As your startup grows, you will notice hiring gets harder and harder; you will need more and more people to hit goals while having to offer them less equity as the team grows. The tactics that worked to find your first 10 employees may not work for the next 50. Here’s how to scale your hiring:

Use Existing Team’s Network

What: Go through all your existing team members’ networks on social media with a fine-tooth comb. Use software to pull team member networks from the social platforms, e.g. LinkedIn, and ask for recommendations with a cash referral incentive (usually $2–10k). Encourage team members to post jobs on social media and boost company posts.

Why: Your team members want to work with great people, so they’re motivated to help bring in those they enjoy working with. Since your first employees usually come from the founders’ existing personal networks, finding new networks to explore is critical.

Pay Higher Salaries

What: Pay higher salaries as you offer steadily less and less equity to new employees. If you were paying 30–50% of comparable salaries at Google or Facebook, try increasing that to 50–75%. Offering benefits can also help, such as remote work, a 4-day work week, or funding for continued education.

Why: Although a potential employee may be interested in your company’s mission, most people will be unable to say no to 2–3x higher corporate pay elsewhere, if they only own 0.1% of your company. Work flexibility is also an effective way to attract talent, as many people seek a higher quality of life outside of corporate environments. Plus, if you’re scaling, you likely have cash on hand and staffing is a great place to put that money to work.

In-House Recruiters

What: Once you have 3 or more open positions, it’s probably time to hire an in-house recruiter who can scale outreach and screening. Finding a good in-house recruiter will take time, so you may have to use a third party to provide an in-house recruiter temporarily.

Why: An in-house recruiter, with equity as part of their compensation, is aligned with your company’s long term interests. I prefer to avoid contingency-only recruiters who work on commission and are thus forced to optimize for their own short term earnings; which may not be in your best interests.

Public Listings

What: Post your jobs on public company profiles like AngelList and LinkedIn. Be prepared to spend up to $5K if necessary. If you’re a member of a startup community or have investors with a jobs board, post your open roles there too.

Why: Jobs posts on popular websites and social networks improve your ad’s distribution due to the high volume of users visiting those places each day. These services are often free or have comparatively low fees versus recruiters, so there’s minimal risk in trying them.

Hiring is one of the hardest problems for startups throughout their lifespan and making the transition from hiring your friends to a repeatable, scalable process is challenging. Work to remove the bottleneck by leveraging your team, public platforms, in-house recruiters, and being flexible on compensation.

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Thanks to Kaego Rust for their help with this article.

#Recruiting

If you’re raising your round on a SAFE with a post-money cap and you get oversubscribed, you have to increase your valuation. I don’t care who you promised or how much you want to be polite. You don’t really have a choice.

Each new dollar at the current post-money, will lower your pre-money valuation. Lowering your pre-money valuation reduces the equity value for your current employees and equity is a big part of their compensation!

Tell the investor you’re sorry, there’s overwhelming demand and others signed first. Offer them a slightly higher valuation or a small discount on the next round but don’t make your team members take the hit because you’re afraid of irritating an investor.

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#Fundraising

1. Suspicion

When you see a product that is heavily discounted, you’re immediately suspicious. It’s the exact same for your potential customers.

2. Margin for Error

If you have a low price, you give yourself minimal room to make mistakes. And as a startup, you will probably make a lot of mistakes along the way.

3. Distribution Needs

If you decide to go for a low-priced product with low margins, then you’re going to have to distribute it broadly. If you don’t have a skillset for that kind of marketing, it’s both difficult and expensive.

Best of luck out there.

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#Sales

In general, building a SaaS business is a lot easier. This is because you only have one customer type to deal with — you make them happy and you’re good. With a marketplace, you have to generate both great supply and demand. Keeping your customers happy is harder in a marketplace too, as you don’t control large parts of the transaction.

Now, marketplaces can get very, very big. And you’ll get a share of every transaction, that’s why people build them. However, choosing SaaS first doesn’t prevent you from adding a marketplace later. Amazon began as an e-commerce retailer, but now they also have a huge marketplace.

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#GoalSetting

One of the best ways to generate new investor interest is to announce a previous round of funding. You’ll be amazed at how many investors, old and new, suddenly appear in your inbox, keen to learn more. Some will want to invest now to avoid missing the boat, others, usually later stage institutions, may want to connect before the “next” round.

Now if we’re announcing a previous round, then maybe we’ve had time since that last round closed for some additional, exciting growth and coincidentally, we just happen to be ready for the next round, right now.

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#Fundraising

Sometimes it may seem attractive to take a one time fee from a customer, usually for something like consulting or development services. Try to avoid this if you can. Instead, increase the price of the customer’s annual plan proportionately. You can still ask for all or some of the money upfront. I usually suggest asking for 3 months paid in advance.

But with this approach, you’re increasing your recurring revenue, with a small hit to overall margins, but most importantly, you get to start next year’s contract negotiations at a higher price point. You’ve already upsold them!

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#Sales

This week saw the broad release of ChatGPT’s latest model, Sol, without incident, alongside the heavily delayed re-release of Claude Fable. Although most consumers agree with Anthropic’s political positions and appreciate them fighting the good fight, the current situation is not commercially sustainable.

The US government’s restrictions on Fable were clearly not based on actual capabilities, as older models could find the same vulnerabilities. Furthermore, the US government explicitly approved Sol’s release while OpenAI claimed Sol outperformed Fable in some areas. If you’re a business in need of the best models, who will you trust to provide guaranteed, uninterrupted access?

A relationship deficit this large takes years to build. OpenAI’s presence around the White House is obvious, from Sam Altman’s TV appearances to Greg Brockman’s $25M donation to a MAGA Super PAC. Meanwhile, Anthropic’s CEO Dario Amodei had to delete his negative social posts about the President and was reportedly replaced in the Fable negotiations by his fellow co-founder, Tom Brown (shoutout YC W12!).

Anthropic began the year with overwhelming momentum, but thanks to these government relations issues, many of their customers have come to see them as a risky single point of failure. This unforced error created an opportunity for OpenAI and they seized it.

You may not have voted for the government, you may not agree with it, and you might be right. But they are still the government, and you still have to work with them.

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#Marketing

1. Existing Workflows

AI chatbots are now a part of people's daily workflow across the USA. This is mainstream. That means you can provide services in these workflows, helping your customers and generating revenue.

2. Numerous Paths

MCP servers, skills and developer tools are all viable paths in the chatbot environment. This means it’s much easier to provide a great experience for your customers compared to a more limited platform like Apple's iPhone.

3. 1st Movers

Chatbot apps are still a new concept, so there's a lot less competition at present. Now might be the best time to build an integration to grab a foothold and a bunch of revenue before the big rush.

Best of luck out there.

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#Marketing

Once you start hiring salespeople, you never really stop.

1. If the new sales hire doesn’t work out, then you’ll have to let them go. That puts you back where you started, so you’ll have to hire a replacement.

2. If the new sales hire is good, then you will hit your sales goals, which, in turn, leads to more hiring as you expand the sales team.

Make sure you understand how your sales process works before jumping on the sales hiring treadmill.

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#Recruiting

I strongly advise against trying to automate your investor outreach.
First, there’s a low response rate. Usually around 5%. Why? well you usually know when you receive an automated email, same as me, so those emails are simply given less attention.

You also risk burning the lead forever. If you reach out in future, it’s likely the investor will find your previous, automated email and they may not appreciate the spam.

So if you can’t get a warm intro, sending a truly personalized email, highlighting any points of affinity, even down to shared locations, well those emails can get up to a 50% response rate.

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#Fundraising

Many founders spend hours agonizing over projections they’re sending to investors. What should I include? How detailed should I go? Here’s what you should expect to provide:

If you’re raising under $2M: Projections are usually just 1 sheet, of 10–12 lines covering salaries, cogs, marketing, office/equipment & admin (e.g. legal & government filings).

Then if you’re raising more, let’s say $2–5M: It’ll be the same first sheet from the previous example + a breakdown of distribution, revenue growth & a hiring plan. Usually 3–5 full sheets.

These projections will not survive contact with reality so there’s no point getting too worked up about them. If in doubt, send it to a friendly investor and ask for feedback.

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#Fundraising

1. New Solution

You’re addressing a large and costly problem without a real solution - or you’re at least 10x better than any current solution.

2. Desperation

When you explain the idea to potential customers, they want it and they want it badly. They ask to be first and maybe even offer a deposit.

3. Difficulty

In the age of AI software, I would urge you to build something that is inherently difficult, ideally where your skillset makes a tough solution possible.

Best of luck out there.

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#GoalSetting

1. If you’re charging more, you give yourself room to make mistakes without it costing you more than you’ve received from the customer and reducing your runway.

2. Building great software is tough, when you’re still a very small team. It’s a lot easier to provide a wonderful, concierge service, because you don’t have a lot of customers.

3. No need for broad distribution. As premium customers pay more, you need less of them, which then means you can spend less money on marketing.

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#Sales

Startup’s often put their founders in tough situations and one of the toughest is becoming a solo founder. Within the Sterling Road portfolio, a solo founder raised an $18M Series A led by Accel. Here are the 3 skills Joseph Quan, CEO of Knoetic, perfected to ensure 2021 was a successful year:

Be a Generalist

What: You’ll need a basic understanding of most tasks within the company from sales and hiring to engineering management and marketing. If you try to hire people for these tasks too early, it’s hard to know what “good” looks like, as you haven’t completed them yourself. Some of these tasks, such as email setup, corporate registration and payroll are mission critical for your startup.

Why: As a solo founder, you will be directly involved in almost every goal your startup sets. You’ll need to be able to personally address a range of problems to keep the company on track.

Be a Learner

What: Read around and seek advice on every issue you encounter, to collect as much data and as many options as you can (in reasonable time) before making a call. Make use of external mentors and courses, and engage peer groups of other similar stage founders. At Knoetic, Joseph would often consult 4–5 advisors on strategy questions, as well as involving his team — this was a significant time commitment, but necessary for good decision-making.

Why: Even the best generalist will not know how to solve every problem, so you will need to collect a broad range of options and information to give yourself the best chance of finding the right answer.

Be a Recruiter

What: Hire great people into key leadership positions, as well as those that can make you make you more efficient, e.g. an Executive Assistant, Chief of Staff, or Sales Representatives. This will involve spending the majority of your time on recruitment until your key openings are filled. In Joseph’s case, hiring a hungry Chief of Staff, who wanted to own entire projects, provided a huge lift to productivity.

Why: Being a solo founder doesn’t mean building your company completely alone, instead you will need to find true believers willing to commit to the aspirational future ahead while taking less risk than a cofounder.

Being a solo founder is incredibly difficult, on top of all the usual challenges of building a startup. To be successful you’ll need a broad set of skills, a willingness to learn, and to hire great people early.

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#GoalSetting

For founders outside the main tech hubs, it’s tempting to fundraise in the places that you know. While that may work for your first few checks, you really should try to meet investors in the main tech hubs like SF, NYC, LA, Austin etc.

The high concentration of investors and startups in those places, creates competition which drives up prices, gives you choice on who to take money from and helps you close your round faster so you can go back to building.

It may seem daunting to break into a region without an existing network connection but quality, personalized cold emails and persistence will generate results.

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#Fundraising

Rapid development with AI is now a central part of startup building. Here are the standard practices we see working (and not working) across Sterling Road startups.

Ditch Coding Editors

Everybody on the engineering team must use a parallel agent coding tool, with skills, e.g. Claude Code, Codex, Conductor. Specifically, nobody should be using a coding editor with AI integrated, e.g. Copilot, Cursor. Senior engineers may complain about this policy, but they will be even more productive once they accept the change.

OpenClaw is not for Coding

Personal agents, like OpenClaw, are incredible tools for many day-to-day tasks but they are not (currently) the best tool for writing code. Keep your agent for writing reports and booking taxis but don’t expect that flexibility to also extend to writing reliable workflows and test cases in an app. The specialist coding tools are a much better choice.

Skills

Skills force you to plan better and drastically improve the behavior of your coding agent. You should use them for almost all coding tasks. Most teams use GStack or Superpowers and then write additional skills for their use case, e.g. I wrote skills on top of GStack to speed up my workflow.

100% Automated Bug Fixing

This is controversial but almost every company that implements this has been impressed by the results. All bug reports are first verified by an agent which then writes and tests the needed code to produce a pull request. Pull requests are reviewed 3 times by agents, using 2 different prompts for your favorite model and a review by another model. Then full testing and a push to production. It’s unlikely the average bug report gets anywhere near that level of human attention but if you’re still skeptical, a robust testing infrastructure can improve your confidence.

These are the standard practices that are working well across most startups. Next, I’ll review what the most advanced startups are attempting in this area.

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#GoalSetting

1. Confidence

Even if you’re not putting in a virtuoso performance, confidence goes a very long way. If investors believe you don’t need them, they will want to talk more.

2. Evidence

Strong proof of progress, ideally with lots of growth, will always incite investor interest. Startups are about growth, make sure your pitch shows your growth front and center.

3. Vision

You have to show investors where you’re going, today’s product will not be enough, they will want to know how you become the next Anthropic.

Best of luck out there.

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#Fundraising

1. The team is worried this will hurt our metrics and jeopardize the next round. While it’s true raising prices may mean less customers, it also means more revenue and revenue is the best metric for an investor, by far.

2. Customers will be offended. This is false. Customers do not get so offended by a price that they cut off communications, instead, they’re more likely to reveal their real budget.

3. We need a feature to launch first. The reality is that customers probably don’t care too much about anything but the core feature — they just want to quickly solve their problem and move on.

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#Sales

Everybody hates dealing with compliance, it’s a huge hassle. However, I often see it as a deciding factor for enterprises when choosing a vendor. They may want the latest, trending software discussed online but unless it’s compliant with their regulations, they cannot buy.

Now, this creates an opening for your startup. If you’re willing to do the hard work of being compliant for SOC 2, HIPAA or others, then you can massively improve your chances of closing an enterprise sale, as well as creating a barrier to entry for competitors.

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#Sales

I get this question a lot from founders around this time of year, and the answer is yes, it’s ok to fundraise in the summer, but it is harder.

From roughly the end of June until roughly the end of August, you’ll find 10–20% of the investors you try to reach will be on vacation. That means they’re much more likely to delay a meeting or pass all together.

To offset this, you will have to do 10–20% more outreach and meetings to get roughly the same result as if you’d fundraised at a better time, like March or October. So if you do end up fundraising in summer, expect it to take longer and to perhaps raise a little less.

Best of luck out there.

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#Fundraising