How to Hire Your First Person When You Cannot Really Pay Them Yet
- Aug 20
- 4 min read
There is a moment in most small startups where the founder realises the work has grown past what one person can do, but the revenue has not grown past what a founder can barely live on, and the question of how to bring in a first teammate becomes real in a way it had not been before.
The advice you hear on this varies from unhelpful, such as "just raise money first", to unrealistic, such as "give them equity and inspire them with the mission", and the honest reality sits somewhere in the middle, requiring a specific kind of arrangement that founders rarely see written down. The good news is that a first hire made under these constraints is entirely possible, and the founders who navigate it well end up with a partner who is often better than the person they would have hired at a proper salary later.
The most important shift in mindset is to stop thinking of the first hire as an employee and start thinking of them as someone who is joining a venture, since the person you can attract without much money is almost never the same kind of person who would take a paid role at a bigger company. Their motivation for joining you is different, and if you understand what that motivation actually is you can structure an arrangement that works for both of you.
What you are actually offering
You are not offering a salary, and you are not offering the kind of stability that comes with a real job, so pretending otherwise will produce a mismatch and the person will leave once they realise what they have signed up for.
What you are actually offering is three things.
A share in what the company becomes.
A chance to build a specific skill they cannot easily build elsewhere.
And the experience of being part of the founding team of something before it was obvious.
These three things are valuable to the right person, and the whole recruiting process is about finding the right person rather than convincing the wrong person to accept less than they should.
What to trade instead of money
The right person will almost always be someone at a specific stage of their own life, such as a student who wants operating experience, a recent graduate who has not yet locked into a full time role, or someone in a corporate job who wants to see whether they can build.
These are the people for whom your offer actually makes sense, and once you know the profile you can look for them in specific places rather than trying to attract from the general labour market.
Instead of a full salary, structure an arrangement with three parts.
A small stipend that covers their basic living costs, so that they are not distracted by financial survival.
A meaningful equity stake, usually somewhere between two and ten percent depending on their role and stage, with a vesting schedule that protects both of you.
And a very clear description of what they will learn and what they will be able to point to on their resume when the year is over, since the learning is often the biggest thing you are actually giving them.
The most important shift in mindset is to stop thinking of the first hire as an employee and start thinking of them as someone who is joining a venture, since the person you can attract without much money is almost never the same kind of person who would take a paid role at a bigger company.
How to write the agreement
The agreement should be written down, even if you are working with a friend, and especially if you are working with a friend. It does not need to be a formal legal contract, though a lawyer should look at the equity terms if you are giving out more than a symbolic amount, but it should be a document you both sign that describes what each of you is committing to and what happens if either of you decides to leave. The founders who skip this step tend to have hard conversations later that could have been avoided with a two-page document at the beginning, and the awkwardness of writing it down at the start is always less than the awkwardness of negotiating it under stress six months in.
What to expect in the first three months
The first three months of working with your first hire will be harder than either of you expect. You will discover that you have never really managed anyone before, and they will discover that startup work is messier than any job description makes it sound, and both of you will occasionally wonder whether the arrangement is going to work.
This is normal, and the founders who survive the first three months tend to have a working relationship that is stronger on the other side of it than either of them anticipated. Talk more often than you think you need to, be honest about what is going well and what is not, and give each other permission to name the problems early. If you do that, the arrangement usually works, and the person becomes the first real member of the team.
Comments