time for more strategic work.

"And so, typically, one of the first two hires, and this can happen in any order, is going to be one person who's going to be more of an administrative help to you, because as you start a business, especially in the beginning, there's lots of administrative work that needs to be done."

Speaker A explains that the first hire is usually someone to assist with administrative duties, which are critical in the early stages of a business but do not directly contribute to its strategic advancement.

• The third hire is often the first salesperson, depending on the entrepreneur’s sales skills.
• This role is crucial for businesses where the founder is not strong in sales.

"The third piece will likely be the first salesperson."

Speaker A identifies the likely third hire as a salesperson, acknowledging the importance of sales in the growth of the business and depending on the founder's aptitude in this area.

• The decision to hire for a role should be based on the value generated per dollar per hour.
• Hiring should prioritize replacing tasks that generate less value per hour first.
• If a task generates a lot of money, consider the net difference between earned value and replacement cost.
• Administrative, customer support, and sales roles are typically hired early in the business lifecycle.
• Marketing or promotional assistance is also an early hire, especially if the business relies on content generation.
• The order of hiring may vary depending on the individual strengths of the entrepreneur and the business needs.

"The corresponding framework that you need to be thinking this through is how much value am I making per dollar per hour? And then how much would it cost me to replace that dollar per hour?"

This quote emphasizes the importance of quantifying the value of one's time and the cost of outsourcing tasks to determine hiring priorities.

"So right off the bat, you're going to have some sort of administrative help, then you're going to have some sort of customer support help, then you're going to probably hire some sort of sales role right from there."

This quote outlines the typical order in which roles are filled when starting a business, starting with administrative and customer support functions, followed by sales.

"Some of the more laborious parts that are not as value additive, that would be kind of that fourth looking hire."

This quote suggests that tasks which are time-consuming but add less value should be delegated early on, likely as the fourth hire.

"If, for example, you're a killer salesman, then you might have somebody who's prospecting and doing some of the intro calls for you so that the majority of your time is spent just closing, which is the higher value task."

This quote explains that if the entrepreneur excels in sales, it may be beneficial to hire someone to handle preliminary sales tasks to focus on closing deals, which is more valuable.

• Early on, businesses may use fractional services for roles such as bookkeeping, legal, and tax assistance.
• Fractional services provide the necessary support without the cost of a full-time employee.
• As the business grows and surpasses certain revenue thresholds, these roles may become in-house positions.
• The overarching goal of entrepreneurship is to buy back the entrepreneur's time to focus on high-value activities.

"So you'll probably have some sort of fractional bookkeeper, which is really filling the gap for the finance hole."

This quote introduces the concept of a fractional bookkeeper, a part-time or outsourced service that manages basic accounting for the business.

"Before you're at $100,000 a month, you probably don't have a ton that's going on. So just having a fraction bookkeeper is sufficient."

This quote suggests that until the business reaches a significant revenue milestone, a fractional bookkeeper is adequate for managing financial tasks.

"As you're moving up this value ladder in terms of the value per hour and the cost per hour that you can get, this the process of entrepreneurship, if you think from a big picture perspective, it's always just buying back your time."

This quote encapsulates the entrepreneurial process as an ongoing effort to invest in services and employees that allow the entrepreneur to reclaim time and focus on higher-leverage activities.

• The video version of the content offers additional effects, visuals, and graphs.
• Visual enhancements can engage different brain centers and aid in understanding.
• The content is available on a YouTube channel for free.

"I have the video version of this, which usually has more effects, more visuals, more graphs, drawn out stuff, sometimes it can help hit the brain centers in different ways."

This quote emphasizes the benefits of visual aids in content comprehension and retention, suggesting that the video version of the content could be more engaging for some viewers.

• Entrepreneurs often fail to utilize newly freed time to add value to their businesses.
• Proper time management can lead to profit margin maintenance or growth.
• Ideally, team members should ascend and form their own sub-teams.

"I'll see entrepreneurs replace all of their time, and then they don't do anything with that added time to add more value."

The speaker highlights a common pitfall among entrepreneurs, which is not using their time efficiently to enhance their business value.

• As a business grows, roles become more defined and can evolve into higher positions.
• An administrative assistant could become a director of operations, acting as a project manager.
• A salesperson might advance to a sales director or manager, leading and training new salespeople.

"The person who was helping you originally now has a team of people helping them."

This quote illustrates the natural progression of roles within a growing business, where initial team members expand their responsibilities and manage others.

• Transitioning from an individual contributor to a manager is one of the hardest changes in business.
• Many people struggle with this transition, and it is a common area of error.

"It's one of the hardest transitions in business, and it's commonly messed up by most people."

The speaker is acknowledging the difficulty of moving from being an individual contributor to a managerial role, which is a frequent challenge in the business world.

• Recognizing talent for future needs is a key skill in entrepreneurship.
• Early hiring of talented individuals can be limited by financial constraints and the candidate's interest level.
• Sometimes acquiring high-level talent early is possible with funding or other incentives.

"One of the things that comes with experience in entrepreneurship is you recognize the people who have the talent to do the thing that is required later."

The speaker suggests that experienced entrepreneurs have the foresight to identify and hire individuals who will be valuable as the company grows and their roles evolve.

• Starting a business involves incurring various forms of debt beyond financial obligations.
• Entrepreneurs accumulate life debt, management debt, technological debt, and more.
• Not addressing these debts early on can lead to greater challenges as the company scales.

"Whenever you are starting a business, you are incurring debt."

This quote introduces the concept that starting a business is not just about financial investment but also involves other forms of "debt" that need to be managed.

• Technological debt occurs when there's a lack of proper systems, such as a CRM.
• Hiring a tech person to manage CRMs, websites, and other technical needs can prevent technological debt.
• Neglecting technological infrastructure can lead to compounded issues in the future.

"If you don't have a good CRM that's in place, you will incur that debt, and then you'll have to pay it back with interest later when the company's bigger."

The speaker warns that failing to establish a solid technological foundation, like a good CRM system, will result in "technological debt" that becomes more costly to resolve as the business grows.

• Entrepreneurship often involves incurring various types of debt, including financial, operational, talent, management, and CRM debt.
• Financial debt can be used strategically to avoid other types of debt and facilitate faster growth.
• Bootstrapped companies may have to incur more non-financial debt due to limited resources.
• Companies that grow quickly often do so by strategically incurring financial debt to avoid operational and talent setbacks.
• Experienced entrepreneurs can grow companies more rapidly by understanding and managing different types of debt.

couraging management debt, which means you'll have cultural debt, which means you'll have to pay that back later. And so the idea, in terms of moving quickly in the game of entrepreneurship is recognizing which debt I want to incur in what order.

This quote highlights the inevitability of incurring some form of debt in entrepreneurship and the importance of strategic planning in deciding which debts to take on first.

And so I used to poo poo the idea of investors and venture capital and things like that. Who gave people money to start? Because I was like, that's not real entrepreneurship.

The speaker initially dismissed external funding as a legitimate means for entrepreneurship but has since revised their view.

And so it's the reason that each of the companies that we've had subsequently have grown bigger, faster, stronger than the companies that preceded them, because we are willing to incur less of the other types of debt rather than financial debt, because we have the finances right.

This quote explains that having adequate finances allows companies to grow more effectively by avoiding non-financial debts that can impede growth.

• The hiring process for startups should be strategic and based on the value and replaceability of roles.
• The typical hiring sequence is: customer support, administrative roles, sales, marketing, bookkeeping, and IT.
• Growth in a company leads to expansion in certain departments such as marketing, sales, and delivery, while others like IT, finance, and HR maintain a lower ratio of personnel to customers or employees.

And so as you're thinking through this and you're hiring your team, the two major frameworks that I'd like you to take away with this is, number one, you are hiring in reverse order of value that you are providing and cost to the marketplace that you can use to replace it.

This quote presents the first hiring framework, which suggests that startups should hire based on the value provided by the role and the cost of replacing it in the market.

And then a Christmas tree is down. You'll have five people hanging off of each of these, not necessarily five it people, but hopefully you can understand, especially on the marketing, the sales, and on the delivery, those are the teams that tend to grow as the companies grow and the IT and finance departments and HR departments, which end up getting built over time.

The speaker uses the metaphor of a "Christmas tree" to describe how teams in marketing, sales, and delivery tend to expand with company growth, in contrast to IT, finance, and HR.

And so as you scale, that is framework number one. And then framework number two is be mindful of the type of debt that you are incurring and make sure it is the type of debt that you would prefer. Two, incurr, if you have the choice.

This quote introduces the second framework, emphasizing the need to be aware of the types of debt incurred during scaling and to choose the type of debt that is most preferable or manageable.