Making payroll: an inside guide to first hires
Startups’ first hires, inside the raise – Fluid, growth company gazette +More
Times are tight for startups, which makes the first hire all that more important.
nVenue sells a stake in its micro-betting business to the NBA.
Inside the raise takes a look at HappyHour’s recent investment in Fluid.
All the startup focuses from November.
Making payroll
It is not easy for startups in the current climate, so making the right employment decisions is more crucial than ever. Here, we find out how startups make that all-important first hire.
Hiring into the whirlwind: More startups closed down in 2023 than ever before, according to software provider and adviser Carta, which describes it as “the most difficult year for startups in at least a decade”. It predicts another two or three quarters of increased insolvencies and a depressed fundraising climate to continue.
But founders’ gonna found new businesses and all would be in agreement that their people are their key asset. So, how do you go about putting people on the payroll?
Outsource or die: it is possible to outsource almost everything, from sales and marketing to software development and engineering, and more traditionally outsourced areas such as legal services and finance.
“I would outsource absolutely everything that is not absolutely essential,” says Bettingjobs.com director John O’Neill.
“Startups don’t know how successful they are going to be. They need to go to market and test the market. When they are making some money they can come to Bettingjobs.com to build a team.”
Serial entrepreneur Steven Matsell’s White Coral Group is a next generation low-cost specialist law firm built on the founding principle that startups generally invest their money in product development, sales and marketing, and not on lawyers.
“This is one area that is done really badly by startups and they pay for it later,” he says.
“They don’t pay enough or they pay too much. They have overlapping contracts that need to be consolidated later. Potentially, when you exit, if your contracts are not done properly, it will trip you over.”
Typically, company founders will be relying on their own networks: on previous colleagues and clients, on strategic advisers, investors and board members, rather than recruitment agencies or job boards. Investors can help with contacts and they can also provide an objective voice that helps sell the founders’ dream to recruits. But what do you recruit first?
Know your business: Future Anthem founder and CEO Leigh Nissim says it boils down to “understanding what your DNA is – keep what is key in-house”. For Future Anthem, the DNA of the company is data science, and that made a chief data officer, Chris Conroy, a crucial early hire.
By contrast, the biggest challenge in payments and banking is compliance, so a compliance officer was the first hire of Delos Banking director and co-founder Mark Walsh.
“You only have to look at the news to see the number of compliance failures. It was absolutely essential for us to be compliant with banks and regulators.”
“Your most important hires are engineers,” says Compliable chief revenue officer Greg Ponesse, “because you’re building IP and you don’t want that outsourced”.
Know your own strengths: Often the founder is a good salesperson, because they need to sell the vision to investors and clients, and in technology businesses they will be partnered by a co-founding CTO. Matsell, therefore, would advise emerging businesses to focus on managerial infrastructure.
“The COO is the absolute epicentre of your business,” he says. “That person is key. They need to be the right-hand of the CEO. The CEO needs to look out to the market and consider what could happen to the company, not be dealing with day-to-day problems. That is the job of the COO, who can see the company’s weak points and solve them.”
“Lots of CEOs meddle and cause problems. They think they know best in every area because it’s their baby. You need people you trust in every area and you need to let them get on with the job.”
“Your second hire should be a financial director who is a little bit too qualified, because you’re going to grow and you will need their experience.”
Others would suggest finance can wait, but echo Matsell’s sentiments when it comes to making that hire. All agree that early hires need to be flexible, energetic and to really understand and buy into the business’s USP. “These first hires will define what the culture becomes,” says O’Neill.
Trust the process: Trust is such an important issue – for employers and employed. With 20% of startups failing by the end of year two, nobody knows whether the venture will be successful. Ponesse advocates a “try before you buy strategy, otherwise known as consulting”.
Nissim says that six of his early hires, including Conroy, were employed on a consultancy basis and four of them are still with the company.
His CMO Mitchell Feldman was an early-stage investor before he volunteered his services to help with marketing. It pays to choose your investors wisely (if possible) as well as your employees.
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+More Startups
The month’s transactions
Australian-based OSB startup Picklebet has announced a A$15m (~$10m) Series A funding round led by Discerning Capital, with participation from Drive by DraftKings, Manifest Investment Partners and wagering and media investor Jeff Sagansky.
Jumping through hoops: The micro-betting supplier nVenue has sold a stake in the business to the NBA for an undisclosed sum. As part of the deal, head of gaming and new business ventures at the NBA, Scott Kaufman-Ross, will join the nVenue board as an observer.
nVenue CEO Kelly Pracht said the company’s offering filled a gap, particularly with basketball.
The Dallas-based company’s platform uses AI and machine learning to analyze historical and real-time data to generate real-time probabilities for each game.
Takeout: Fantasy sports and betting content provider FTN Network closed an oversubscribed $3m seed funding round led by businessman Perry Gershon and with involvement from the TechStars investment fund.
The investment sees Gershon take on the majority of FTN founder Kevin Adams’ stake. Adams will remain with the company as a board advisor.
The artists formerly known as: Parimutuel betting platform Sparket secured strategic investment from former NBA champion Metta Sandiford-Artest, formerly Ron Artest and who now goes by the name Metta World Peace. Yes, really.
The Malta-based VC fund focused on early-stage iGaming startups HappyHour has made a strategic investment in digital wallet and cashier solution Fluid (see Inside the Raise below)
Growth company gazette
The Betting Startups podcast has teamed up with Smarkets’ Jason Trost to reignite the Business of Betting podcast. The pod will restart with a series of weekly episodes released every Friday.
Underdog Fantasy has launched an initiative to find startups with original ideas around responsible gambling. The GuardDog initiative will see Underdog Fantasy backstop an effort to accelerate early-stage startups with $1m in initial funding.
Sports-betting/player trading mash-up Mojo appears to be in trouble after it was announced it was laying off 20% of its workforce.
Inside The Pocket has partnered with HotSpotBet to launch HotSpotJogos, a localized website offering F2P games, as it looks to boost its customer acquisition and retention in Brazil.
HITSqwad has teamed up with Black Cow Technology to utilize the latter’s OGA Jackpots platform to build custom, secure jackpot engines that support unique in-game and reporting features across its portfolio of slots and games.
Sports-betting and iCasino development company The Unit has unveiled a designed and developed front-end system for data odds provider TXOdds.
Want to unlock new revenue using sports-betting tools engineered by an experienced team of data scientists?
With our technology you can.
Our real-time API provides accurate predictions & actionable insights at your fingertips, covering more than 15 sports and in excess of 20,000 events each year, each of which is simulated over 10,000 times
Inside the deal – Fluid
Liquid refreshment: The link between HappyHour and the digital wallet and cashless solutions provider go back to when Fluid founder Roberto Rubio sold his previous company Betit to GiG, previously the home of HappyHour principals Robin Reed and Ben Clemes.
“All the companies in the HappyHour portfolio are uniquely innovative, so when the team and I were looking for funding for Fluid we knew that HappyHour was the investment partner we wanted,” Rubio tells E+M.
“Not only do they bring equity, but also a vast network of connections, insight and many years of experience.”
Rubio says Fluid was looking for “strategic money”, with HappyHour able to bring not just money to the table but deep industry knowledge and guidance on how the company can attempt to “redefine the digital transaction space in the gaming industry”.
Under the hood: For HappyHour, partner Ben Clemes says, “if there is a critical point of success or failure in any online gaming operation, it is payments,” but it is a fragmented space, and the potential offered by Fluid to develop an “agnostic cashier” that could integrate into a website was too good an opportunity not to miss.
“We were sold knowing there is a huge need for this solution in the market and, until now, no viable solution other than building in-house, which has a high cost from both a time and resource perspective,” Clemes adds.
Rubio appreciated the interest shown. “It’s one thing to support an idea when it is well-funded and quite another to believe in it when you have almost nothing,” he says.
Full potential: The plan from here is to launch with live customers in Q1 of next year. “We will use our traction iGaming to refine the product and discover the full potential of our machine-learning algorithms,” says Rubio. “Later down the road, we plan to explore other industries outside of gaming.”
“Our tech uses web components that deliver instant load times and regular insight into the user sessions,” he adds.
“Essentially, Fluid will increase conversion across all transactions by creating a simple, customized experience for every user.”
Clemes adds that the incorporation of machine learning into a digital cashier “aligns with the broader trend of utilizing advanced technologies to create more sophisticated, secure and user-friendly platforms”.
A helping hand: Rubio will be leaning into HappyHour’s collective experience as a central part of its strategy. “We have a great network of people who are always willing to test new products out, give feedback and in many cases be early adopters,” says Clemes.
“The primary pathway for Fluid is to continue to build upon the great product and organization foundations that they have already in place,” he adds.
“When they achieve this, which they will, the rest will fall into place.”
The month in focuses
UK horseracing media play The Racing App.
iCasino comparison site Comparasino.
Compliance solutions provider BetComply.
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