Why HR Matters to Start-Ups

A whopping 80% of start-ups experience human capital issues, which either support their success or accelerate their demise. Strong workforce and HR plans not only help to define a start-up’s culture, but also protect its most important assets: its people. What every start-up (and small business) must know is that for its value proposition to be strong, and differentiated, there needs to be a solid framework in place to grow your workforce.Successful start-ups from Zappos to Google are known internationally for their unique culture and office environment. The history, of these two firms, can be traced back to a well-defined human capital strategy, in addition to, the know how to implement a strong product. However, entrepreneurial drive would mean nothing without leveraging the intellectual capital attracted to (and retained by) the organization.

Recently, Yahoo agreed to purchase Tumblr, a six-year old successful start-up for $1.1billion! Tumblr’s value proposition stems from building a platform, which allows users to create blogs and post writings, photos, and videos. According to the Wall Street Journal, “Tumblr lowered the bar for online publishing and effectively merged blogging with social media.” In essence, Tumblr increased the visibility for over 100 million users. Doing so, it has allowed users to exponentially increase the tangibility of their work to a larger audience.

Most interestingly, the agreement between Yahoo and Tumblr, calls for Tumblr to be independently operated as a separate business. This suggests, that Yahoo recognizes Tumblr’s unique culture, with only 175 employees. Additionally, it suggests that Yahoo’s recognition that nobody knows Tumblr’s employees better than Tumblr does. Keeping Tumblr running as an independent business unit allows Tumblr to continually concentrate on its product, while keeping its small-knit culture intact. At the same time, Yahoo expects to strengthen its market prospects through the acquisition. From small deals to mega-billion dollar closings, as with Yahoo and Tumblr, the common denominator is the human resources function. From strong performance to an agile strategy, these firms have been adaptive to competitive forces and market changes.

From talent quitting to protecting its intellectual property, Yahoo, Google and now Tumblr all have a strong talent acquisition strategy in common. Moreover, they all follow the path of entrepreneurial human resources. The products that these firms offered, at the time, were revolutionary. Accordingly, their human resource officers had to adjust their talent acquisition strategy to attract talent, where there were no initial six to seven-figure paychecks. Last, but not least, adjustments had to be made to retain its top talent and provide benefits that were congruent to the growth of each firm.

As the next possible Tumblr or Google, your business needs to value HR. This means you shouldn't start with a junior recruiter as your first hire or outsource all of your HR. Founders and leadership teams have to play a role in human resource/capital management. Whether you like it or not, your start-up’s success depends upon the strength of your workforce. So you have to learn and understand the business of people.


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