Hiring Strategies for Bootstrapped SaaS Founders: Job Titles, Equity, and Key Roles

As a bootstrapped SaaS founder, hiring your first employees is a critical step in growing your business. However, many founders struggle with determining the right job titles, compensation structures, and roles to prioritize. This guide will walk you through key considerations and best practices for building your early-stage team.

Job Titles: Keep It Simple and Standard

When you're just starting out, it's tempting to get creative with job titles. However, this can cause issues down the line:

• It makes it difficult to benchmark salaries
• Unusual titles don't show up in job searches
• It can hinder employees' future career progression

Instead, stick to standard job titles that are widely recognized in the industry. For engineering roles, a typical hierarchy might look like:

• Junior Software Engineer
• Software Engineer
• Senior Software Engineer
• Staff Software Engineer
• Principal Software Engineer

Similar hierarchies exist for other departments like customer success, marketing, etc. Using these standard titles will make it easier to hire, compensate fairly, and provide clear career paths.

Avoid Inflated Titles

Another common mistake is giving inflated titles too early. For example:

• Calling your first customer support hire "Head of Customer Success"
• Hiring a "CTO" when you really need a senior engineer

These inflated titles can create awkward situations as you grow and need to hire more senior people. Reserve C-level and VP titles until you have at least 50-100 employees.

Leads vs Managers

As you grow, you'll need to start introducing leadership roles. Here's how to think about leads vs managers:

• Leads: Technically lead a discipline, but don't have direct reports. Example: Development Lead
• Managers: Can hire/fire, approve vacation, do reviews, etc. Example: Engineering Manager

Consider introducing lead roles once you have 2-3 people in a department. Move to managers when you hit 4-5 people in a department.

Equity and Compensation Structures

Deciding how to compensate early employees beyond salary is an important consideration. Here are the main options:

Equity

Giving actual shares in your company is rarely done for non-founders due to tax implications. It's usually reserved for co-founders only.

Stock Options

Stock options give employees the right to purchase shares at a set price after vesting. This is common for venture-backed startups, but can be complex for bootstrapped companies. Consider stock options if:

• You plan to sell the company eventually
• You might do a secondary offering to provide liquidity

Profit Sharing

Profit sharing can be a good option if you plan to run the company long-term without selling. Some considerations:

• Typically 10-20% of profits are shared
• Quarterly distributions work well
• Create a pool rather than individual agreements

The profit sharing approach used by Balsamiq is a good model to consider.

Key Early Hires for Different Founder Scenarios

The ideal first few hires depend on the founders' skills and your go-to-market approach. Here are some common scenarios:

Low-Touch Sales Model

For companies with a self-serve, marketing-driven approach:

Single Technical Founder:

1. Customer Support
2. Marketing or Engineering (depending on product complexity)

Technical Founder + Subject Matter Expert:

1. Customer Support
2. Marketing or Engineering

Technical Founder + Marketing Founder:

1. Customer Support
2. Marketing or Engineering

High-Touch Sales Model

For companies doing demos and more hands-on sales:

Single Technical Founder:

1. Customer Success
2. Sales or Marketing

Technical Founder + Subject Matter Expert:

1. Customer Success
2. Sales, Marketing or Engineering

Technical Founder + Sales Founder:

1. Customer Success
2. Marketing or Engineering

How to Decide What Role to Hire Next

As you grow beyond the first few hires, use this process to determine your next key role:

1. Track your daily/weekly tasks for 2 weeks

2. List things that should be done but aren't getting done

3. Identify which tasks:

   • You're not good at
   • You don't enjoy
   • Could significantly grow the business if done better

4. Group tasks into these core SaaS functions:

   • Product
   • Design
   • Engineering
   • Marketing
   • Sales
   • Support
   • Customer Success
   • Operations (HR/Legal/Finance)

5. Try to fit the role into one of these functions, or at most combine two related areas

Effective Role Combinations for Early-Stage Teams

When you're small, some employees may need to wear multiple hats. Here are role combinations that can work well:

• Customer Success + Sales (for inbound leads)
• Customer Success + Support
• Sales + Business Development
• Legal + Finance + HR (Operations)
• Engineering + some design skills
• Engineering + product sense
• Product Management + Design
• Marketing strategy + execution in 1-2 channels
• Marketing strategy + project management

Avoid combining roles that require very different skill sets, like engineering and sales.

Key Takeaways

• Use standard, widely-recognized job titles
• Avoid inflated titles too early
• Consider stock options if you might sell, profit sharing if you'll hold long-term
• First hires depend on founder skills and sales model - often support, marketing, or engineering
• Track your tasks to identify what to offload next
• Combine related roles early on, but don't expect one person to do everything

By following these guidelines, you'll be well-positioned to build a strong early-stage team that can help take your bootstrapped SaaS to the next level. Remember, your job as a founder is to gradually fire yourself from various roles by hiring great people to take them over.

Article created from: https://www.youtube.com/watch?v=Q2A2iD_wJOs