Long-horizon business incubation and consulting

Playbook 5 of 10, Build

Hire your first team member

Define the outcome the role owns, settle the working relationship with your own counsel, interview with the same questions and prepare the first week.

What you will have at the end

  • A one-page description of the outcome the role owns
  • A job description with first tasks and how the result will be judged
  • An interview scorecard
  • An offer reviewed by your counsel
  • A first-week plan

The steps

  1. Write the outcome the role owns

    Describe what will be true when this person does the job well, in plain terms and without a list of tools. If you cannot name the outcome, you are not ready to write the job description.

  2. Settle the working relationship with your advisers

    Decide with your counsel and accountant whether the person will be an employee, a contractor or something else. Bring the facts about how the work will be directed and paid, because the answer depends on them.

  3. Write a job description a candidate can answer

    State the outcome, the first tasks, who the person works with and how you will judge the result. Remove requirements that are habits of the last company you worked for.

  4. Interview every candidate the same way

    Use the same questions and the same scoring notes for everyone, and add a small piece of real work. Decide before the interviews what a strong answer sounds like.

  5. Put the offer in writing and have counsel review it

    Write what the person is being offered, what the person is expected to do and what happens if either side ends the arrangement. Have your counsel review the terms before you send them.

  6. Prepare the first week before the first day

    Arrange access to tools, one page that explains how the team works, a first piece of work with a clear result, and a person to ask. Ask your counsel and accountant what paperwork the first day requires.

The playbook at a glance

A cover, one public figure that frames the question this playbook answers, and the steps drawn as one path.

7.5% 1

of 2021 U.S. business applications became employer businesses within two years

2.29 quarters 1

on average from application to first payroll, for 2021 applicants that hired

  1. U.S. Census Bureau, Business Formation Statistics

These figures describe all new U.S. businesses, not WE's results.

The steps, in order

  1. Write the outcome the role owns
  2. Settle the working relationship with your advisers
  3. Write a job description a candidate can answer
  4. Interview every candidate the same way
  5. Put the offer in writing and have counsel review it
  6. Prepare the first week before the first day
The same steps as below, drawn as one path from the first to the last.

This playbook does not give employment, tax or immigration advice. It helps you prepare the role and the facts, so your own counsel and accountant can tell you how to engage the person.

What good looks like

A good first hire starts with a clear outcome, a fair process and a written arrangement. The new person can say in the first week what they are to deliver and how you will judge it.

  • The outcome the role owns is written down, and the founders agree on it.
  • Your counsel and accountant have been told the facts about how the work will be directed and paid, and you have their answer in writing.
  • Every candidate answered the same questions, and the scoring notes were written before the decision.
  • The offer is in writing, and counsel reviewed it before it was sent.
  • The first week has a plan with one piece of real work and a named person to ask.

Decision aid: what to settle before you choose how to engage someone

The right working relationship depends on facts. Answer each row in writing and take the answers to your counsel and accountant. They decide how to engage the person, not you and not an article.

Facts to settle and bring to your advisers before engaging a first team member
QuestionWhy it mattersWho to ask
Who will decide how, when and where the work is done?The IRS asks whether the company controls, or has the right to control, what the worker does and how the job is done.Your counsel and accountant.
Who pays for tools and equipment, and how is the person paid?The IRS asks whether the business aspects of the worker's job are controlled by the payer.Your accountant.
Is there a written agreement, and does the relationship have an ongoing character?The IRS asks about written contracts, employee-type benefits and whether the relationship will continue.Your counsel.
Where will the person live and work?Engaging someone in another state or country can change the paperwork, tax and benefits.Your counsel and accountant.
Will the person own anything the company will rely on?Work done for the company needs a signed agreement about who owns it.Your counsel.
Are you offering equity or a share in the outcome?Equity has tax and legal consequences for both sides.Your counsel and accountant.
What will you do if it is not working?A way to end the arrangement should be written before it is needed.Your counsel.

Facts to know before you ask

The IRS says that facts that provide evidence of the degree of control and independence fall into three categories, which it labels behavioral, financial and type of relationship. Bring the facts in the table above to your counsel and accountant, who can weigh them for your case.

For an employee, USCIS describes a step to complete and sign Section 2 of Form I-9, Employment Eligibility Verification, within 3 business days of the date of hire of the employee. Ask your counsel or accountant whether this applies to your first hire and who will complete it.

Common mistakes

Common mistakes when making a first hire
MistakeWhy it costs youDo this instead
Hiring before the outcome is clearYou cannot judge the work, so you cannot tell whether the hire is working.Write the outcome and the way you will judge it before you write the advertisement.
Choosing the working relationship by what is cheapestA label that does not match the facts can create problems for both sides.Give your counsel and accountant the facts and follow their advice.
Hiring someone just like youThe team ends up with the same blind spots and a gap where the work needs a different skill.Describe the skills the work needs, not the person you imagine.
Interviewing without a scorecardYou remember the best conversation, not the best answers.Write the questions and the scoring notes first and use them for everyone.
Sending an offer by chat with no written termsEach side remembers different terms, and a later dispute has nothing to rest on.Put the terms in a document that counsel has reviewed.
Leaving the first week unplannedA new person spends the first week waiting for access and instructions.Prepare access, a first task with a clear result and one person to ask.

Evidence to check before you move on

Move to Price your first SaaS product when you can show each of these.

  • The outcome the role owns is written down and agreed by the founders.
  • Your counsel and accountant have given you the advice on how to engage the person.
  • The interview scorecard exists and was used for every candidate.
  • The offer or agreement is written and reviewed by your counsel.
  • The first-week plan exists and names the first piece of work.

Where WE can help

WE’s Business Management and Operations line provides contractor-management frameworks, which cover how you brief, review and pay people who work for you, and a starter set of company policies for your counsel to review. It does not give legal or tax advice and does not run your company for you. The service line page lists what it covers and what it does not.

Sources

The decision aid and the steps draw on the articles below. The two statements about government guidance draw on the pages named in the last two items. None of them replaces advice from your counsel and accountant.

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A short PDF of the charts and sources, sent by email to the address you give.

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