This is the third post in the MBA Mondays series on People. The number of people you have in your company at any time is a very important part of getting the company building process right. Too many and you will slow things down, burn through too much cash, and increase management overhead for no real benefit. Too few and you will be resource constrained and unable to grow as fast as you'd like.

I will say upfront that different types of businesses will require different employee bases and that my experience is really limited to software based businesses and within that sector, mostly consumer internet projects. So if you are working outside of the software business, I am not sure how useful this post will be.

I have a strong bias on this topic and that is that less is more. Time and time again I have seen the entrepreneur who wants to hire quickly fail and I have seen the entrepreneur that is a bit slow to hire succeed. If you took the time to corrrelate success in all of the venture investments my various firms have made over the years with one variable, it might be most highly correlated with a slow hiring ramp, at least in the first few years of company building. Being resource constrained can be a very good thing when you are just getting started. It forces you to focus on what's working and get to the rest of the vision later on.

I have tackled this topic of headcount before in the post on Burn Rate. This is what I said:

Building Product Stage - I would strongly recommend keeping the monthly burn below $50k per month at this stage. Most MVPs can be built by a team of three or four engineers, a product manager, and a designer. That's about $50k/month when you add in rent and other costs. I've seen teams take that number a bit higher, like to $75k/month. But once you get into that range, you are starting to burn cash faster than you should in this stage.

Building Usage Stage - I would recommend keeping the monthly burn below $100k per month at this stage. This is the stage after release, when you are focused in iterating the product, scaling the system for more users, and marketing the product to new users. This can be done by the same team that built the product with a few more engineers, a community manager, and maybe a few more dollars for this and that.

Building The Business Stage - This is when you've determined that your product market fit has been obtained and you now want to build a business around the product or service. You start to hire a management team, a revenue focused team, and some finance people. This is the time when you are investing in the team that will help you bring in revenues and eventually profits. I would recommend keeping the burn below $250k per month at this stage.

A good rule of thumb is multiply the number of people on the team by $10k to get the monthly burn. That is not the number you pay an employee. That is the "fully burdended" cost of a person including rent and other related costs. So if you use that mutiplier, my suggested team sizes are 5, 10, and 25 respectively for the three development stages listed above.

So 5 or less while you are building product, 10 or less when you are finding product/market fit, and 25 or less while you are working on generating revenues and locking down the business model. That's a rule of thumb for software based businesses that don't require a large direct sales force or some other significant labor cost.

Of course, there are all sorts of reasons why these numbers might not work for your business. This is just a "rule of thumb". You can use it as a baseline to think about whether or not you need those extra heads. But you might convince yourself that you do. And you may be right.

But above all else, restrain yourself from hiring early on. Just because you can does not mean you should. Team dynamics are easier in a small group. They get harder in a larger group. Things don't happen as quickly in larger groups. More management overhead is needed. All of these things work against you as a startup trying to get somewhere before someone else does. So hire slowly and wisely instead of quickly. You will be happy you did.

I guess this weekend will be google analytics weekend, given my post yesterday and today. In light of the rumors that Facebook may purchase the Opera browser, I got to thinking about how quickly browser market shares move. If the AVC blog audience is a good sample, then the answer is pretty quickly.

Here's the breakout of browser market share on AVC in the month of May 2006:

IE was dominant with over 60% of the AVC audience using it in May 2006. Firefox was coming on strong and Safari was tiny with about 5% of the users.

In just two years, the landscape had shifted rapidly.

In May 2008, Firefox was ascendant and over half of AVC readers used it. IE was still popular and Safari had doubled its share among AVC readers.

Two years later, in May 2010, the market was shifting again.

Firefox was still on top but was falling and Chrome was taking share from it. Safari had doubled again, and IE usage was in freefall.

And fast forward to today, we see a different story again.

Chrome is by far the most popular browser among AVC readers. Safari and Firefox usage has declined a bit. And IE contnues its decline.

All of this share shifting has happened in the relatively short timeframe of six years. There is apparently very low loyalty to browsers in the AVC community. I suspect our crew here is more likely to try something new and shift than the broader Internet, but even so, this is something to think about if owning a browser is part of your lockin strategy. Apparently that doesn't work too well.

UPDATE:

There was a question about OS market share. This is what the current OS market share on AVC looks like:

I took at look at Google Analytics this morning and was a bit surprised to see the makeup of the top ten sources of traffic to AVC in the past month.

If we compare this to May 2010, when AVC got almost exactly the same amount of visitors, you can see that the makeup of traffic has changed a fair bit.

Search, Twitter, Stumbleupon, Facebook, and Disqus have all risen a fair bit as sources. Direct, Feedburner, Hacker News, and various specific sites have waned as sources of traffic.

Mobile visits have also doubled in the past two years from 11% to 22%. Frankly I thought they would be even higher by now.

What this tells me is platforms are ascendent as drivers of audience, particularly platforms like Twitter that are optimized for mobile.

It is also nice to see Disqus cracking the top ten. And the characteristics of the Disqus traffic is very different from the traffic that comes from the other top ten sources. The Disqus audience stays longer and is way more engaged. That makes sense. I hope to see Disqus rise in the top ten as they do more to drive traffic around their network.

It makes me think that Disqus could use a mobile reading app that shows Disqus users the interesting conversations happening in their network in real time. I would certainly be a big user of that.

But no matter how you slice it, we are in the era of mobile platforms. That is pretty clear to me this morning.

I'm not feeling well today so instead of fun friday or feature friday, I'm going to post another video from the paidContent 2012 conference. When Mathew Ingram and I got off the stage, the paidContent folks asked us to continue our conversation for a bit longer for the camera back stage.

In this video, we talked about the media investments my prior firm, Flatiron Partners, made in the late 90s and what I learned from them and also the "artist direct" model and what it means for the folks who currently make a living working with artists in the traditional model.

This is a feature request. I'd love to see Google do this but I imagine this might also be possible via a third party service built on the gmail api.

I will often log into my gmail account on a conference room display in order to find a document that I want to load on the big screen. I do this a lot and I see many others do this frequently. Many entrepreneurs will do this when they come to see us. They will log into their gmail on the conference room display, they find the presentation they want to make, and then load that on the display.

The problem with this move, of course, is you briefly display your entire inbox to everyone in the room. That is suboptimal. But even so, I do this all the time. I've gotten pretty good at jumping into the search box quickly and running the search in order to get out of the inbox display.

So here's what I want. A simple app I can use that runs at something like gmailsearch.com. I go there, log into gmail, and then do a search on my inbox without having to reveal my entire inbox first.

It is possible that this feature already exists. If so, please tell me how to do this. I can't figure it out and I have tried. If this feature doesn't exist, it should.

The NY Tech Meetup has produced a series of short videos talking about some of the key early challenges that startups face.

They call this series #startupstories and currently there are three videos up on the web, one about pitching your company, one about building the team, and one about failing.

They are all great but I particularly like this one on Failure.

AVC community member Kevin Marshall is the consummate hacker. I can't count all the stuff Kevin has hacked on since I've known of him over the years. And I've tried many of them.

A few weeks ago, Kevin emailed me with his latest, gawk.it. Kevin described it this way:

I just hacked together the start of a simple system I wanted to
tell you about.  The idea is a system to let you search conversations
from around the web.

 So far I started with just the AVC comment board, and it's
super basic right now (going to improve it over the next few days) but
should already be functional (and useful for those of us interested in
the avc community).

Being able to search the AVC comments is probably the single most common request I get when we talk about the comments here. So I knew right away that Kevin was working on something where there was a real pain point.

But I wanted more than comment search. I replied back to Kevin:

What would be great is an integrated blog and comments search

Could you build that?

In classic hacker behavior, Kevin replied that he could and less than a day later, we had integrated blog and comment search. We then iterated on the UI/UX a bit and by this weekend, less than seven days after his initial email, gawk.it was live on AVC. It is live on GothamGal.com as well.

It's been running in the AVC search field on the upper right of this blog for a few days now. I know that a few folks have noticed it, but I want everyone to check it out.

I think the blog search part (which is the default result) works really well. I think the comment search (in the tab to the left) works OK but is getting better every day.

Give it a spin and let Kevin and me know what you think in the comments.

One of the most vexing problems entrepreneurs face is where to find strong talent for their companies. The kind of people you want to hire for your company are in short supply and they are rarely out looking for a job. You have to go find them and recruit them to join your team. But where to look?

Here are some suggestions:

1) People you know and people your team knows. This is the most obvious but also often the most fruitful source of talent. I know an entrepreneur who asks everyone he hires this question on their first day on the job, "who is the most talented person you have ever worked with and whom you would love to work with again?." He then adds that person's name to his list of people he is trying to recruit to his company. It is that kind of dedication to sourcing talent that is required to build the strongest team.

2) People who work for your competition. I often tell entrepreneurs that they are overly focused on their competition and that they should spend less time watching the competition and spend more time focused on their own game plan. But there is one place that watching the competition closely pays off. If you find a sales talent who keeps winning deals from you or a product talent who is making your competitor better, you should see if you can recruit them to leave your competitor and join your team. There can be issues with non-competes but the truth is that non-competes are often unenforceable unless they have been properly structured and most are not.

3) Companies that have been recently purchased. When a company is sold, the team is in play. Buyers know this and structure the deals to lock up key employees. But the combination of having had a decent payday on the purchase, having to wait a bit for the stay package to pay off, and the dread of working for a big, slow, bureacratic company is often enough to cut them loose. When a company sells, find out who the stars are on that team and go after them. It might take a bit of time to get them, but keep trying. They will free up in time.

4) Other parts of the country and the world. This is particularly true if you are operating in a hypercompetitive talent hub like NYC or Silicon Valley. The best talent is often locked up by the big companies in the neighborhood. I have seen our portfolio companies do incredibly well by locating super talented folks working in other parts of the country or the world and relocating them to NYC of SF. They find these folks on places like Stack Overflow, Behance (both are USV portfolio companies), Dribbble, and GitHub. Relocating someone from another part of the country often means making their relocation painless with financial incentives and also things like helping a spouse find a job. Relocating someone from another part of the world means all that plus navigating the immigration system. It is painful to do all of this but it is often worth it to get the right type of person for your company.

5) Colleges. You cannot fill your entire company with young folks graduating from college. You will need people with experience and management skills on your team. But you can supplement senior talent with people just starting out in their career. And the one pool of talent where everyone is looking for a job is the senior class at a college campus. I had an investment in a company back in the 90s that had a high paid sales force that wasn't getting the job done selling the company's product. The CEO fired the entire sales force and replaced them with an army of smart, inexperienced college grads who were hungry and scrappy and sales took off. That move won't work for everyone but it sure worked for that company. It is often surprising what young folks right out of school can do with the right management.

If you want to focus some of your recruiting efforts on college grads, I would encourage you to set up an internship program for students to work at your company prior to being hired. There are all sorts of ways to do this. One of our portfolio companies offers seniors in college the opportunity to work for them 10 hours a week during senior year. They then offer the best ones full time jobs upon graduation. There are also programs like HackNY that can bring great summer interns to your company.

6) The big companies in your market. This one is a little dangerous because you can find a lot of people "resting and vesting" in big companies and you don't want to hire that kind of talent. But the fact is that when companies like Google, eBay, Yahoo, and yes, even Facebook, get big, they become the wrong place to work for the scrappy fast moving entrepreneurial types. The early employees get itchy and can be cut loose. Focus your recruiting efforts on folks who have been at these companies three years or more because at that point they will have vested into the majority of their initial stock grant and will have weaker "golden handcuffs."

7) Your investors. The truth about venture capital firms is that as much as anything else, they are recruiters. I don't think a day goes by in our firm where someone isn't doing some form of recruiting. People who want to get their "resume on the street" will often come by and let us know they are looking around. We get tips from all across our network that someone is good. We reach out to them, take them to lunch, and get to know them. And then we route all of the talent we are seeing to the places in our portfolio where they are the best fit. If your investor isn't helping you find talent, then they aren't doing their job.

So those are some places to go to in order to find strong talent. Don't expect that you will be able to find people easily. Recruiting is a full time job for many people. Even if you can't make it your full time job, you must work on it every day, and be thinking about it all the time. You need a strategy, a process, and a committment to the process. It will bear fruit over time if you are patient and committed.

In the last MBA Mondays post talking about company culture, I wrote:

It helps a lot to have a one pager that outlines the core values of the company. I just saw our portfolio company Twilio's version of that. They call it "Our 9 Things." I wish I could publish it here but I don't have permission from Jeff and so I will resist the urge. It has things like "think at scale" and "be frugal" on it. You get the idea I hope. This "guiding light" is a framework for the culture and values of the organization and each new hire should be assessed against the framework to make sure the fit is good.

Well it turns out that Twilio published their "9 things" on their website this week and so I can now publish them here.

I like that they published them in the form of a telephone dialpad. For those that don't know Twilio makes telephony work easily in web and mobile apps. Putting the 9 things in this format makes a statement in itself about their culture.

These need not and should not be your company's values, although it is likely that you may share a number of these values with Twilio. The point is to articulate what your culture is about and put it front and center so that everyone knows what they are.

Nicely done Twilio.

It's memorial day weekend. We are at the beach with our family and I am taking it easy after a hectic week.

I did a bunch of interviews and talks last week. It felt like I was in front of an audience at last a half dozen times in the span of four days. So I am going to take a short hiatus from writing this weekend and run some video here.

We will start with the interview I did with Mathew Ingram at the paidContent 2012 conference. Mathew focused the conversation on the challenges that traditional media/entertainment has had in working with the changing technology landscape and the tech community. I don't think I said anything that the AVC community hasn't already read or heard from me before. But I do think we did a decent job of framing the issue and laying out some likely paths forward from here.