In this episode of 'Never Too Early,' host Lauren Ipsen from Decibel engages with Amy Kim, the Chief Revenue Officer at A.Team, discussing the strategic use of contractors for early-stage startups. Amy provides insights into the evolving gig economy, emphasizing the paradigm shift towards output-driven organizations in a rapidly changing workforce landscape. She discusses the benefits of hiring contractors, such as flexibility and cost efficiency, while addressing common concerns and misconceptions about their investment and reliability.
The conversation also covers A.Team's rigorous vetting process for high-caliber talent, differences in contractor versus full-time employee compensation, and the importance of cultural fit and regular feedback. Amy shares her perspective on when it is optimal to hire contractors, stressing function over company stage, and encourages founders to overcome traditional stigmas associated with contract work as they build agile, impact-focused teams.
00:00 Introduction to Never Too Early
00:19 Meet Amy Kim: CRO at The A.Team
02:42 Question One: What are the pros and cons of hiring contractors versus ful time employees? Amy and Lauren address the negative association that usually comes with hiring contractors as opposed to full time employees and why it shouldn’t be taken at face value.
06:31 Question Two: Do I vet contractors the same as I do full time employees? Amy talks through not only how the A.Team vets talent that they let into their contract community, but also ways to ensure that your company is also choosing the right contractor.
13:20 Question Three: What does compensation typically look like for contractors versus full time employees? Lauren talks about how contractors can often charge a premium on the front end, or actually be more expensive from a cash perspective than hiring a full time employee, but overall, are ultimately cheaper for the organization.
15:33 Question Four: When is it less optimal to engage contractors? Amy talks about how it’s actually less important to focus on the stage of the company for contractor support and more important to focus on the specialty or function.
17:25 Question Five: How do I ensure that contractors feel properly incentivized? The biggest reason contractors fail is when they are not properly incentivized or treated as a player on the field. Amy talks about the importance of frequent check-ins and aligning incentives early in the contract engagement process.
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Transcript
LAUREN IPSEN: Welcome to Never Too Early, a YouTube series focused on unconventional talent insights for founders. I'm Lauren Ipsen, Talent Partner at Decibel. In each episode, we'll cover the top five commonly asked questions that we get from founders building their organizations for the very first time. It's never too early to learn from the best.
I'm super excited to introduce my guest today, Amy Kim. Amy is currently the CRO at the A.Team. The A.Team has become my absolute go-to for all things contract hiring, and they have also become the go-to for 500-plus additional tech companies, including Lyft, McGraw Hill, Grindr, LifePoint Health, and many, many more.
So, with that being said, my friend Amy is more than qualified to answer the top five commonly asked questions that we get from founders wondering if they should hire contractors for the very first time.
Okay, Amy, welcome to the show. Thank you for joining.
AMY KIM: Thanks for having me, Lauren.
LAUREN IPSEN: I'm so happy you're here. Okay. So I would love to start by you sharing with the listeners a little bit about yourself, your background, and what ultimately brought you to A.Team.
AMY KIM: Awesome. Thank you so much. So my name is Amy Kim. I'm the chief revenue officer here at A.Team. Started off my career in the ‘90s when, um, the internet was born. I came to A.Team because for the last a decade or so, the success for me or for organizations I’ve worked with have been around people. And I felt that A.Team had a value proposition that was really a future state, which is understanding, what is the work that needs to be done? And who are the people or the talent that we need to get the job done?
LAUREN IPSEN: Cool. And that kind of bridges into what we're going to talk about today, which is all things hiring contractors, and when it really makes sense to bring folks into the fold that maybe aren't going to be there for the long haul, but can get you started and help you iterate and build.
And so, I want to start with that question in particular. Talk to me about when you feel the best time to hire contractors would be, as opposed to hiring full-time employees, and what you feel the pros and cons to both are.
AMY KIM: Sure. So it's interesting because contractors, in the traditional sense, have been perceived to be folks that are temporary or perceived to be folks that are not as vested. And I think there is a stigma around that. But as we look at the gig economy, what we're realizing, that more and more talent are looking for flexibility in how they work and what they work on.
And if you look at sort of the surveys that are happening towards the millennials to the Gen Zs, people want to work on mission-driven projects. And so, just the—sort of the perception of contractors is starting to shift a little towards our people. What are the types of employment people are looking for? So, I think that's one change.
Contractors are super helpful just pragmatically when you're not really sure about the future, future state of the company, or future state of the project or future state of the talent that you need. It brings elasticity to the investment, right?
So you want to invest in a big way for a few years and then see how the project goes, or ramp down. And if you have a full-time employee, it's extremely hard to ask them, what, to come on board for two to three years, and then at the end of that sort of investment phase, ask them to leave. And, candidly, that's why we see a lot of terminations, right?
And so, if you were to bring on contractors that are highly equipped and understand the time commitment, it actually brings a lot more stability to organizations, especially for full-time employees, where you're not going to have to go through terminations and downsizing as we see in the market quite traditionally, rapidly right now.
Some cons to that. I think, you know, the traditional mindset of they're not vested or they're not reliable, right, are probably the biggest challenges that employers face today. But I think my advice to organizations like that is to help to onboard your contractors in a meaningful way, where they feel vested. And it's as simple as including them into team meetings, right? Setting the expectation for them as if you set for your own employees.
Many times, contractors are brought in, but kind of left in a silo to deliver outputs, but not really understanding what the protocols are, how to communicate, how to attend meetings, can they speak up and actually voice their ideas? And so, if you're able to bring them in as a part of the journey of the project or the team, you will see higher levels of performance from the contractor, as well as much more willingness and accountability around the work that they deliver.
LAUREN IPSEN: I love it. Super, super helpful. I think part of what comes up a lot when I'm talking to my founders around whether or not to hire a contractor is whether the quality is going to match the same of that of a full-time employee, right? So I think you spoke to how it's a lot easier to ramp these folks up because they know what to expect. They've done the early stage thing. They've been pre-vetted by the A.Team.
AMY KIM: Yeah.
LAUREN IPSEN: But talk to me a little bit about how you're pre-vetting, so how these folks are getting into the program, and then also how you guys are ensuring that the quality remains as high as possible.
AMY KIM: Yeah, no, that's a great question. And one of the exciting things about A.Team that I found when I was joining the company and what intrigued me is just the caliber of the talent in our ecosystem.
So A.Team was really built by builders. And so we only, yeah, invited these builders that were from referrals. So folks that our existing builders had worked with. So that was validation number one. A second, because most builders that are highly talented only want to work with highly talented engineers.
The second piece was that we not only just accept them through the referral, we actually go through a pretty stringent evaluation process where—which is ingenious.
We start with engineers, vetting out engineers. If you look at a traditional sourcing or hiring model, who are the first people that talk to candidates?
LAUREN IPSEN: Recruiters.
AMY KIM: HR, yes. And they do a phenomenal job in identifying talent and going through the recruitment process. But in terms of vetting the actual job spec and the skill sets required, they're not experts in that area.
And so what we did was reverse engineering the hiring or the recruitment process by having our top engineers actually vet out the source code, the projects that they worked on, the portfolio that they would submit, to validate that they were at the caliber that we were looking for, because our promise to our clients is that we're going to deliver the best quality talent that's going to help you at the right stage of your product development life cycle, so that you can get to results and impact faster.
And so, we've really focused on that to be our core to making sure that our quality level is at the level that our customers are expecting.
LAUREN IPSEN: Yeah. So you talked about how the A.Team personally vets the talent that you guys are putting into these companies. Once the A.Team pairs a contractor with a founder or a founding team, talk to me about how, then, they should vet whether or not this is someone that's going to be potentially a good fit for them to join.
AMY KIM: Many times, our entrepreneurs are not as technical or relying on us to vet that component out for them, but they do want to validate. But the most important part is really the cultural fit. Can this person gel with the existing team or with the founder? And that is so critical for us.
And so, when we prepare our interviewee, which is the builder, but also the founder, is to make sure that this is like a hiring interview like no other. But what we would love them to focus on is your expectation of the individual as they collaborate with the team, as they deliver results.
And that's kind of unique for that company and the culture that they're trying to build, and really educating the, the candidate on those attributes more than, candidly, on the skill set that they will bring to bear. Because that's the part that we do well.
LAUREN IPSEN: Right. Do you feel like there's a big difference in the way that folks should vet a contractor versus a full-time employee?
AMY KIM: I think from a skill set perspective, no. But I think the areas that I would caution would be understanding a contractor and what their desires are, versus what a full-time employee's desires and expectations may be, and asking those questions upfront.
A contractor is looking to obviously understand the term of the engagement, but also, more regular feedback about how they're doing, because their employment could be quite short-term. And so, it's really up to the employer or the hiring manager to continue to provide feedback.
And what we've found is the more feedback that you provide to the contractor, the quality of the work and the performance or the collaboration increases instantaneously. And so, that might be something very different from a full-time employee, where you've got a little bit more time, or your expectation is that you're going to do a performance review every six months or every year.
For contractors, that feedback needs to be weekly, monthly, especially in the early stages. We encourage our clients and we meet with our clients on a weekly basis in the first month, until the relationship settles and they have a good rhythm going. That's very critical in the early stages of a project.
LAUREN IPSEN: Let's talk about pay a little bit. Talk to me about the compensation differences between someone that would be brought in in a full-time capacity and then what it typically looks like for a contractor.
AMY KIM: Yeah. It's a tricky one because people—if you look at the overall cost on an hourly basis, a contractor could look higher than a full-time employee. But if you tack on benefits and the—what I call the operational costs of all the infrastructure that you provide—meals, facilities, et cetera—it ends up being higher for a full-time employee. So it really depends on how companies look at the cost.
If you look at total costs of output, I would say contractors are significantly lower, especially around delivering outputs and product deliverables. But also, the ability to really create elasticity to your cost structure is probably the number one benefit. So I would encourage founders or employers to look at the total cost of the project and what the estimated time of delivery is versus an hourly rate.
LAUREN IPSEN: Yeah, I'd agree entirely. I've also found sometimes that I've worked with contractors that have then been brought on in a full-time capacity, and their contract fee was obviously, as you mentioned, a little bit higher than what they would be paid monthly per se, in a full-time capacity. And then they've used that number to advocate for themselves in a full-time salary.
But then, you know, we have to remember that they're not taking into consideration equity, benefits, all of the other components that you just mentioned. And so, I think it's also really important for founders to then level set and come back to those primary differences, because it is going to ultimately be more expensive if they're bringing them in full-time, uh. But maybe that contractor doesn't have the same amount of cash in their pocket per se, or there's tax differences, or whatever it might be, so.
AMY KIM: All growing pains, but absolutely.
LAUREN IPSEN: When do you feel is not the right time to engage contractors? So I know that A.Team, for instance, does a lot of work in the early days. So maybe seed to series C or something along those lines. But when does it stop making sense for contractors to be the first choice? Or, I guess, how do you just think about the right time to engage these folks, and then maybe when it's less optimal?
AMY KIM: I think it depends on the role versus the stage of the company. Because I could see where you want contractors throughout the entire journey. Because one of the things as a business operator that I love about the contract model, because—and I would like to boast that we know how to leverage contractors to their best potential because we—that's the market that we service, is it brings elasticity to your business.
And that is so key, especially in today's market, where the life cycle of a company is less than 30 years, or the lifespan. And so, you want to be able to run an operation in a healthy financial way. And so, contractors help deliver that for you financially, while you're not compromising outputs. So I think it's important to have that in mind as you're building a business.
But it depends on the roles. I'm taking on a nontraditional role. I don't think I would bring in a salesperson as a contractor. Because I'm looking for longevity. Sales cycles could be months to years. And you do want that sort of reliability as well as the payout—
LAUREN IPSEN: Yeah, absolutely.
AMY KIM: —we may come at the end of that journey, versus on a monthly basis. Right?
So there are certain roles where you're going to have to make that upfront investment, both from the company side, but also from the employee side as well, to deliver results. And so those are probably not optimum contract roles, right? If you get a 1099 to sell for you and that—not get paid until the end, you know, good luck, but I see very few people that are willing to do that, so.
LAUREN IPSEN: Yeah, I, personally, have come into some of the aftermath that's happened from maybe some top of funnel BDR type support that's in a contractor capacity. And I personally have yet to see a successful outcome, in in my own experience. But I think, yeah, if you're focusing on the technical side of things, and these are individuals that are all kind of working on a similar goal or working on a project, that feels like a more desirable outcome.
So it sounds like less around stage of a business, from your standpoint; more around the actual outcome you're solving for with these individuals.
AMY KIM: Yeah, it's more functional in nature.
LAUREN IPSEN: Yeah. This has all been super helpful. Talk to me a little bit about how—I mean, we spoke to this a bit—but how I really ensure that contractors are feeling incentivized in the right way, feeling a part of the team, and feeling like, you know, they have more skin in the game than just being on the outside or on the sidelines.
AMY KIM: We help to communicate and educate our clients on how to leverage these A.Teamers and motivate them. And the more the clients spend time with the A.Teamers, and again, as I mentioned before, make them feel included as a part of the project, the better the quality of the outcomes. And so that is probably the number one thing that we advocate for, is that, treat them as if you're treating your full-time employees, to the extent that you can, obviously, because there's benefits that they don't qualify for.
But most importantly is the ongoing feedback and dialogue. We've had many times where we've had project leads that are actually deployed on missions of clients, and they're actually managing the employees or developers. And so this—these people are playing almost the right hand of a founder, or a CTO, or a CPO, in delivering the outcomes. And they're very strategic to the projects.
And so, we found that the recipe for that success was always on communication and inclusivity.
LAUREN IPSEN: Okay. Awesome. Any final tips or wisdom for our founders as they're thinking about building their early teams, on the contractor side of things?
AMY KIM: My sort of encouragement would be to get out of the stigma of contractors and what they represented 30 years ago, and what they represent today. I mean, there are founders that are going out to build a unicorn company with an employee of one. And that's the world that we live in.
And to be able to compete in that fast-changing tech environment, especially with the evolution of AI and the efficiency that that's going to bring to you is find experts that can solve the problem at hand, versus going down the path of the traditional route of, I'm going to hire these people, train them, and ramp them, and they deliver in a year. All right? I think that's a very outdated model that's going to potentially give risk in your business opportunities, if you don't think—start to think in a much more transformative way. But I would say nouveau, right, in terms of—based on—in terms of where the workforce is today.
LAUREN IPSEN: Yeah, I completely agree. I mean, I think, look, contractors have kind of struggled to beat the stigma. I think recruiters have also been put in similar buckets. So I've found that I've had kind of an uphill battle as I've been trying to prove myself in a space where, you know, there's reasons that some of these different, you know, specific spaces in tech have maybe a negative connotation. Because I don't think, historically, it's all been done right, you know?
I think that there's been a lot of experiences that I've personally had with contractors that were underwhelming, or they haven't worked out, or they weren't onboarded in the right way, or they weren't incentivized to really feel like a—you know, an extension of that team. And therefore, you're not going to get the right outcomes, right?
So I think that's why it was so important for me to have you on today to talk through, if this is a route you want to take, I have seen so much success for our early founders, and accelerated builds, and really leveling up the founding team from contractor support. But it's how you go about it. And it's the types of people that you bring in, in the early days, that are really the most important part.
AMY KIM: I think you've nailed it. This notion of blended teams or bringing in contractors and learning how to actually leverage them to their fullest. I think there is some best practices around that, that we're happy to share with those founders that are interested. And that is our expertise, and helping you ramp teams to deliver outputs and outcomes quicker, so. And I see more and more organizations headed in that direction.
LAUREN IPSEN: Yeah, I agree. Cool. I cannot thank you enough, Amy, for hopping on. This has been so insightful, so incredibly helpful, and I think will be very eye-opening for a lot of our early founders. So thank you so much.
AMY KIM: Well, thank you for having me, Lauren.
LAUREN IPSEN: Yeah, my pleasure. And thank you all for tuning in to Never Too Early. More to come soon.
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