There are three things that matter in a startup: people, people, and people. The right people set your company on the right course. They create products that have never been seen before, enabling your company to break into a marketplace, or even to create a new one. Their dedication brings the products to customers in record time.

Finding these right people is the entrepreneur's job. He or she has to identify them, then persuade them to join the team by demonstrating it's a team worth joining.

Each hire is a very important decision. As a company grows, the organization becomes stressed, like a metal chain pulling a heavy load. It's important that each and every link in the chain be strong. And at the same time, each person must contribute a different strength to the company.

Entrepreneurs sometimes find that hiring people with diverse skills does not come naturally. If the founder is strong in engineering, for instance, he or she will favor people who possess that same quality. Good engineers will want to hire good engineers, but not necessarily a strong finance or sales person. But the founder must find people who complement, not duplicate, his or her strengths. So one way to begin the hiring process is by identifying your own strengths and weaknesses. This will tell you who you need to hire first. When you and a few people form the core of the company, you will look for people who are strong where you and the team may be weak.

The ideal person is someone who is very good in his or her field, but who is individually qualified to be an entrepreneur. This is someone who has broad interests, who can work well with others, and can take on responsibility.

In a startup, the manufacturing person can't say, "Give me a perfect product and I'll manufacture it." That won't work. That manufacturing person needs to be part of the team that defines the perfect product.

TEAM BUILDING

The first people in a new company decide the course the company takes. Every day, they define the right thing to do. Often, one of the most important decisions is who to hire next.

The first hires form the ceiling for the talent your company will attract, so don't shoot low. You want people who can mentor, motivate, and promote the people they hire.

Those first few hires are always the hardest, because they are the ones everyone will look to when deciding whether to join the company as it grows.

Hunting for seasoned executives from the largest corporations is not always the best way to find entrepreneurs. If you have a choice between a mediocre executive with experience and a highly motivated, talented, inexperienced person, I would choose the inexperienced person, because motivation and drive are difficult to teach.

You do not always need all the top people at the very early stages of a company's development. But if you find a great person in marketing, for instance, it is a good idea to lock them in. It makes sense to build a strong base up front. The slight cost of having someone on board a little early is minimal and is outweighed by the ability of the team to attack the market that much faster.

To identify the right people, you will need help from everyone you know. The venture capital firm, your board of directors, and even your mentors can help. The more diverse your network is, the broader your access will be to very talented people. This also goes back to picking the best VC firm possible to fund your company, because it will help you recruit talented people.

The best way to attract and keep people is to offer them part of the company. Give them stock options. Obviously, if you have identified talented people, they will be in high demand and will be taking a lower-paying position to join your enterprise. Those individuals need to understand that you are offering them the right opportunity, and that a short-term loss will turn into a long-term gain. This is where your conviction and your ability to sell become very important.

Sometimes entrepreneurs are afraid of giving equity in a company. But by accepting fewer dollars and more equity, the team is motivated to build a strong company over time.