NOLL TILL 100 — ENGLISH TRANSCRIPT
Episode 105: The right hire can 10x the business #105

English translation of the full Swedish conversation. Original timestamps preserved.
Original audio: https://www.youtube.com/watch?v=3N3BkqHv8KQ

[00:00:00] A warm welcome to a new episode of Zero to 100. With me, as usual, is Fredrik Ankarsköld. New week, fresh start. How are you feeling, Fredrik? Good. The sun was out this weekend, so that gives you a little extra energy. How about you?

[00:00:15] Really nice weather. What's happening in Sweden? It felt like Italy, really lovely. This week we're returning to a topic we touched on before. When you said in an episode that you'd sold part of Såpa …

[00:00:34] … one of my questions was: Why not just hire more people? Why bring in an investor instead of growing on your own without external capital? What's your thinking?

[00:00:49] Why grow with capital rather than entirely organically? A relevant question. Now that we've brought in capital, this week we've decided on two key hires: a CFO and a Head of Retail. We've grown in grocery retail and demand is greater than our production can satisfy. That's been the case since the start. We haven't felt the need for retail staff who would just become an overhead cost; we've thought we could handle it with the resources we have.

[00:01:27] But with us approaching 200 stores, they all need a bit of attention. Maybe we should build a team around that. Now we have those two key hires. Back to why we're not growing organically: We could have done that, and have done up to a certain level. I usually say: ‘What took us here is not always what's gonna take us there.’ One team can get us to 100–150 million without a problem. Then perhaps a different level of professionalism is needed to take us to two or three billion. After that, another level of middle management, governance and reporting. Making mistakes becomes so expensive as the company grows. If we take a …

[00:02:14] … small company with revenue of 10–20 million and make a bad hire, it's not the end of the world. You have a lot of flexibility with fewer than ten employees in Sweden. You're probably not in a union. That's a separate discussion, but we're discussing how we should join, whether we should, and how it even works. Just an internal discussion like that takes a lot of energy.

[00:02:48] Small company, small problems. Big company, big problems. Those big problems can scale, and a bad hire can be very expensive. It can be in small companies too; I'm not saying otherwise.

[00:03:04] They have smaller budgets. Can't a bad hire be difficult when you don't have much money? Usually you improvise a bit. You might have option agreements, shareholders' agreements or something else to offer on top of salary. In a private equity-backed company, you essentially have the salary and sometimes a management incentive program, an MIP. You get some kind of option stake and share in the growth journey if you're on the board or in management.

[00:03:37] What percentage is it usually? Completely different; it varies from case to case. Typically you set aside about one hundredth, one percent, for an MIP, shared between perhaps two, three or five roles. It all depends on the company's size. The smaller the company, the larger the stake. The larger it is, the smaller the stake.

[00:04:01] When you join, the important thing is to see it as a bonus and leverage on the work you do yourself. You're part of the journey and perhaps grow the company from 200 million to two billion. Then you might have increased the valuation tenfold or even fifteenfold. If you joined at a valuation of three, four or five hundred million, it might have become three or four billion …

[00:04:28] … and a big bonus for whoever contributed. Is that more generally accepted in Sweden? I recently listened to an interview with a founder who worked in Poland and Japan many years ago. He had to struggle to convince people: ‘You'll become a part-owner; you'll get shares.’ People thought: ‘You're trying to trick me. You just want to pay me less.’

[00:05:03] I'd say it's extremely unusual in Sweden. It's become more common, particularly in tech, because there are more favorable option-based compensation agreements you can issue, favorable options and employee benefit options and so on.

[00:05:26] If the company meets the criteria, such as being young and fairly recently established … I don't remember the exact number of years, whether it was up to seven or ten. It can't have revenue above a certain level and must have a certain number of employees. Then you can issue that type of option. They're favorable both for the company and for the employee or beneficiary …

[00:05:53] … who doesn't have to pay tax while the option is running and only does so when the profit is actually realized. That's normal, because then you have the money to pay it. In some countries, you're taxed when you receive shares or options even though it's an unrealized gain in a company that might have no money to distribute in two or three years.

[00:06:20] It might go bankrupt or whatever. There are any number of stories about people becoming personally liable for repayments after participating in share schemes under various agreements.

[00:06:33] Then I understand why people don't want it in those countries. I think it was like that in Sweden too, before this was introduced a few years ago. Was it the Klarna and Spotify founders and some other tech companies that pushed it through with the government? I'm guessing the Moderate-led government, but I have no idea. They're very favorable for entrepreneurs.

[00:06:53] Could have been. This is a tangent that's outside both your expertise and mine. Back to hiring, because it can make it or break it. We're growing a great deal organically. The capital we've brought in primarily helps the company with expertise. We get a different structure and a different way of reporting.

[00:07:22] It's not that we haven't been profitable. We've been very profitable and have been able to pay dividends and reinvest. Money isn't what Såpa is primarily after; it's the network, expertise and professionalization we get with the team we've brought in.

[00:07:38] Couldn't you hire that expertise yourselves? We could, absolutely. But then people are in their positions without taking any risk. Now people are coming in and risking a lot of their hard-earned money. A private equity firm has raised some of its own money and some from people who trust them.

[00:08:05] I feel that the recommendations we receive come from us being in the same boat, if you see what I mean. Had we hired someone, of course we could buy services and find really good people. But would we be in the same boat then? I don't think so. Even with equivalent option schemes and very big incentives, they haven't put a number of million kronor on the table at risk. If the company does badly, now we're in the same boat and all want to save it. Right? Fortunately it's going well now and we're having really enjoyable conversations. But there will be days when things go badly, because running a company is like a roller coaster. It goes …

[00:08:57] … up and down. For us it's mostly gone up, but down sometimes. Then we've had to get tough and work out how to fix sales or deviations in sales. We've had other challenges.

[00:09:10] Yes, you can hire your way to that. But I think there's a different value in someone external putting money into the company and buying shares compared with [unclear in the Swedish source: vad det gönnar kör].

[00:09:25] Is there a level at which hiring becomes difficult because they need bigger incentives? Perhaps you reach a level of expertise where people want leverage and to earn more. That expertise …

[00:09:44] … perhaps you can't access it without having them as investors? One hundred percent. Looking at myself, I've been both an entrepreneur and a shareholder. In the previous company I helped build, an earlier agency, I started as an employee with an agreement to become a partner. I became one fairly quickly. We grew well and I did a good job, but that isn't enough. You want a bigger incentive than the pay packet at the end of the month, because I know I could just as easily do it myself. Admittedly, now I've proved I can, but there's always a risk from …

[00:10:33] … the employer's side: Should we give incentives in shares and benefits or not? After that I had a year in between when I couldn't work in directly competing e-commerce, but could work in management consulting. The arrangement was the same. I would never have accepted salary alone; I became a partner immediately, with an incentive program and shares in the parent company.

[00:11:02] Attracting talent to a small company … I'd almost say it's a red flag if the person doesn't want to share in the upside. But earlier you had a meeting with a recruitment agency. Why have you started working with those? Over the past few years, I've done a lot of hiring myself, but I've also seen other companies get help.

[00:11:27] I've strongly advocated E-commerce Recruit, who are good at industry recruitment in e-commerce and related commerce roles. But honestly, you know your own business best and know what you want to do. Most agencies have a predictable process. Step one is to gather information about what we're looking for, read up on the company and do research. You skip that part if you do it yourself.

[00:12:06] You save a lot of time just posting the ads yourself. We can handle the marketing in-house. LinkedIn is so broad that I'd say nine out of ten candidates today are found there. Almost anything else is strange. There used to be lots of marketplaces to advertise on. Recruitment firms could negotiate a deal and buy discounts on somewhere like Blocket Jobb …

[00:12:36] … when they bought in quantity and could offer that, on Monster and loads of different sites. Now LinkedIn is so big and widespread, especially in our niche. Step two is about filtering candidates. That's where you get major leverage from a recruitment agency, because they're used to it and do it every day. Those of us in the business might not be used to it. We can easily ‘waste,’ in quotation marks, hours or days sifting through candidates. Getting two or three hundred applications is very easy today. I'd say it's an employer's market, from everything I've read and my own experience. There are so many employers who have … Yes, it's an employer's market. That said …

[00:13:28] You can easily get 200–300 applications, maybe over 50 reasonably qualified ones you want to give time and care to. Just skimming CVs, LinkedIn, references and portfolios takes time. That's where you want help from people who do it every day. That's where I feel they contribute.

[00:13:55] I'm thinking of Alva Labs or Teamtailor. Don't they have automated filtering features that do that initial stage? I don't know. I get outreach from them all the time, just this morning. I hate it because it's so impersonal. If they'd sent a video: Here's how the service works …

[00:14:14] … a two-minute Loom video, I'd definitely have clicked. But they send a cold outreach email with zero personalization, nothing about me. Here's the service, buy it, without saying what it costs or what I gain from it. I can't be bothered to click. Today I literally blocked one and clicked phishing and spam …

[00:14:37] … when I received one like that. Because it's not personal? Yes, and that particular one was Teamtailor. I'm sure they have automated or semi-automated services. But for some services there's value in human involvement. The recruitment agencies probably use AI too. You can go through 50 CVs in minutes instead of scanning them yourself for certain words.

[00:15:08] You can also get around the AI tools. I've read that you can hide keywords that humans can't see but AI reads, using white text on white paper. The AI can read it because it selects all the text in the XML, while a human can't see it.

[00:15:30] Similarly, there's phishing involving code. If you ask AI to visit certain sites, you can get scammed, because the code can ask it to do things invisible to the eye. Even I didn't know that. But back to recruitment: There are services that make things easier, but a human is still needed to select the three to five best candidates to present to all stakeholders. You also have to account for them having different starting points and requirements for the key hire.

[00:16:10] In our case, we have Vendis Capital, a private equity firm. The fund has its reporting structure and is used to a certain approach. When we're recruiting a CFO, they have their requirements.

[00:16:28] What have you learned from them? What's different from before? More professionalism and structure. We have formalities that some might find difficult or feel kill creativity. I think they're bloody great in our situation. They force us to think certain decisions through one more time, which is really good.

[00:16:59] You don't want to spend five hours discussing whether a button should be red or blue. A PE or VC fund doesn't look at that anyway. But when recruiting a CFO, perhaps you should spend five hours with a questionnaire, deciding together how to shape the role and what our weaknesses are. CFO, even senior controller, is a broad role that can do a lot. Today the recruitment agency asked whether the person should work on purchasing and logistics.

[00:17:34] We have a logistics manager, so I'm unsure about logistics specifically. But I think the person must be able to do purchasing calculations. I don't know, is that reasonable to expect of a CFO?

[00:17:48] What are your criteria for the CFO right now? My criteria … The most common pitfall, and this is my recommendation to everyone running D2C, is that you should recruit from the industry. The most common mistake is taking someone from an adjacent industry and thinking: This person has been a senior controller at Axfood. That's grocery retail, and you're moving into that. Of course there's overlap with Västerbottenssåpa, but still, not really. It's a different business, a different pace, entrepreneurial drive and a different location. You have to account for Stockholm and Vilhelmina. Big differences in the business. We sell directly to consumers, manage inventory and do the accounting differently. We have different types of forecasts …

[00:18:38] … different needs and purchasing from a larger organization. Recruit both from the industry and from similar companies that have made the journey you want to make. If someone comes from H&M, a big grocery or retail company, they may have had a narrower scope and done very well at their level. Extremely capable, but without that broad scope and experience of working with different stakeholders across departments.

[00:19:15] That's a common, major problem. You think that of course the qualified person should be able to do it. How difficult can it be?

[00:19:26] It varies between companies. For us it's useful if the person has worked with, or close to, a company that develops products. We do product development and have production in Vilhelmina. That experience is useful.

[00:19:44] Do they need experience specifically in grocery retail, with similar products and roughly the same size, so they've already solved your problems at another company? That would be the dream, but it doesn't have to be that way. If the person comes from a company like Nelly, a 500-million, 800-million or billion-revenue company, they're still struggling with fairly similar challenges: average values, cash flow, delayed incoming deliveries, product problems, returns and the like. Right? But you don't face those problems in the same way if you work at Weekday or H&M within the group, with a part of the operation for perhaps the UK or the MENA countries.

[00:20:42] How does a recruitment agency help beyond finding leads? The best example is a stronger network. Through recruiting in the industry and adjacent industries, they know which people suit different situations. They might have five to ten candidates they can call straight away. ‘I recruited this one to that company seven years ago; an incredible success.’ They have that relationship.

[00:21:16] So the network you want access to is almost like a shortcut in life. That's what it's worth paying for. Why? I can draw a parallel with myself. If someone wants to recruit an e-commerce person, I don't need to know the person personally. But if I haven't even heard of them, it's a bit strange, considering I've worked in the industry. It's like a little pond. You meet everyone at the events, talk at different roundtables, and I've been everywhere giving talks. It feels strange if I haven't heard of the person. At least I can fairly quickly check their CV and who their references are. Other …

[00:22:05] … recruitment firms can do the same in their industry. The network is invaluable. It's quicker to get in touch and get people interested than just posting a role. The hottest candidates probably won't apply. The most desperate, those who've lost their job or are between jobs, apply straight away. Others might take a look but need an extra nudge, outreach from someone who knows the person is good.

[00:22:39] I've never applied for a job, after my first one 15 years ago, that is. Since then I've never applied; it's always been a recruiter getting in touch about an available role, or someone in the industry wanting to recommend something. I also often help without being paid. Today I connected two fantastic individuals: a guy I worked with seven or eight years ago at another agency, and a company we worked with but stopped working with a year ago. I connected those two this morning. Almost a match made in heaven, I think. I can see it'll be a bloody great match, because this is …

[00:23:15] … a hands-on strategist who's really capable. The company is moving forward fast. If I were them, I'd definitely bring him in. But that's my little niche. If we're hiring there, we don't use a recruitment agency. If we need a CFO, though, I don't have that network. Historically I haven't networked with controllers. Even with some experience, it isn't my core expertise.

[00:23:47] That makes me think about how you've done a lot of recruiting yourself. Tesla's president a few years ago said Elon Musk had arranged for 60 percent of his calendar to be recruitment. It was considered one of the most important factors in how the company would perform. I think it's the most important thing in a company. With the wrong people in the boat, you make wrong decisions on fundamental matters. We see that when, for example, listed company Nelly changes its CEO and board, and they come in and suddenly turn the ship around. From the outside it can look fairly simple. But of course a lot of work went on behind the scenes, including at other equivalent companies. It's the people …

[00:24:35] … who do the work and produce the results. It's the people you need to spend time on. Recruitment is one of your main tasks if you're a CEO or on a management team. Not spending time on it is shooting yourself in the foot.

[00:24:53] But then there are really two questions we can go into. One is how to choose a recruitment agency. The other is how to hire someone when you don't know the role yourself. Yes, both are really relevant. I don't have an answer to either; right now we're dating different agencies, you could say. We're taking initial meetings, hearing them out, and above all I'm trying to put emphasis on the personal and human aspects of the meeting. Are these people just reading from a script and following their own track regardless? Or are they listening, taking feedback, hearing what I'm saying and adapting their pitch? Then: What have they recruited for before? Have they handled similar roles in similar industries?

[00:25:41] I have a checking question: What industries do you see for this role? If the answer is grocery retail, retail or consumer, which is so damn broad and could mean anything, that's a red flag for me.

[00:26:00] Why? Too broad. I want the answer to be D2C. Or it doesn't have to be D2C, but at least e-commerce. Whether it's multibrand or direct to consumer, you'll have had equivalent challenges. Ideally D2C, because that often involves your own production, sometimes abroad. You're selling directly without intermediaries and have faced the same challenges as us.

[00:26:30] Hopefully you've been involved in scaling a company. Perhaps not as quickly, but it's grown and you've experienced the growing pains. That's a checking question I leave open. I don't know how to choose an agency; the pitches sound alike. We have three or four to choose from right now, and in terms of cost I don't think there's much difference.

[00:27:03] Seniority, who do you get on the team? That's important. A partner may present the assignment, while a junior gets it and does the outreach and headhunting. Then you want to meet the junior, not just the partner selling it. The same as choosing any agency: Meet the people who'll be working with your company.

[00:27:35] That's what I'm trying to do. Sometimes the partner will handle the recruitment personally. Nice, then I know what I'm getting. If you're doing it with a team, that's fine, but you hold the responsibility and you're the one I hold accountable for the main questions. Then I want answers from you, not for you to ask to get back to me after double-checking with someone on the team.

[00:27:58] It's hard to choose, because the industry feels pretty similar throughout. Have you worked much with recruitment agencies? Not enough to give good tips and advice. We're going to go through how you hire when you don't know all the details of the role. But first: How do you distinguish between bringing in an agency, recruiting yourself or using a recruitment agency?

[00:28:29] Difficult. It's easier to recruit for roles you know yourself. If I'm recruiting in e-commerce, it's easier for me to do it myself than outsource it. The only reason would be that I trust, for instance, E-commerce Recruit to bring in new candidates. Then a few hundred thousand extra might be worth it for a broader network and more choice.

[00:28:56] It is. Roles I don't know, or that we don't currently know, like CFO and Head of Retail, are ones we haven't worked with. We don't have them in-house and don't know what to look at. Then it's smart to get help from an agency that's recruited that type before. They can give input along the way on what we should look at, why a particular candidate stands out over another, and assist with setting salaries, contractual aspects and basically everything from start to finish. That's a perfect example of when to get help. The other is if you have a great deal to do, which we usually do. If you're an entrepreneur and founder with a lot on your plate and want help, then …

[00:29:43] … it's phenomenal. You can see it as an expensive cost, or as getting to spend the time on other things. If the team saves me just ten hours, I can be more efficient and earn more in those hours than now. Ten hours is a low estimate; you probably save much more. But say ten: Is it worth it to me? What is that time worth?

[00:30:13] What is a bad hire worth? It costs an enormous amount. Some roles can cost several hundred thousand, others several million if you hire the wrong person. In some cases getting help is a no-brainer.

[00:30:29] Is there a risk of saying you don't have time and trying to outsource it? You still have to make time. Input and output are usually a good starting point. Outsourcing one hundred percent probably doesn't work. You have to provide a good requirements specification and picture, and at the end conduct proper interviews and review the tests with the three to five finalists.

[00:30:59] But trust the agency to find three to five good candidates. If it doesn't, redo the process. How do you define a requirements specification if you don't properly know the role?

[00:31:13] Really difficult. You can get external help. But now we're almost getting meta: How much external help should you get? You have the recruitment agency to rely on. Hopefully it's good at recruiting and knows the role.

[00:31:33] In some cases perhaps you shouldn't even hire anyone. In marketing there are roles where you think you can do it in-house …

[00:31:47] … but it actually works out cheaper with an agency, because they get leverage from buying the best software and using it for all their clients.

[00:31:56] True. That's a different case. But if you're hiring a media buyer, a CRM person or a hybrid today, an agency can be cheaper. Partly it has the software you mention, and partly perhaps tools it's built itself with Claude and other things. Before that they had developers building software for several hundred thousand to deploy.

[00:32:26] So they have those elements. Then you have the leverage from the agency usually keeping track of several clients and knowing a bit better what's happening in the market. It often has several people in the same role who can discuss things with each other. If you hire one CRM person, they usually only have themselves: the right hemisphere talking to the left. There are no sounding boards within the brand. Everything has pros and cons. Sometimes bringing in an agency for certain types of roles is a big advantage. Sometimes it isn't.

[00:33:03] We have employment where you recruit yourself, a recruitment agency, and an agency doing the work without recruiting.

[00:33:17] Then consultants. You can bring in an interim resource, a consultant, or try staff temporarily. There are many ways.

[00:33:27] Yes, you can bring in an AI person. There are of course different ways to solve the problem. Hire someone in, or take a consultant temporarily at a certain utilization level. As I said, everything has pros and cons. If you know the role you're filling requires close to or over one hundred percent, then hiring is what's needed. But if you know the work is only four to eight hours a month, perhaps it's easier to find an agency that does it in that time. They might charge 4,000–8,000, or even 16,000, and it's worth paying compared with hiring, training and then inventing tasks outside those sixteen or eight hours.

[00:34:10] How do you distinguish today? You know how to build companies. I read an interesting study involving more than 500 startups in the same accelerator program.

[00:34:23] They all got 25,000 dollars each in credits to use on AI. Both halves received training on AI, but the training differed.

[00:34:38] And the result was that one group received AI training that led them to increase revenue by 90 percent compared with the other group. Okay. The first group learned about AI in general. How to streamline processes, how to get faster at writing emails, how to collect email addresses and perhaps write the emails more quickly. So really it was more about: How do you become more productive as a person? That was the first half. The second half learned about the processes themselves. That is: Don't even assume a human should do this. Instead, think about how you can automate the different roles so that a human isn't even needed.

[00:35:22] An example: Previously you might have had a designer and a UX person investigating and researching. The first group learned how to be more efficient at UX and design. The second group learned workflows where AI builds seven versions of the software over the weekend, which you test in real time on Monday.

[00:35:53] Reasonable, a really current example. How do you see recruitment today compared with five years ago? You've been involved in building several companies to hundreds of millions, after all.

[00:36:05] Some roles are very human and require a lot of human touch. You can't outsource Head of Retail to AI today, and I don't think you will within five years either. That's why we're hiring. The person will have underlying software helping with what people on the team might have handled previously. You need the strategy, partly supported by AI, but also to execute it, travel around and meet people. A team visits stores, replenishes stock, packs, puts up displays and reviews areas. A lot of physical work …

[00:36:51] … that can't be automated like a desk-based marketing role or UX, where quite a lot can be. That aspect exists. But would we hire a specialist today, a CRM person or media buyer? Perhaps not. A lot is being automated, so we're hiring more of a growth manager or growth specialist with overall responsibility and support from various agents.

[00:37:34] I've seen that development at other agencies and brands. It's not unique; several companies work that way. If you're not doing it, you should start catching up, otherwise you'll be overtaken. It's the industry's general development. That's why it's become harder as a specialist. If you've been an e-commerce developer, it's fairly difficult to get a job in that today.

[00:38:04] Now that you've sold Såpa and brought in a lot of money, what three things are you focusing on in recruitment to grow? One: The right person in the right place. We need help to grow and scale. Two: It mustn't take too long. We need the help here and now.

[00:38:31] Ideally the processes should be completed before summer starts. Don't drag it out too much, because then hiring gets harder. Three: The people should roll up their sleeves, be a bit entrepreneurial and help drive the company, rather than just seeing themselves as ordinary employees.

[00:39:05] But how do you find those people? I think everyone wants people who roll up their sleeves and work hard. It's difficult. We talked about it earlier: We have the incentive program. We have a hot offer, because you're joining an extreme growth journey. It builds your own CV incredibly well. The opportunities it opens up are enormous. If you've taken a Såpa case from eleven million to two billion, it's very easy to get lots of equivalent or better jobs going forward. You're on a rocket, definitely. Internally we usually call it a hypergrowth case. It's much easier to be in environments and do things well with people who are …

[00:39:57] … like-minded than to take full responsibility for a case that's going badly and needs turning around, if you see what I mean.

[00:40:08] It's a good offer. We also have capital behind us, so it's secure, permanent employment. You get to visit a lovely place like Vilhelmina several times a year. That's a bonus in itself.

[00:40:21] I can imagine people lining up to go to Vilhelmina. They do; bloody great fun. I've actually been there. A very small and cozy airport.

[00:40:29] Have you only been to the airport? No, it's not like I went … [unclear in the Swedish source: Ulla V]. But the airport is a bit bus-like. A little village, but incredibly beautiful nature.

[00:40:40] I recommend a visit in both summer and winter. I've been there in both and it's really lovely. A big benefit of the job. If you enjoy e-commerce, you get to work closely with me and will probably learn a lot of practical things about building companies. You get to work closely with Sara and see product development up close. There are lots of positive things about the case.

[00:41:15] When should a company hire its first staff? Then at ten, twenty, fifty and a hundred million, how does recruitment happen at the different stages?

[00:41:30] Difficult question. Today is different from a few years ago. The first unicorn company, meaning the first company with revenue of a billion dollars in dollar terms, has probably already been created with just one employee, I think. Even within D2C, perhaps not in Sweden but globally. We see companies like Andy, which sells posters online, where it's Andy and one other person …

[00:42:06] … with revenue north of 100 million, and now with an investment company, Jarno's crowd, behind them, they're going to accelerate and grow fivefold or tenfold. I don't see any difficulties … Well, there are difficulties in every industry, but no direct challenges requiring loads of employees. It's about processes, automation and solid preparation.

[00:42:35] I think they've done that. They might need to grow the team, but that's not the first recommendation: Now let's hire loads of people. Every hire takes time and becomes expensive if it's wrong. These are people you have to have meetings with and bring along on the journey. Only hire if the need actually exists.

[00:42:57] Not for the sake of hiring. If you're turning over five, ten or twenty million on your own and it works, go for it. Why more people? At Twistboxes, Micke is on his own and the plan isn't to hire. He's surrounded himself with consultants and agencies, outsourced as much as possible to experts within their niches. Then you can also have different expectations than with traditional employment.

[00:43:28] There's no simple answer. If you're good at product, brand and brand development but aren't getting it out to market, perhaps you have to hire or bring in an agency that's good at getting the product seen and heard.

[00:43:46] What risks are there? Similarly, you can use 3PL or your own warehouse, bring in agencies or recruit yourself. It's easier to replace an agency than an employee. Sweden is fairly accommodating, or forgiving, when you're a small company, but you still have obligations you must fulfill. You can also get a bad reputation in the industry, which isn't very helpful. It's hard to recruit talent when you're small and things are unstable. Bad hires involve major risks. Often you have to take a chance on younger staff who are entering the labor market, or who see the opportunity to learn a lot and want to do …

[00:44:33] … lots of different roles. Small startups require several hats. What are the most common mistakes when a company hires its first staff?

[00:44:46] It's difficult, but a common mistake that I make too is hiring people you know around you, because it's easier. You fall back on: I know this person. They might not be the best, but I know them anyway. They end up being the person I choose. Then it can go really well. I've hired both friends and family and it's gone extremely well. Some of my best employees to this day. It can also go completely wrong. We've been there, hired a friend where it hasn't worked out so well. Ending an employment relationship like that can be awkward. What happens to the friendship afterwards? It's …

[00:45:28] … a typical mistake. If you do it, put clear roles and terms in writing beforehand to avoid discussion later. I've had discussions myself, perhaps not specifically about this but about compensation, without writing things down. Then someone comes back with a completely different picture. Were we on different planets when we talked?

[00:46:00] You also don't know how much work certain situations require. Everyone wants to be part of a success story. Someone thinks: I'm helping a friend and might get a share of the upside, but it isn't in writing. The friend thinks: I took all the risk; you were paid a salary. Different opinions can lead to disagreement later.

[00:46:28] Better to discuss everything beforehand. When bringing someone in, be clear about the division of responsibility, the role description and follow-up. How do we follow up? Sometimes I take long shots and try people out, but then the objectives for the first six months are clear and explicit.

[00:46:50] How do you do that? We have an initial discussion and follow up weekly at first, then monthly, quarterly and annually. Are we following what we said? We've talked about CRM for a while. We can see you don't know Klaviyo CRM right now …

[00:47:10] … but set a goal: Within three months, I want you at least to be able to create a strategy for personalized emails to leads from Facebook, a specific case. Then a general goal: You should have set up flows, be able to send segmented emails and explain how the business is doing and the next actionable insights. A 90-day goal broken down by month and week, so there's something to make progress towards.

[00:47:47] Everyone likes development. I think personal development is a basic condition for enjoying your workplace. In all the studies I've read, and in situations where people want to change jobs, it's because they've stopped developing. You have to understand that in small companies we don't compete with each other for a role in the same way you might at Ericsson, H&M or Ikea. There might be one role that certain people in the department are competing for, and perhaps you have to elbow your way forward. I don't know; I haven't been in that situation. But in small companies everyone can grow in parallel, get more responsibility, higher pay and different types of roles and allocations. It's …

[00:48:38] … usually a flat organization, without hierarchy in that sense. But what does the onboarding process look like? It can be very different. At the agency we have a designated person responsible for onboarding, in this case Tove, who handles the administration. Okay. How do the apps and access permissions work? When you arrive on your first day, you have your work equipment, access to all the tools and know how they work. You have a checklist to tick off, such as uploading a profile photo and other simple little things. Step two is setting up meetings with your immediate manager and team, so you're included in all meetings and know what goals we're setting …

[00:49:34] … and how they're followed up. Then you make sure to do it. The process can change along the way. We're fairly agile, which isn't a bad thing as long as we communicate freely and openly. If something isn't working, say so early.

[00:49:57] It's easy to pull … You should pull the handbrake sooner rather than later. I talk to lots of employers who think they'll wait a few months; perhaps the person will change. For instance, if regular working hours are nine to six or nine to five, but the person arrives at ten a few times a week. You say something, it changes, and after a month you're back there: The person arrives late or goes to the gym in the middle of the day. You don't enjoy that.

[00:50:37] Some workplaces are completely open: Do whatever you want as long as the work gets done. Others aren't. You have to be clear about expectations.

[00:50:49] Say you hire someone, the person starts and gets onboarding, but you notice they can't do half the tasks that need doing.

[00:51:02] What do you do? Either you pull the handbrake and wonder whether the learning ramp-up is too long. What's acceptable? It depends on the role. Do you know it yourself and intend to train a junior, or is someone coming into management or a leadership position? A big difference. Salary is also related to the ramp-up period. If I hire someone above 50,000–60,000, I have high expectations of delivery from essentially day one. The ramp-up is zero.

[00:51:44] But if I hire someone on 25,000–40,000, I'm more accepting that the person needs time, a ramp-up of perhaps a year, sometimes two, before reaching the level I've assumed. But I see the path there, and we have time to develop the role together for the future. This is something candidates in hiring processes don't think about. As an individual you always want as high a salary as possible. But the higher the salary you ask for, the greater the demands placed on you. It's an indirect, unwritten rule. Nobody says it except me, but that's literally how it is in the vast majority of workplaces. The higher the salary you ask for, the greater …

[00:52:36] … the demands and the higher the workload, or whatever applies in your role. That can be positive if you want it. Very positive for the kind of person who really wants it, has the opportunity and time and wants to learn, or whatever they want to do. If you have the will, it can be extremely positive. But if you know you don't have the time right now, want to pursue a new hobby, have just had a child or want to focus on family, that's perfectly reasonable. Don't put excessive demands on yourself. You'll primarily disappoint yourself. Then I'm thinking about juniors. I got experience early on by …

[00:53:19] … offering some people to work for free for a limited period. I had so few results to show that I couldn't even get a basic starting salary based on my skills at the time.

[00:53:35] That's a really good idea. The best way to get a job today is to offer yourself and your time. You get a foot in the door, hopefully a good mentor, and make yourself invaluable so you get a good salary quickly. It was different 15–20 years ago when I started, but today it's tougher for newly graduated e-commerce people to get a job.

[00:54:09] Yes. The tip there too … I listened to another entrepreneur, well known on social media. He said he constantly has people writing: ‘I can help you for free.’ But they don't define with what or in what way. They don't understand that training them is also an enormous cost to him. They just think: I'm working for free, so you should take me on. Instead of thinking …

[00:54:36] … that the time he or his staff spend training also costs money. Enormously. That's why companies don't take on LIA work placements left, right and center. We only accept a LIA placement if we feel it's a serious person who wants to work after the internship …

[00:54:53] … and if the period is at least a number of months and it's a serious school. If the LIA period is only four weeks, I'd say training the person is a greater cost to the company.

[00:55:08] Pros and cons to everything, as I said. I hope you've come away with an understanding of our thoughts and views and the process we're facing. We have two key hires and we're going to scale up. We'll be hiring many more and can share that in future podcasts.

[00:55:31] Perhaps someone listening wants to work for you. I hope so. If you know a CFO or Head of Retail at a fast-growing or growing e-commerce company, let us know when you hear the podcast. Send a DM and hopefully we'll find the right match. Great. Thanks, Fredrik, for another week. See you next Thursday. If you like the podcast, share it with a colleague or someone in the industry who finds it interesting. Every week we talk about usually different things, but always related to e-commerce. The journeys from zero to a hundred are very much in focus here.

[00:56:19] Talk to you next week. Bye! Yeah.