Zero-to-Ten: Building a Founding Team in Crypto

 

As Head of Portfolio Talent at Pantera Capital, I have been in the unique position where I’ve been able to partner closely with top founders in our portfolio of 200+ companies in the blockchain ecosystem. As our industry continues to evolve at a rapid pace, building a strong, lean team has become the competitive advantage. Over the past few months, I’ve had the privilege of speaking with several of the best founders in the ecosystem, gleaning invaluable insights into their hiring practices, company culture, and the unique challenges they have faced when building their initial teams. 

 

I’ve recently conducted our first “Zero to Ten” interview series with leaders from notable companies such as Arbitrum, StarkWare, 0x, M^0, Obol, Omni Network, and more. on how they built their initial team from the founders to the first 10 employees. Now I want to share the findings with you!

 

Recurring Themes in Hiring

 

Network-Based Hiring

 

Every founder I spoke with talked about the importance of network-based hiring. Leveraging personal and professional networks has proven to be the single most effective strategy for making early hires. As Austin King, CEO of Omni Network put it, “If you’re not leveraging your personal network, I honestly don’t know how you can land those initial hires.” The importance of hiring through existing relationships can not be overstated. Without a strong network in the industry you are building in, finding the right hires will be challenging. Additionally, it’s crucial to leverage the network of your team. “Of our first ten people. It was almost all referrals from other early employees.” Amir Bandeali, Co-CEO and Founder of 0x.

 

There is no substitute for your network; however, there are multiple strategies to better leverage your team’s connections which is one of the first strategies we employ with new portcos.

 

Engineering First Approach

 

A common, albeit unsurprising theme across conversations was the priority given to hiring engineers in the early stages. Engineers form the backbone of any tech startup, particularly in the blockchain space. The initial team is often composed predominantly of engineers, focusing on building the core product and infrastructure. In fact, of the teams we spoke with, more than 81% of their first 10 hires were engineers.

 

 

Kickstart your product

 

More and more, founders are leveraging contractors and digital agencies in their earlier stages (prior to Series A) as a way to supplement their workforce and kickstart their product.

 

“I think that it’s nice to get the product and fundraising in a slightly more mature state before trying to get full time people, because it’s very hard to convince high quality people to join when you have no product” – Nathan Allman, CEO of Ondo

 

“I think for engineering, as our founding team was technical we didn’t make a full time hire, but we had a lot of contracting help. So there were actually a number of engineers that helped us in a part time capacity.” – Winston Zhang, Co-Founder of Cega

 

This approach helps manage costs and equity distribution, making it easier to attract high-quality candidates later on when there’s an actual product to demonstrate. “So If you can take more of a bootstrap mentality and use contractors to get to a state where you could then get better full time people.” – Nathan Allman, CEO of Ondo

 

Fostering Company Culture and Values

 

Skills are important, but don’t discount the importance of company culture! “I think just hire people who are proactive and can be autonomous and wear a lot of hats. Where you think the company is going is probably not actually where it’s going to end up. And people’s roles are going to evolve” – Amir Bandeali, Co-CEO and Founder of 0x.

 

Startups thrive on the adaptability and versatility of their team members. Founders should look for individuals who are comfortable wearing multiple hats and can adapt to various roles and cycles. Autonomy and flexibility are crucial in early-stage teams, where each member’s contribution can significantly impact the company’s trajectory. Furthermore, as companies grow, the challenges start to change so it’s crucial for people to follow suit.  And so; as Steven Goldfeder, Co-Founder and CEO of Offchain Labs put it: “you have to find those particular people that are really passionate about what you’re building. And it turns out those are the best people to build a project because they actually care.”

 

Beyond technical skills, cultural fit and values alignment are critical. Founders emphasize traits such as hard work, commitment, effective communication, and a willingness to learn. These values form the bedrock of a cohesive and motivated team, driving the company forward.  And in many instances the perfect candidate might not be the perfect fit for your team. Again, Steven Goldfeder had some very important wisdom to impart: “I’d much rather take a quote unquote ‘worse engineer’ who’s excited about what we’re doing than a quote unquote ‘better engineer’ who’s not excited and just going to clock in and clock out.”

 

Grooming the next generation in crypto

“It’s expensive hiring in from the industry! So one thing that has been working really well with us is we have set up this internal hub where we kind of take people from outside the industry who have proficiency in c or other languages and we train them.” – Shaaran Lakshminarayanan, Founder at tanX. 

 

There is undeniably a limited pool of human capital in the crypto space. Successful founders are finding innovative ways to integrate Web2 talent into the ecosystem to bridge these gaps. Leaders are also focusing on developing talent within their organizations:

“We found out that it’s easier and more natural to grow leaders from within than to bring them from the outside.” – Eli Ben-Sasson, Co-Founder & CEO at StarkWare

 

We should look to bring in more people to the industry, and grow leaders within our own. 

 

Compensation and Incentives

 

A particularly interesting take that I wholeheartedly agree with came from Amir Bandeali, Co-CEO and Founder of 0x: “In my opinion, tokens are a pretty bad form of compensation for an early team because they’re marked to market in real time and extremely volatile. It is critical for early stage teams to be focused on creating long term value rather than short term price fluctuations.” One little considered danger to a TGE is that it can bring a post IPO mindset to an early-stage startup. 

 

The volatile nature of the crypto market presents unique challenges in structuring compensation packages. While tokens are a common form of compensation, their volatility can be problematic. “One of the challenges just stems from the volatility of crypto markets. So comp expectations just change so much depending on what stage of the cycle you’re in. And that can make it very difficult to have reasonable alignment internally.” – Nathan Allman, CEO and Founder of Ondo

 

Many founders would prefer a mix of cash, tokens, and equity to ensure stability. Additionally, hiring strategies are often adapted based on market conditions, with more favorable terms (to companies) offered during bear markets. Founders should think long and hard about their compensation philosophies and how this can change over time. 

 

As a side note, this happens to be a favorite topic of mine so I would be happy to have compensation philosophy conversations with any founders out there!

 

Lessons Learned from hiring

 

Implementing structured hiring processes and standardized interview steps is crucial. Founders have found success with probationary periods, work trials, and well-defined interview processes, all of which help evaluate fit and performance. Clearly-defined roles and expectations ensure that new hires understand their responsibilities from the outset. These practices help prevent hasty hiring decisions: “In general, if you rush a high priority position and you bootstrap a process quickly, 90% of the time it is a mistake. Unfortunately, life is meritocratic.” – Luca Prosperi, CEO and Founder of M^0 

 

Many teams try to replicate the interview processes of other firms in the space or from Web2.  However, as both Luca and Winston would agree, the best way to assess a good hire is by evaluating their actual work in a similar capacity. “I think one of the mistakes is not actually checking for output during the interview process. The easier way of framing it is; we learned that actually asking people to do work in the interview process was far more indicative of their actual performance than just doing a bunch of arbitrary interviews.” – Winston Zhang, Co-Founder of Cega

 

We also enjoyed the advice from Shaaran Lakshminarayanan, Founder at tanXi: “Don’t hire for your needs. When we actually had the need, we didn’t have the time to hire more people.”  Most teams hire when they already have needs. It’s a lot easier said than done, but it’s important to start hiring before needs arise!

 

We will let Eli Ben-Sasson, Co-Founder & CEO from StarkWare drive the point home with some advice we loved: “Make sure that you have, a team that is very harmonious and gets along on a personal level and sees things in a similar way in terms of vision and not just technological vision, but in what is important and not important in life. Because building a company is such a hard and all consuming effort. 

 

“Like a good marriage, physical attraction isn’t the only thing or maybe even not even the most important thing. There are values and then a sort of mindset in which you view the world on many other levels that are really important for a successful relationship.

 

“Founding something as an early team is the closest thing I can think of to a family. I’m saying this is someone married happily over 20 years. That would be probably my number one piece of advice.”

 

Building a founding team in crypto is both an art and a science. The insights shared by leading founders highlight the importance of leveraging personal networks, prioritizing technical talent, and creating a flexible, culture-driven team. As you navigate the challenges of assembling your early team, remember that the landscape is ever-evolving, and adaptability is key.

 

Key Takeaways:

 

• •  Network-Based Hiring: Tap into your existing connections and those of your team. Strong networks are invaluable for finding and attracting top talent.
•  
• •  Engineering First Approach: Engineers are the backbone of early-stage startups. Prioritize technical hires to build and refine your core product.
•  
• •  Bootstrapping with Contractors: Before securing full-time team members, consider using contractors to manage costs and develop a product that will attract top talent later.
•  
• •  Foster Culture and Values: Skills are crucial, but a team’s cultural fit and alignment with company values can significantly impact long-term success. Look for individuals who are adaptable, passionate, and committed.
•  
• •  Groom Talent Internally: Develop and mentor talent within your organization to fill leadership roles and address skill gaps.
•  
• •  Strategize Compensation: Carefully structure compensation packages to balance stability and incentivize long-term value creation. Consider how market conditions may impact your compensation philosophy.

 

As the ecosystem continues to evolve, I hope these principles will help guide you in building the next batch of crypto unicorns. Remember, the journey from zero to ten is a critical one, and the foundation you lay now will set the stage for future success.

 

If you have any thoughts or questions about hiring practices, company culture, or compensation strategies, feel free to reach out. I’m always excited to discuss and share insights on these crucial aspects of building a founding team.