How to Make Your Startup Sustainable: Invest in Your Team

League Inc.

Studies show that it can cost​ employers up to 213% of salary to replace a highly skilled employee. That doesn’t even factor in time and productivity lost. So, what can you do to ensure you’re providing an environment that doesn’t just attract top talent, but that is built to keep it? Here are my top three recommendations:

1.   On-the-job learning. Employees who are attracted to work for a startup want the challenge. They want the opportunity to learn and scale with the business.

2.   Pay them what they’re worth. This can be a tough pill to swallow, because while startups 

may be full of passion and talent, sometimes the one thing they’re strapped for is cash. But if you want to ship an amazing product, you’re going to need amazing people.

3.   Don’t skimp on the benefits. I’m not talking about Free Candy Fridays and a kegerator in 

the breakroom. I’m talking about protecting your employees like they’re your family.

There are TONS of articles and studies around the first two recommendations (like this one from Inc. and this one from Entrepreneur), but not a lot has been said about benefits in the startup world.  

When I was running my last startup, Eloqua, benefits and salary were an afterthought. For the first two years I was paid $18,000 a year. 

What happens over time is you think, "We're profitable, we're making money," but really you're doing it on the backs of the employees and it takes you a long time to come out of that hole. 

Having great success with Eloqua, my co-founder Steve Woods and I wanted to do it again with our current startup, But we couldn’t build a business where everyone is constantly working 100hr+ weeks on a minimal salary and no benefits — we needed something sustainable. 

Think Like a Business

You need to act like a business right from the start if you want to hire the most talented people. Founders can often go with minimal salaries and no benefits, but you need to make it sustainable for your early employees. 

Want to hire the most talented people? Act like a business right from the start.

With, many of our employees have families. It’s easy to say, “Why don't I just pay you more and not do benefits?” But benefits provide an intangible value and comfort for people, especially once they have family.

What if something really bad happens? That extra $3,000–5,000 a year in salary is not going to cover it.

At Nudge we had been using a traditional benefits provider with a broker right from the start, but in December 2016 we switched to League

We made the switch for a few reasons:

     1.   A modern platform: using antiquated benefit technology is counterintuitive to the 

           experience I want my employees to have.

     2.   League’s customer service: their proactive approach made for a seamless transition. 

     3.   The economic advantage: with our old broker, we were leaving $18,000 a year on the 

            table. That’s a lot of amount of money to take out of the business.

Let’s dive into that $18,000 a year that we were leaving on the table. 

With the traditional benefits model, there is a certain amount of money the company can spend across different categories per person. Our broker explained to us that the average company is only using 60% of that, meaning that you’re leaving 40% on the table. That’s right, leaving 40% on the table is expected. 

For us, we were at 30%. That meant we were leaving 70% — or $18,000 — on the table. 

Especially in the beginning, you can do so much with that money: attend and sponsor an event, run campaigns to generate more business or even hire a part-time contractor to help you out for two months. That’s why I recommend to go with a plan where the money you put in is the money your employees are going to get out. 

The broker we had was pretty good. But to be honest, I’m unsure what he did, other than make sure we paid our insurance provider and inadvertently let us know that what we were doing didn’t make sense.

To compete for talent, startups need to have the same opportunities and benefits as large companies – @paulteshima

Most industries that have a middle person in it are going to be disrupted. A middle person is adding less and less value as these new technologies come up to provide the same service in a much simpler way. I'm a big fan of helping support that transition. 

If You’re Reacting, You’re Not Leading

Speaking of getting ahead of trends, I'm a firm believer in being active, rather than reactive. That's why I’m a big proponent of preventative health. I’ve been running almost every day since I was 22, and I think the only way to run a startup is to find some of that balance with staying fit. 

That’s why I was a big fan of moving us to a platform that allows our team to do those type of proactive activities, rather than being reactive.

One thing that encourages that is having your team members discover themselves and some common interests. That doesn’t happen with a traditional benefits plan. But with the plan we’re on with League, employees can take a yoga class together. It's a totally new opportunity to reinforce company culture, and that’s really how you can continue to add value not to just individuals, but also to the business. 

See how @Nudgeai was leaving $18,000 a year on the table before finding @JoinLeague.

Today, the best employees want their cake and to eat it too. Startups need to have the same opportunities and benefits as the large companies — that’s where the bar is set.

That can be hard to hear for a startup with limited money, but it’s the new reality. That’s why at, we try to pay as close we can to the market rate — if not even slightly above — and provide as many of the benefits employees would get if they went to a larger, more established company. Because if you want to attract and retain the best of the best, you have to provide an environment that is the best of the best.