Look for a generalist.
When bringing on employee number one, don’t hire a specialist unless you absolutely have to for your startup. In my experience, I’ve found that having someone who is good at a few things is better than having a colleague who is an expert in one area.
Share responsibilities.
If you plan on hiring someone and unloading all of your work, he may head for the door. No one wants to work somewhere they are going to be overworked, underpaid, and undervalued. One of the easiest ways to show someone that you value them is to allow them to take on big responsibilities, but you have to share the big responsibilities with them.
Once you have your first hire on board and things are operating smoothly, you may find that it is time to begin hiring the rest of your team. This process should not be rushed. As you transition from a solo entrepreneur to a team player, here are some things to keep in mind:
Take responsibility for the big failures.
Starting a company is a team game, as everyone has potential to lose something. But at the end of the day, the company is your baby. When a big loss occurs and you are to blame, don’t point your finger at someone else. Quickly own up to your failures and take action to correct them.
Don’t hastily propose problems.
Time is money, and with only a few hires, these employees don’t have a lot of it to waste.
There is a very thin line between looking for supporting solutions and already having a solution in mind. So make sure you articulate where you are in the problem-solving or decision-making process. People love to feel included and want to help. However, they don’t like being taken on a ride or asked for their opinion if it clearly doesn’t matter and the decision has been made or the problem has been solved.
Don’t own all of the big decisions.
The reality is that everyone will have to live with the consequences of your decisions, so they should be invited to help make the really big decisions. Because your team is small, make sure they have input (when applicable) and applaud their insight when it helps move your company forward.
Be vulnerable.
Entrepreneurs don’t have all the answers, especially first-time founders. That’s okay. Your team would rather have you solicit input in the areas that you are experienced in than make the wrong decisions because you were scared to ask for help.
Bring your team to big meetings.When meeting with potential clients, vendors or partners, don’t hesitate to include a hire or two. As long as they will be beneficial to the meeting, having your team involved can increase the level of inclusion at the organization and transparency around your work, and can save you time in the long run if you feel comfortable sending them off to the meetings on their own.
Listen and deliver.
This is plain and simple. Don’t just sit there and pretend you are hearing what your team is saying; show that you’re listening. Offer feedback, ask smart questions, and if a team member’s input can improve your business, act on it.
Chapter Twenty-one
The Wrong Hire
“Hire slow, fire fast.”
—Michael Hyatt
Building a great mission-driven company with incredibly passionate people is the big picture. There was a time when the workload distracted me from this vision, and I rushed the hiring process.
During our hiring process, we settled on a candidate that came across as capable but not passionate. (I am almost convinced that passion is not something you can teach someone.) After weeks of lackluster performance, we decided to let this person go. It wasn’t easy. Not only was it an expensive lesson but the process of letting someone go is mentally and emotionally draining.
When you hire someone for a role in a small company, you can’t forget that you’re also hiring him or her to be a brand ambassador. Their interactions with people and supporters may sometimes be the only impression they get of your company. Ultimately, every hire in your early stages should be just as passionate and invested in the success of the company as you are, because it directly impacts your startup’s survival.
Here are some ways to avoid hiring the wrong person:
Avoid hiring full-time employees outright.This is especially important for the first set of new hires who are outside of your immediate circle of professionals and whom you have not previously worked with.
Today, it is typical for companies to start individuals on a trial period. Thirty- to ninety-day trials are fairly common before making a final decision on their employment. This period provides you with an opportunity to gauge their passion for the job and overall group fit. Some people may come across as well polished and can feign interest during an interview, but it is a lot harder over a multi-week trial period.
Be patient.This is probably the thing most entrepreneurs, myself included, struggle with most. We are all dreamers with big visions, and those ambitions cause us to set lofty goals. In our hearts, we know the goals are achievable, but sometimes they require just a little more help than we anticipated.
When we made our third hire, we were feeling a little overwhelmed, and we let that influence our decision-making process. Instead of looking to find the right person for our company—someone who shared the same mission, values, and capabilities—we found ourselves looking for a person who we believed was strictly capable of doing the work.
Implement a 100-percent rule for your first ten hires. Until our team grows to more than ten people, everyone in the organization must approve anyone who is interested in joining our team for a full-time position. This will not only ensure that everyone is involved in the decision-making process, it will also increase everyone’s commitment to the new team member’s success within our organization. Onboarding an employee when you are busy is never easy, and it only becomes more challenging if not everyone has bought into their success.
These points are not likely to completely eliminate having to fire someone again, but hopefully they will increase your odds of making the right decision on your next big hire.
Chapter Twenty-two
Utilizing Interns
“The expert at anything was once a beginner.”
—Helen Hayes
Afederal appeals court gave employers flexibility, once again, to use unpaid interns legally when the work serves an educational purpose. This decision overturned a lower court decision that made hiring unpaid interns for for-profit companies and nonprofit organizations incredibly difficult. The language surrounding the last ruling on what was deemed an acceptable unpaid internship was crystal clear and left very little room for misinterpretation. As a result, Practice Makes Perfect decided we wouldn’t take on any interns unless we could compensate them. This meant fewer educational opportunities for students and less support for our growing organization. But the new ruling means we will have greater capacity to take on interns in the future and provide educational opportunities that will also aid our organization’s growth.
With that said, more interns don’t necessarily mean greater productivity. In fact, I’ve heard dozens of intern horror stories. For entrepreneurs starting out, interns can be your greatest ally or your biggest nightmare. Nonetheless, when we founded PMP, I was eighteen years old and was capable of adding value within an organization. My perspective gained from successfully interning at a few companies, and now having had several interns at PMP, has taught me that if you structure the opportunity correctly, it can in fact be mutually beneficial.
Here are ways to maximize your interns’ effectiveness:
Assign them an internship project.This is a long-term task that you’d like them to complete before their internship ends. On the intern’s end, it will provide them with a self-directed opportunity to conduct research, ask questions, and have something to present. This could be an individual project or a project that multiple interns can share and work on together. T
his also helps when you’re overwhelmed and don’t have time to assign a new task or project. That way, the intern always has something they can work on.
Give them someone to report to at the company.Make it clear who their manager is when they start. Interns should be encouraged to speak with anyone on your team, but they should also have someone they can go to in the event that others aren’t available.
Make them feel included.Do you have company-wide meetings? If so, include them in the conversations. We have a weekly team meeting where we discuss pressing challenges, and our interns are asked to attend. If you want them to act on information, then they should have full knowledge of the things that are happening. We also value transparency at our company.
Prepare a list of tasks. This takes some time on your end but will help you in the long run. Before our interns started, we made a list of things we needed them to get done. That way, they could add value for us as well.
The reality is that not every intern is going to be great, so calibrate your expectations. Nine out of ten times it is the employer’s fault for not adequately screening or providing the appropriate training.
The best interns find ways to add value without getting in your way or asking you for more work usually two to three weeks into their internships. With that said, if you do not invest the time during those first two weeks really explaining what you do and how it works, your interns won’t feel empowered to add or create value.
I’m glad the courts overturned their previous position on unpaid internships. For me, internships were crucial to my skill development, and we need more of them in the workplace to train our next generation of leaders. Any constraints placed on those opportunities hurt our economy in the long run.
Part v: Structure
For-profit, not-for-profit, LLC, benefit corporation, etc.—all of those are just legal structures. Which one do you pick? Ultimately, you need to pick the one that will best position you to achieve your goal or mission. When I first started Practice Makes Perfect, I wanted to support low-income kids and families who were growing up in neighborhoods just like the one I was growing up in. In order to do that, I needed to raise money from people who had money and could support our services. The best way to do that in the United States is to be incorporated as 501(c)(3) nonprofit organization.
Later, I realized we were solving a problem for schools and they would be willing to pay to customize our solution. In this section, I’ll detail how we went from a 501(c)(3) to a benefit corporation and why we did it, and I’ll share some things to keep in mind as you consider different legal structures.
Chapter Twenty-three
Nonprofit vs.
For-Profit
“You’re the bridge between the pain point of where your customer is now and where they want to be.”
—Mark Hudson
To provide low-income kids and families with free enrichment programs over the summer, we figured that we’d have to find a way to get people who have money to donate to our cause so we could provide the programs for free, since our target beneficiaries didn’t have money.
To raise money at a large scale, we recognized that we needed our legal structure to be a 501(c)(3) nonprofit organization. After operating for a couple of years, we realized that if we were to have any chance at scaling our work to reach a critical number of children and families every summer, then we would have to get schools to contribute to support our programs. That was the beginning of our earned income strategy.
Nonprofits can have earned income models and remain nonprofits. In fact, many hospitals and universities have earned income strategies and strategically remain nonprofits because it makes the most sense for them.
Here were the three reasons we decided to convert:
Social Problem vs. Pain Point:Traditionally, nonprofits solve social problems, like homelessness, poverty, and achievement gaps; and for-profits solve pain points, like finding a new apartment and learning a new skill to be successful at work.
In our case, we began to realize that our school partners were not paying for our services because they wanted to narrow the social problem of the achievement gap. Rather, they were paying for our services because they needed support running summer programs. The way the school year was designed set them up for failure in trying to operate any summer programs effectively. Thus, we were operating in the realm of the for-profit space.
We also realized that we were in a space where we were competing with other for-profit companies, like Scholastic, Pearson, and McGraw Hill. However, we were limited to using nonprofit tools. At that point, we realized if we wanted to compete with other for-profit companies, we would have to be on a level playing field where we could operate with the same resources.
Market Opportunity:This is probably the biggest factor driving your conversion, and it was ours too. When we started out, there was no such thing as a summer school market. It is still debatable whether one exists today. However, after generating millions in revenue in this space, we’d like to believe that there is in fact a market. Moreover, the market has the potential to be worth over $10 billion nationally. When we realized this market existed, we decided that if we remained a nonprofit, we wouldn’t be as compelled to provide and deliver a service that actually met the needs of the market, because we’d always have philanthropy to rely on. By becoming a for-profit, we recognized that we’d have to be more responsive to our customers and provide something that was addressing a need for our partners. This was a lot more in line with the ethos of our company, which we’d been operating as a business from the very beginning.
Ownership:When I originally started building Practice Makes Perfect, ownership was the last thing on my mind. The reforms we were carrying out were led by my firsthand perspective. I was empathetic to the challenges and the adversities that our kids faced. I was them.
Nonetheless, I would find myself backing down as I went toe-to-toe with our board as we were building the organization. Every board member on a 501(c)(3) board has equal voting power. That means the founder or the executive director cannot make decisions unilaterally. That’s because most nonprofits are funded by individuals who receive a tax deduction for their contributions. Because those tax deductions are money that would’ve gone to the government, the government assumes ownership over the assets of any nonprofit. The board members are appointed fiduciaries who are supposed to act in the benefit of the government. What’s in the best interest of the government may not always be what’s in the best interest of the mission.
There were times when I found myself wanting to take bigger risks and make larger leaps to serve more students only to be told I needed to be “more realistic” or “not take on that level of risk.” That’s when I realized that ownership was important for me because it would maintain the integrity of the work my team was carrying out.
When we finally decided to make the conversion, we decided to become a benefit corporation.
Chapter Twenty-four
A Benefit Corporation
“It takes twenty years to build a reputation and five minutes to ruin it.” —Warren Buffett
The advantages of being a for-profit trying to achieve our mission of creating high-quality academic summer programs outweighed the advantages of being a nonprofit. In the process of making the conversion, we learned that not all for-profits are created equal. After several discussions with our leadership team, our board, and our lawyers, we decided to become a benefit corporation.
Benefit corporations, like B Corps, are for-profit companies that meet rigorous standards of social and environmental performance, accountability, and transparency. In essence, benefit corporations aspire to use the power of markets to solve social and environmental problems. When we were inspired to incorporate as a benefit corporation, here were our five reasons:
Shared Beliefs:B Lab, which is the nonprofit group that holds benefit corporations and B
Corps accountable, shared our belief that businesses should exist to do more than just turn a profit. We both believed that businesses should be used as a force for social good. At Practice Makes Perfect, one of our four core values is conscious capitalism, which is all about the triple bottom line. We know business principles can be used appropriately as a very powerful tool to address social inequities.
Community:Every entrepreneur knows that building a business is hard work. It’s even harder work when you’re doing it alone. Today, there are over 2,000 B Corps around the world. B Lab aggregates learnings, shares case studies, provides professional development, and creates opportunities for CEOs to convene and engage in meaningful conversations.
Public Accountability:The standards that benefit corporations and B Corps need to adhere to are the gold standard for how businesses should operate. As a company that worked directly with our public education system, we wanted to hold ourselves to the highest available standard of public accountability. B Lab’s incorporation and certification process keeps companies honest.
Ability to Put Money Second to What Matters:This was one of our top reasons. We didn’t get in the business of eliminating the summer learning loss and working with low-income children just because we wanted to make a profit; otherwise, we would’ve incorporated as a for-profit from day one. We put mission first as a benefit corporation. This truly allows us to think about what is in the best interest of our kids and our school partners.
The Purpose-Driven Social Entrepreneur Page 8
