Category: Startups

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5 tips for building your network

1. Be great at what you do.
If you only remember one point from this post, make it this one. If you are great at what you do, a powerful network will form around you with surprisingly little effort. People that work with you will refer others to you for everything from expert advice to employment opportunities. By taking the time and effort to continuously hone your craft, your skills and accomplishments will eventually reach a point where they speak for themselves and people will actively be trying to network with you rather than the other way around.

2. Treat others with genuine kindness and respect
People naturally form stronger bonds with those they enjoy spending time with. Imagine you have two acquaintances who are starting new companies. One is a kind and thoughtful person who treats others respect, the other is a self-centered egomaniac who is often rude to others. Assuming both startups are equally promising, which one are you more likely to introduce to a potential investor? Time and time again I’ve seen people go out of their way to help others when they feel like they are a “good” person, and drag their feet when called on to help people they consider mean or disrespectful.

3. Socialize without ulterior motives
Nobody likes the overly schmoozy person at the party who is clearly just there to add contacts to their LinkedIn profile. I’ve personally found that the most effective way to network at social events is not to try networking at all. Stop seeking out the “power players” and “influencers” and try talking to whoever happens to be around you. More importantly, actually listen to what they have to say. Examples of times when I made some of my most valuable contacts: A party bus, a casual dinner party, and an E-mail intro to someone recruiting for a position I wasn’t interested in. In all three instances, I had no idea they would blossom into valuable relationships. They were just interesting people that I had fun chatting with over a bottle of whiskey, a tasty meal, and a cup of coffee.

4. Don’t be afraid to reach out
I learned this lesson from my friend Josh Schwarzapel. He’s the type of person who decides he needs to talk to someone and then makes it happen no matter what. Case in point, we were bouncing startup ideas back and forth and thought it would be awesome if we could get Reid Hoffman’s opinion. One week later we were sitting in Reid’s office running our idea by him (for the record, Reid is someone who actually lives up to the hype, he is just as brilliant as all the stories suggest). I was dumbfounded that Josh was able to make that happen, and since then I’ve made it a point to never assume that anyone is out of reach. I’ve done things like sending direct E-mails to CEOs asking questions about their business, and more often than not I’ve received a thoughtful response.

5. Stay involved with your communities.
People often underestimate the number of communities they belong to — family, classmates (not just college and grad school, but K-12 too), neighborhood, teams, work colleagues, and so on. Don’t let those connections die. I’ve had old friends reach out to me that I haven’t spoken to in almost a decade, and in some cases, I’ve been able to help them via feedback and introductions. Often times fruitful connections come from unexpected places. The high school slacker might have finally gotten her act together and work at a VC firm that’s the perfect fit for your new startup! Plus it’s always nice to reconnect with old friends. I’ve found that the passage of time has a lot less significance on relationships than we think.

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Pay employees what they’re worth not what they’ll accept

This week I was faced with a situation where a potential hire felt burned by their past compensation experience. They found out they were being substantially underpaid compared to their peers even though they were acknowledged as one of the highest performing employees. When they joined the previous company, this individual had accepted an offer that was much lower than what others were willing to accept, and that set them on a substantially lower compensation trajectory.

This raises an important question that all companies must wrestle with: how should you compensate your employees? At one extreme, you can pay employees the lowest possible amount they are willing to accept. On the other, you can pay employees the maximum amount you are able to pay someone with their skills. Let’s consider the pros and cons of these two approaches.

At first, paying employees the minimum they’re willing to accept appears to be the clear winner from an economic standpoint. However, that doesn’t hold up under closer scrutiny. In order to work, it relies on employee compensation remaining strictly confidential. Compensation will likely vary widely between employees with similar skill sets because they will each have different minimum acceptable amounts. If this disparity becomes widespread knowledge you risk a team crisis, particularly among top performers who discover that they’re paid less than their peers. Anyone who has worked in industry for more than a few of years knows that compensation is anything but confidential. People talk, and with resources like glassdoor.com becoming more popular it’s easier than ever to get a sense for what your peers are being paid. In addition, your best employees usually receive a steady stream of recruiting offers from other companies. If you undervalue them by only paying what they’re willing to accept you run a higher risk of losing them to someone who is willing to compensate them at a level commensurate with their abilities. Aside from risking employee morale and heightened attrition, I believe this style of compensation also speaks negatively to the type of company culture you’re trying to build. It makes it crystal clear that you value the bottom line far more than any individual, and that’s a great way to discourage loyalty and create a cut-throat self-centered organization.

Alternatively, paying employees the maximum amount you’re willing to offer someone of their skills is costly from a cash flow perspective. It is highly likely that many of your employees would have accepted more conservative offers. However, this has the potential to create a company culture that affords a level of productivity and loyalty great enough to offset the increased compensation costs. Instead of worrying about keeping everyone’s compensation under wraps, you can more openly discuss compensation and what it will take to move up to the next pay band. When making an offer, you can be clear about what you consider market rate for the position and how you’re adjusting it up or down by some amount due to the applicant’s specific skills and experiences. Employees will feel like their compensation is fair, they are properly valued, and there is a clear path to increased compensation. It is also less likely that outside recruiters will be able to offer dramatically higher compensation. This level of transparency and fairness does an excellent job of fostering employee loyalty and making them feel like they work for a company that cares about them as an individual. One thing to note is that this style of compensation is still viable in an early-stage startup that does not have the cash to pay market-rate salaries. In these cases, everyone should understand that salaries across the board are lower than market rate, but the lower cash compensation is offset by greater equity and potential for rapid career development. It should also be made clear that salaries will be adjusted towards market standards upon reaching profitability or taking in significant additional funding.

As I’m sure you’ve gleaned by now, I lean heavily towards the later style of compensation. I do not believe in overcompensating employees (that leads to its own unique set of problems), but I have seen first-hand that undervaluing employees is short-sighted and leads to serious long-term issues. Furthermore, if you don’t think someone is valuable enough to compensate fairly, then you probably shouldn’t bother hiring them in the first place.