Shawnee Love   •   July 29, 2024

In the early days of tech, I had a CFO tell me that investors of start ups were either Friends, Family or Fools.

As I reflect on the stages of companies and their HR needs at those stages, the start up stage (typically to around 5 people) tends to be just that, friends, family, or fools (and I say that most affectionately for the first true believers in the products or services being produced. Those friends and “foolish” dreamers quickly become like family as they go through the trials inherent to getting a venture off the ground.

If the company doesn’t make it, there are tearful goodbyes with promises of lifelong friendships and often pairs or a trio spawn a new business and give it a go to get to five.

If the company succeeds, this group of 5 stage becomes the heroic age of the company where rituals and myths are born and in the future people wistfully remember the near insurmountable obstacles which the small but mighty team overcame.

When you are 5 people, the times are pretty simple. Culture is the 5 of you, held together with your mutual interests and the vision or purpose of the original founder(s) who by definition establish the cultural framework. Since communication is easy (whether online or in person, its fairly easy to get messages out to people you know really well), and the decision-making process is usually either consensus, founder decides or majority rules, there isn’t much of a need to establish systems or processes. This is one of the reasons why you don’t need anyone in HR. If there is a people challenge which arises, that person is treated like family following one of the typical familial conflict resolution tactics (avoidance, argument, or direction). People move on and if things go well, it becomes a distant memory. It helps that those friends, family and fools all tend to be more alike than different and bump along fairly well together.

The value of HR at this stage is more advising on setting the groundwork for future growth if the business gets there, but let’s be honest, few want to invest in something until they know they are going to need it, so HR remains on the wish list for this early stage of business.