Chapter 5: Team

Core Idea

To grow, a founder has to hand off roles one by one. Delegate whole roles, not scattered tasks. Use standard titles, add leads and managers at predictable team sizes, hire slowly with job descriptions written like sales letters, choose incentives that match your exit plans, and decide carefully whether you need a cofounder at all.

Frameworks Introduced

• Delegate roles, not tasks. A founder does many jobs at once, but one hire rarely has the skills for support, business development, and front-end design together.
• SaaS departments and the likely first hire in each:
  • Product (what to build and how it works): Product Manager, usually above $1M ARR.
  • Design: UX Designer.
  • Engineering (code and production servers): Software Engineer.
  • Marketing (strategy, implementation, business development): first, individual contributors skilled in one or two approaches (SEO, content, PPC); later, a Manager or Director of Marketing for strategy and project management.
  • Sales: an Account Executive (AE) who qualifies and closes their own deals. Later, SDRs or BDRs qualify leads for AEs.
  • Customer Support: Customer Support Representative.
  • Customer Success (onboarding and keeping customers from churning): Customer Success Manager.
  • HR, Legal, Finance: much later, one combined Operations Manager or Director of Operations. Until then, legal goes to an outside lawyer and finance to a bookkeeper and accountant, with the founder coordinating.
  • “Manager” at the end of a title means they manage a process; at the start, they manage people.
• Which role to fill next (founding means “firing yourself” from one job after another):
  1. Track your time for a week or two, or list your tasks from memory.
  2. Group the tasks by department and, if possible, by role.
  3. Ask: Which am I bad at? Which am I good at but don’t enjoy? Which could I stop with no harm? Which could a current team member take? Which, if improved, would most grow the company?
  • Support is usually an early hire: it is repetitive and lower value than other founder work. Sales, marketing implementation, and development come next, depending on the founders’ skills. Two engineer founders probably shouldn’t hire an engineer first.
• Combining roles: with 10–15 employees and no large funding, hire generalists who fill two roles; specialists come later. A task that takes you 10 hours a week may take a hire 20, because founders work faster and also rush. Combinations that work (from the book’s figure):
  • Customer Success + AE (only with warm, inbound leads)
  • Customer Success + Customer Support
  • AE + BDR/SDR
  • Product Manager + Designer
  • Engineer + Product Manager
  • Engineer + Designer
  • Marketing Strategy + Marketing Implementation
  • Marketing Strategy + Marketing Project Management
  • Legal + Finance + HR (Operations)
  • Split roles later using the same time-tracking exercise, run by the team member.
• Use standard job titles. Candidates search for them, recruiters need salary data for them, and hires need them to explain their experience later. Drip’s “Senior Scaling Architect” became “Senior Architect.” A typical engineering ladder from top down: CTO, VP of Engineering, Director, Manager, Senior Software Engineer, Software Engineer, Junior, Entry-Level. Avoid inflated early titles: a first support hire called “Head of Customer Success” became a problem when the company needed a real manager above him.
• Technical founders: learn sales and marketing and hire developers. Two reasons:
  • “Developers are gonna develop”: a developer founder tries to solve plateaus, churn, and lost sales by coding more features.
  • Coding needs a Maker’s Schedule (long uninterrupted blocks, in Paul Graham’s terms). A founder lives on a Manager’s Schedule of one-hour slots.
• Nontechnical founding teams: 90% of bootstrapped SaaS companies have at least one developer founder (MicroConf’s State of Independent SaaS survey). Without one, find a developer you trust, pay them well, and treat them almost like a cofounder, or find a developer cofounder. Castos’s nontechnical founder, Craig Hewitt, lost money to developers who didn’t care about the outcome.
• If you don’t plan to hire: hire at least a support person anyway. For bootstrappers, founder burnout kills more businesses than lack of money. A product is rarely “too technical” for support; with documentation, systems, and training, a sharp junior developer can do it.
• Be a team, not a family (an idea popularized by Netflix’s early culture document): you don’t fire family, but you do bench a teammate who isn’t the best player for the position. Tolerating mediocre performance drives away your best people.
• Supervision vs. leadership: a supervisor approves vacation, gives reviews, and sets raises. A leader, such as a tech lead, gives technical guidance, mentoring, and direction. A manager does both. Early on the two can be split: at Drip, cofounder Derrick led the developers technically while they reported to the author.
• Task-, project-, and owner-level thinkers:
  • Task-level: focus on the current or next task.
  • Project-level: plan weeks or months ahead and coordinate others’ work into one deliverable.
  • Owner-level: also improve processes and propose experiments, looking months or years ahead.
  • Around $20,000–40,000 MRR, when a product becomes a business, bring in project- and owner-level thinkers. It reduces your stress, speeds the team up, and gets better terms if you sell.
• When to add leads and managers: a lead once a department has two or three people, a manager at four or five. Managing twelve direct reports well (regular one-on-ones, career development) takes too much founder time. First managers must also be individual contributors. Promote from within when someone is ready to move from task-level to project-level, and train them to run one-on-ones, handle raises and time off, and give feedback.
• What makes a good manager: a good lead is not automatically a good manager. People who had a good manager tend to manage well; many bootstrapped founders never had one. The hardest skill is negative feedback. Trust is the most important part: team members need to know you’ll be fair, listen, decide well, take the blame, and tell the truth.
• Hiring great people: hire slowly, fire fast. If you can afford it, use a flat-fee recruiter such as Remote First Recruiting; commission recruiters (often 15% of first-year salary) cost more than they return. Then:
  • Be different, and show it. Drip’s job ads said the team wrote 2.5 lines of test code per line of production code.
  • Offer interesting problems: fast scaling, varied UX, varied daily work.
  • Lean into small-company advantages: remote work, no politics, a small team, learning from the founders, fast growth.
  • Write the job description as a sales letter, with personality (“Crappy code makes you want to flip a table” filtered candidates at Drip). Say you’re picky; strong performers want strong peers.
  • An audience helps hiring, though the author thinks building one is a waste of time for most founders otherwise.
  • Retention matters as much as hiring. Misrepresenting the job loses top performers.
• Incentives beyond salary (not legal or tax advice; consult professionals):
  • Bonuses: flexible but arbitrary. They can look like favoritism and cause anger in years without them. A California lawsuit ruled for employees who had come to depend on bonuses.
  • Equity: real and emotional ownership, but it pays only on sale or dividends and is taxable on grant. In a pass-through entity such as a US LLC, profit flows to holders: 1% of $500,000 profit means the employee is taxed on $5,000 they never received. Best for cofounders, granted while it is nearly worthless.
  • Stock options: the right to buy shares at a fixed strike price, typically vesting over four years from a pool of 10–15% of shares. Simpler taxes than equity. Best if you plan to grow and exit.
  • Profit sharing: pays without a sale, so it suits companies run for profit long-term. Use a shared pool (for example 10–15% of profits) rather than individual percentages. Balsamiq started at 10%, later 15%, and the author believes it is now 20%. It splits 25% equally and 75% by seniority, weighted by cost of living, and pays quarterly; monthly was too much paperwork and yearly kept unhappy people too long. Some companies have a vesting period of a few months first.
• Do you need a cofounder? No. 56% of respondents to the 2022 State of Independent SaaS Report were single founders. A cofounder gets more equity than any investor ever will. Solo is simple but isolating; most successful solo founders have a strong network or mastermind. If considering one, ask:
  • Are your skills complementary? Developer plus marketer or salesperson, or developer plus subject expert, works best.
  • How well do you know them? “Date” on small projects before equity changes hands.
  • Are you protected? Vest everyone’s equity, usually over four years. TinySeed declined to fund several companies where a founder left with a large stake.
  • Will they make the company more valuable? If you’re on the fence, find another option.
  • Too many founders: with three or four friends, one is often a weak link, and there are too many opinions.

Key Concepts

• AE / SDR / BDR: Account Executive closes deals; Sales or Business Development Representatives qualify leads.
• Strike price: the fixed price at which an option holder can buy shares.
• Vesting: earning shares or options over time.
• Pass-through entity: a company whose profits are taxed to its owners, such as a US LLC.

Mental Models

• Founding means firing yourself from one job after another.
• Hand off certainties; keep the risky, founder-level work (see Ch 7).
• Trust is built by giving both praise and correction.
• The less the business depends on you, the better the sale terms.

Anti-patterns

• Hiring one person to fill three unrelated roles.
• Made-up or inflated titles.
• A developer founder who never stops coding.
• Waiting too long to fire: nobody regrets firing someone too soon.
• Managers who are too nice: a surprised firing breaks trust across the company.
• Equal equity splits without vesting.

Rules of Thumb (author’s wording)

• “When building your team you should delegate roles, not tasks.”
• “For bootstrappers, a lack of money isn’t what kills businesses. It’s founder burnout.”
• “No one has ever said, ‘I fired that person too soon.’”
• “Praise in public and correct in private.”
• “Hire slow and fire fast.”

Worked Example

Choosing the next hire for a hypothetical solo developer founder at $22,000 MRR.

Department	Founder’s weekly hours	Good at?	Enjoys?	Growth impact if leveled up
Engineering	18	Yes	Yes	Medium
Customer Support	12	Yes	No	Low
Marketing implementation (SEO content)	6	No	No	High
Sales demos	4	Somewhat	Yes	Medium
Finance and legal coordination	2	—	No	Low (outsourced)

• Support is good-but-not-enjoyed, repetitive, and lower value, so it is the classic first hire. The founder’s 12 hours may become about 20 for a new hire, so plan for a near-full-time role. A Customer Success + Customer Support hire would also cover onboarding.
• Marketing implementation comes second: the founder is weak at it and it would most grow the company. As a technical founder, the author’s advice is to learn marketing strategy and hire developers later, rather than keep the engineering job forever.
• At $22K MRR the company is entering the $20–40K range, so the next hire should be someone who can think at the project level.

Key Takeaways

1. Delegate whole roles. Use the time-tracking exercise and five questions to choose the next one.
2. Hire support early, even if you don’t plan to grow a team.
3. Combine only compatible roles, and use standard titles.
4. Technical founders should move into sales and marketing; nontechnical teams need a trusted developer.
5. Add leads at 2–3 people per department, managers at 4–5, and project-level thinkers around $20–40K MRR.
6. Match incentives to your plan: options for an exit, profit sharing for long-term profit, equity mostly for cofounders.
7. A cofounder is optional. If you take one, ensure complementary skills, a trial period, and vesting.

Connects To

• Ch 4: marketing strategy vs. implementation; when to hand off sales.
• Ch 7: Risk vs. Certainty; burnout and the joy/skill/need overlap; vesting and cap tables.
• Geoff Smart and Randy Street, Who: hiring method. Drift’s 90-day plan per role as a job description. Current job boards are listed at saasplaybook.com.