Startup bonds run deep: a look at relationships between founders and their 1st hires

May 12, 2014

One of the most fundamental relationships in a startup is the one between a founder and his or her first hire; this bond builds the foundation of a company's culture. Here are three Chicago founding teams whose first hires are still with the team today, setting the pace for these high growth companies:

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Sprout Social’s Peter Soung

Senior Software Engineer Peter Soung, the first hire of the Sprout Social founding team, had worked with CTO Aaron Rankin before at Endeca in 2008 and kept in touch via a bowling team: “Aaron told me about Sprout during a bowling league session and introduced me to the code base the next week while also at the bowling alley," Soung said.

Rankin reached out to him at bowling because “it takes a lot of tech to power Sprout Social and frankly I needed more firepower” before introducing him to CEO Justyn Howard and Creative Director Gil Lara.

Along with Rankin, Soung first took Sprout Social's social media management product from a rough prototype into a proper beta, which attracted about 1,000 users and helped gain seed funding, Rankin said.

So much has changed since 2009 when he joined Sprout Social, Soung said: “We were a team of four who used Google Wave to brainstorm ideas and track development progress; now there are over 100 people who work at Sprout. I used to work on the full stack that made up the Sprout code base; now I oversee an extremely talented group of engineers who improve and maintain our web and mobile products. It has been extremely fulfilling to find an engineering team that is as dedicated to our product as Aaron and I were in 2009.”

"We've grown together since, over the past 4 years; he now leads our web and mobile dev teams and is a partner in the firm," Rankin said. "To me, that was the key. From the beginning we involved Pete as an equal. I think that helped orient him towards the company's best interests, not just his individual contributions. It's really important that early hires push the mission forward."


 

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ContextMedia’s Jim Demas

“Usually he’s the first person we text or call,” ContextMedia co-founder Shradha Agrawal said of CFO Jim Demas, who was her and co-founder Rishi Shah’s first hire after they scrapped their entire team to start what they call ContextMedia 2.0.

Demas came on board in 2009 as their first hire to do accounting and a bit of HR and risk management for the healthcare media company: "We were looking for someone we could get to know as a person, not just as an employee of the company” Agrawal said. “It was important for this person to see the vision for the company, but also to see the chaos around that vision because we didn’t have rules or guidebooks or handbooks. We needed someone who was comfortable in a role without a lot of defined initiatives and defined projects. Looking for someone who was a self-starter.”

Demas, who has more of a traditional CFO/CPA background, was new to the startup environment but said he was envigorated by Shah's and Agrawal's energy: "It was pretty amazing to see these extremely young entrepreneurs and I fed off that. They are people you want to work hard for," Demas said.

Today, Demas oversees operations as well as logistics in a hybrid COO/CFO role, working closely with the founding team.

"We were very collaborative," Demas said. "It’s important to maintaining that as we grew. Overall, it’s been five years that I’ve been at ContextMedia, and they have been the most rewarding in my career. It makes coming to work really easy.”

“How I measure the success of our early employees is by asking, ‘Would this company look different if that person wasn’t there?’” Agrawal said. “Absolutely, if Jim was not there the company would look very different.”

 

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MSDSonline’s fantastic five

MSDSonline’s first hires, a class of 10 temporary salespeople, didn’t quite work out as the founders had hoped. Much like ContextMedia did, MSDSonline scrapped this team and started the hiring process over:

“Immediately, within two days, I let nine of the 10 go,” CEO Glenn Trout said.

The one who stuck around was the one person in the class who was fresh out of school. His trustworthiness and realism sparked something for Trout, and within the next few months Trout added five people similar to him to the sales team.

Of those original five sales whizzes, three are still at MSDSonline: Kevin Sy (who is now Director of Sales),  Melissa Nelli (who is now Enterprise Sales Director) and Annie Prues (who is the Regional Sales Manager of the Southeast today) . Not only have each of these early employees grown into their own roles, but they have grown the sales team itself to about 120 currently.

After these successful sales hires, it still took a few more years and two funding rounds (raised ahead of growth) for MSDS, which provides on-demand safety management products, to get profitable because “the goal was to keep growing, not getting to profitability,” Trout said.

Today, 85 percent of MSDSonline’s revenue is from the software offering that was originally so hard to sell before hiring what Trout calls the “five salespeople that helped save the company.”