I've run 2 service businesses and as the previous answer calls out, investors usually invest for returns. Whether it's product or services, it's about returns.

Investors in service businesses are usually looking for the singles and doubles, whereas the product investors are often looking for homeruns with many strikeouts.

Service businesses more often than not leverage their operating cash flow to expand the business and reinvest their profits. IPOs are rare. Acquisitions are occasional. More often than not it's bankruptcy or building a sustainable business. When it's a sustainable business there should be something worked out at the board level on how to return the winnings/profits to the investor.

Depending on the difficulty of the service business, the operating cash might be locked in the business for several years while it clears the initial hurdles of building for scale.

Hope this was helpful. Feel free to reach me here for more information.

Brian

Hi Paris,
Congratulations on taking the first step!

I've worked in both consumer and enterprise startups in Silicon Valley the past 5 years and advised about 40 companies.

If I were you, I'd give this book a read:
http://theleanstartup.com/book

and then move onto:
https://steveblank.com/tools-and-blogs-for-entrepreneurs/

The biggest mistakes I see people with ideas looking to launch a company make are:
1) Not talking to customers early enough to solicit feedback
2) Worrying too much that someone will steal your idea
3) Not realizing that the idea is 1% and execution is 99%
4) Not starting small and building out from there. Build traction, build a story, and keep perfecting it.
5) And keep talking to your customers/users :)

Hope that's helpful. Feel free to schedule a call if you'd like to talk more.
Brian

I've advised 40+ startups on hiring, org structure, and leadership, and excited to take a stab at this question.

The key first is defining in more detail the role you need today and the role you aspire the company will need 12 months from now. Where do they intersect? What hard skills vs soft skills are needed at each juncture?

The real important part of this will be whomever you hire, will they have their domain in which they can make their own calls and have the final say while you're still there? Management overlap or disagreement is generally what causes leadership to be a mess. The best talent you'll want to attract will expect to have final say on many matters and not have to run so much by you.

As you mentioned, COO's typically have different skill sets than CEOs. COO's run the internal business and allow the vision set by the CEO to become reality. It happens, but not a guarantee than a COO can evolve into a CEO. Your typical CEO is busy setting the vision, meeting investors, building partnerships, brand, working with media, hiring, etc... In the case of many CEOs, they simply don't have the time to meet with their direct reports who lead the other business functions. Although it's prestigious to report into a CEO, most people are frustrated by the lack of time, feedback, and direction they receive. This is where a COO can add a lot of value; by having more time to manage, lead, and guide the rest of the leadership. This way the CEO can spend time with the COO, and the COO then pushes the right framework, expectations, and feedback to the rest of the org.

If you have any other questions on this matter, happy to discuss on a call.

You can still do business in CA regardless of where you incorporate. You'll still need to pay taxes in CA, but the benefit Nevada provides (like Delaware) is pro-employer legal language and well defined laws. The other benefit is if you take financing later from an investor, they will appreciate that the company is established in NV or DE.

The answers below are helpful, but they miss 3 out of the 4 major sources for recruitment:
1) Inbound flow (people come to you)
2) Outbound search (linkedin, etc...)
3) Referrals
4) External Recruiting

I would think about how your firm stands on it's own. Do good engineers and designers know who you are? How can you rise above the noise and get their attention so they come to you?

Are you or someone with your firm allocating time for passive search? If not, are you engaging with an external recruiter?

Do your employees, network, customers, etc... know you're hiring? Have you offered motivators which reward the act of referrals and the wins?

Try asking yourself the above questions to move the ball forward. If you have additional questions, I'm happy to chat via a call. Good luck!

I disagree that money is the most important factor, especially in recruiting designers. Having worked in Silicon Valley the past 5 years and with both Visual & UX design recruitment a speciality, I've sourced, screened, and closed (and missed) on my fair share of designers. They tend to be looking for 2 primary pieces for their projects:

1) Interesting or exciting project, which allows them to use things they've recently learned or technologies they've picked up. They want to feel like they're staying current and moving their career forward. Since it's a project and likely not long-term, they'd like to feel that it will be a boost for their portfolios.

2) Creative freedom and be viewed as problem solvers. Designers love feedback when they're missing the objective of solving the problem (and you should ensure you're hiring designers who view themselves as problem solvers). What they don't care for is a non-designer micro-managing their use of a certain font or color.

Money, work environment (likely telecommute in your case), and other benefits are likely tier 2 motivators.

If you want to be a top destination to attract them, give them the confidence they'll learn and be energized by this client project and you're going to treat them like a problem solver.

I've hired designers for Google as well as a dozen or so startups. I've also hired about 20 people myself via upwork/odesk for my own consulting business and understand the freelance community, if you'd like to discuss more feel free to schedule a call. Good luck!

Scott gave a terrific answer. I would add that positioning is key, know who are you and your value prop and stay focused. It's easy to take on a search for anything, but the more you do that, the harder it will be to build a track record. Even in tech, some of the best engineering staffing firms don't do everything within tech, so they'll turn down a help desk req or peoplesoft consultant search to stay focused on software engineers, etc...

There is also room to run in the contract staffing world, the residual incomes are usually much better in the long run than perm search, although barrier to entry is a bit higher. You can usually pick up some payroll deal business after establishing yourself.

Good luck!