Building An Early Stage Startup Team With No Funding

Building an early stage startup team with no funding
You’ve just started your company, and you have no money. You know you need to build a team. However, you don’t see any way that you’re going to be able to build a team without any money or funding.
It’s the ultimate catch-22. However, this is a solvable problem. In today’s video, I’m going to explain exactly how to build an early stage startup team with no funding. Here’s how:
We’ll start by explaining the most common mistakes CEOs make building their teams. Then…
We’ll examine the qualities you should look for in your new team. Then…
I’ll show you how to recruit your early stage team.
I hope you like it.
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[@BrettFoxstartupceo]

To get your free Startup Pitch Deck Template go to: www.brettjfox.com/startup-pitch-deck-template-youtube/

[@syedmoiezbukhari2972]

Brett, your videos have been amazing. I'll watch all of these videos this weekend. Great help with my current company stage!

[@BrettFoxstartupceo]

Glad these videos have been helpful, Syed

[@tabotcharlesbessong3756]

Oh God. This is great. This will help me with the stage i am right now with my company

[@BrettFoxstartupceo]

Glad to hear it!

[@tabotcharlesbessong3756]

@@BrettFoxstartupceo Please keep bringing great content like these to educate us

[@BrettFoxstartupceo]

Thanks for your kind words@@tabotcharlesbessong3756

[@leodidomenico3091]

Hi Brett. Thanks for this great channel!!! My question is this: It is against the "minimum wage laws" to have employees that are not getting at least a minimum wage in the USA. If you have someone work for you and then you subsequently have a falling out, they can easily turn around and file a lawsuit that they were not paid any salary. This can cause the courts to liquidate your company assets to pay the prior team members their missing wages. Needless to say taking on employees without a salary is a very serious liability. It can essentially give control of your company away to the team members that did not work out and that may be at loggerheads with you - the CEO. If you have many years building out patents etc.. it can effectively be a legally induced fire-sale of your company forced by the courts. I have not been able to see a way around this problem and would love some advice so I can protect the decade of patent development prior to hiring my start-up team. THANKS !!!

[@BrettFoxstartupceo]

Thanks for you kind words. I am specifically talking about building a team of co-founders. My basic rule is anyone that joins your company before you have any funding or money to pay them is a founder. This means they get founder's stock in return for their time.

[@leodidomenico3091]

I am very concerned about this, so I checked with chatGPT for another opinion. It says that equity DOES NOT chnage the requirement for minimum wage. Her are its comments: Equity and deferred compensation, are often relevant to high-tech startups. In the startup world, particularly in the tech sector, it's not uncommon for early employees to receive equity in the company (stock options or shares) as part or all of their compensation. This approach can be attractive for both the startup, which may be cash-strapped in its early stages, and for employees, who might be willing to bet on the future success of the company in exchange for immediate monetary compensation. However, there are several important considerations and legal requirements associated with this practice: Compliance with Minimum Wage Laws: Even if employees are compensated with equity, startups must still comply with minimum wage laws. This means that unless employees fall under specific exempt categories, they must be paid at least the federal or state minimum wage for their work. Valuation and Tax Implications: The valuation of equity and its tax implications can be complex. Employees receiving equity as compensation might face tax liabilities, and the company needs to ensure proper valuation of the equity for both compensation and tax purposes. Securities Laws: Offering equity can be subject to securities laws, which means startups must comply with federal and state securities regulations. This often involves certain disclosures and potentially registering the securities, unless a specific exemption applies. Deferred Compensation: Some startups opt for deferred compensation arrangements, where payment for work is delayed until a later date. These arrangements must be carefully structured to comply with both labor and tax laws. Employee Expectations and Morale: While equity can be a powerful motivator, it's important to manage expectations. The actual value of equity is dependent on the future success of the company, which can be uncertain. Misalignment of expectations regarding equity can affect employee morale and retention. Legal Documentation: Any equity compensation should be clearly outlined in legal documents, including employee agreements and the company’s equity plan. This ensures clarity and legal enforceability. For startups, particularly in high-tech, equity compensation can be a strategic tool, but it requires careful planning and legal compliance to ensure it benefits both the company and its employees. As always, it's advisable to consult with legal and financial experts to navigate these complexities effectively.

[@MrCharlinus]

What a great channel, thanks a lot for taking the time to share your experience and help people like myself who are starting their business!

[@BrettFoxstartupceo]

Thanks for the kind word words. I'm glad you're finding this useful.

[@nulevel9947]

Keep going … You’re giving great quality content

[@BrettFoxstartupceo]

Thanks for the kind words!

[@chukwuemekannaji3802]

Thank you Brett for this. I requested for it awhile back. Thank you also for the email posts. Rock on sir!

[@BrettFoxstartupceo]

You're welcome! Glad to be of help.

[@dylan_nobile]

EXCELENT content, Brett. Keep it up!

[@BrettFoxstartupceo]

Thanks for the kind words, Dylan.

[@abderrahman.jalled]

This is an epic channel, just finished watching all the videos. Ps: we're doing something in semiconductors space, I would love to connect with you 😊

[@BrettFoxstartupceo]

Thaks for your kind words. I appreciate it.

[@MHS-ItsYourTimetoFly]

Brett thoughts on Revenue Sharing vs Equity. Both for Investors and early team recruits? No liquidation event required. For investors % of top line sales for X period of time or a target IRR return is met, the later of the two. The capital is predominantly for Working Capital, no CAPEX. This is a high margin, super efficient cash flowing business w no long term commitments or liabilities or CAPEX. HAve initial team members begin as 1099 employees and all their XPS are deductible. The Revenue Share is paid out in deferred tranches, % quarterly then annually (holdback till EOY). After 1 year option to join as W2 or remain 1099. Additional revenue share bonus accumulates and is deferred until 3 year vesting. What are your thoughts?

[@BrettFoxstartupceo]

It's a no way for investors. Investors are after a big return (think 10X to 30X for VCs), so revenue share just isn't enough. For savvy employees, revenue share probably will not work for the same reasons. Stock options for employees and equity for investors is the way to go. Remember, dilution is good.

[@kanishkbhardwaj7824]

How much equity to the first employee who you’ve paid 1/3rd of market rate but has worked like magic for your Co.?

[@BrettFoxstartupceo]

Watch this video: kzbin.info/www/bejne/q6nOq5ehZayNsKM

[@thelifeofbiraj]

I am a 19-year-old developer eager to create a SaaS product and turn it into a startup. Since I don't have a team, I'm coding and building it on my own. I'm also learning about the business side of things. Can I succeed as a solo founder, or do I need a co-founder?

[@BrettFoxstartupceo]

Yes, you can succeed as a solo founder. However, I would be continually looking for great people to add to your team. And I would hire them as quickly as I could.

[@tabotcharlesbessong3756]

What do you develop in ?

[@BrettFoxstartupceo]

I don't understand what your question is. Would you mind rephrasing it?@@tabotcharlesbessong3756

[@tabotcharlesbessong3756]

I meant to ask is he a web, mobile or AI developer and which technologies does he use as a developer

[@fasondeviv]

Can you help me build a company culture etc

[@BrettFoxstartupceo]

You can read this article for more on building a successful company culture: www.brettjfox.com/why-your-startup-culture-is-the-key-to-your-companys-success/

[@derekkuhl]

Finding qualified people at all seems to be a near impossible task. Not being immersed in the startup community, I am finding it very difficult to raise interest from anyone qualified much less anyone I would hire much less anyone who would work for no salary.

[@BrettFoxstartupceo]

I feel your pain, Derek. There is no way to sugarcoat this, but It is really, really hard to build a team. The reasons for the struggle could be due to a few different things. 1. The story about your company is not compelling 2. You are not being open enough about what you're doing 3. You're not building confidence in the people you're recruiting. Usually, for every ten people you'll meet with face to face, you'll find one you want to add to your team. So stick with and be really intellectually honest about your challenges.

[@dleer_defi]

What about your friends?

[@derekkuhl]

@@dleer_defi I have pitched my friends, and friends of friends. However, my pool is still quite small. Like Brett says, it is a matter of pitching enough people and not being in the tech or startup industry, my circle is not full of programmers and developers. I am also finding that many in the tech industry are very comfortable in their high paying jobs and are not willing to take on any risk. The other points that Brett mentions are probably also valid. I think my pitch is compelling but others may not think so.

[@BrettFoxstartupceo]

@@dleer_defi Yes, it's fine to start a company with your friends. However, they need to meet the same criteria that I outlined in the video.