#485 Scaling Starts with People: Nahed Khairallah on Building Teams That Don’t Break

Episode 485

Mehmet: [00:00:00] Hello and welcome back to a new present of the CTO Show with Mehmet today. I'm very pleased joining me today. Nahed Khairallah, Nahed, thank you very much for making it, uh, today. And as I was telling you, it takes a while between, you know, arranging, you know, between the booking and doing the actual recording to thank you for, you know, making it today.

Um, the way I love to do it now is I don't like much to speak on behalf of my guests. I keep it to them, but just as a teaser for the audience, we're gonna discuss something which is, you know, very important topic. We discuss it before, but I always like to hear different opinions on it. So we're gonna talk about like, hr, especially in the startup space.

So, without further ado, now, please, you know, I want you to tell us more about you, your background, and you know, what you're currently up to. Then we can start discussion from there. 

Nahed: No, thank you Mehmet. I, I appreciate it and, and happy to be on the show. Of course. Um, basically, so [00:01:00] yeah, I, I work in the HR space with startups specifically.

Been doing this for almost 15 years now. And, uh, basically I started off at, you know, like most HR people, I fell into it by mistake, um, because it was sort of a, a topic of interest to me. And I went through an early experience in my early career after I went outta college. I used to work in IT sales, and I have an IT background.

Uh, I went to school for MIS and my goal was to become, you know, a software developer. And I do have some software development skills, but, uh, I sort of fell in love with HR over time because I, I was, I had some experiences with some early stage startups, uh, early on in my career who had great product market fit.

They had good finances, but they happened to always fail. Um, and the more I looked into it and the more I studied it. It turned out that it was all around people, people related decisions, HR specific decisions and strategy. So I, it just speak my interest really to dive into that world and, uh, this is [00:02:00] really how I got into that as a career.

And I'm really a self-taught HR professional and, you know, went through a lot of teaching education certifications. Did a lot of pro bono work with VCs and PE firms and incubators. Um, not only in the US but I've also operated in Europe, middle East, and Africa as well. Um. And today, really I specialize in helping seven figure companies.

You know, those companies that have started to have some sort of traction and success, they found a product market fit. They're starting to, to generate revenues and really help them scale to eight and nine figures. Um, and you know, something that a lot of people don't know, especially first time founders, is a lot of companies fail during that period of time.

They either scale too fast, they don't scale fast enough, and they make some, a lot of decisions that that, that they can stumble upon. So I come in really and help companies to move past that scaling, uh, and really do it well, do it sustainably and really help the company grow from there. [00:03:00] Um, and I do this through my own organization, uh, called Organized Chaos.

Uh, organized chaos is, you know, an advisory firm, but also I have a podcast and newsletter around the topic where I provide. Uh, advice to founders and HR professionals in startups. So that's, if you will, a little bit about me, and I'm based in Dallas, Texas. And, uh, yeah. Ha, happy to talk more about the startup world.

Mehmet: Fantastic. This is, you know, um, the topic that we like to discuss usually here on the show, and thank you for, you know, this introduction night. Now, you mentioned a couple of things which stopped me, and although like I prepared the questions in my mind, but, uh, very valid points and even something as someone also who had the chance to work with startups that were scaling in in the Middle East, I always wondered, um, should we call them mistakes?

Should we call them myths? Um, that founder, you [00:04:00] know, believed that they have to do at that exact stage that you described, which is the scaling, right? And going from maybe 10, 20 employees to. Now hundreds. What mistakes you see happening there? Like other, of course you mentioned like fast, uh, you know, and the, you know, hiring very fast and by, by big numbers.

But other than this, there must be something, or maybe a pattern that you have spotted now what, what you can tell us about that. 

Nahed: I, I love that question. And, uh, yeah, you know, it looks differently in different markets. And again, I also, you know, I, I'm also from the Middle Eastern region, uh, from Lebanon originally, and I've done a lot of work in that region as well.

Um, but there's a lot of what I've found is that there's a lot of common grounds globally between founders that I've seen, uh, you know, as a founder and, you know, I'm a founder as well myself, so I have some experience going through it personally. Founders typically when they make decisions in the moment, they believe [00:05:00] it is the right decision.

Some, in a lot of cases, when you start experiencing a little bit of success. Especially those, those companies that sort of hit that seven figure mark and they start seeing, hey, you know, money's coming in, we're growing, we have more customers and more revenues. You have that feeling of invincibility at some point that, hey, you know, we're knocking it outta the park.

Things are gonna keep going well, and we just can't make a mistake at this point. Um, a lot of it's, first off, there's the mindset that I've seen a lot of founders, once they start seeing some sort of success they take, they relax a bit in terms of analyzing their decisions. The second thing I see, which is a little bit related to hiring, because a lot of I.

If you look at a lot of the startups today, right, it's mostly a knowledge based economy. And you're talking about people in tech, technology, software developers, product managers, you know, BD people, a lot of folks, you know, very knowledge based kind of operations, uh, which means it's manpower heavy. Uh, and most companies today who are in [00:06:00] tech when it comes to their payroll, it really accounts for like, the lowest I've seen really is like 50% of their entire expenditures.

I've seen it as high as 80%. So as a company, bare minimum, half of your spend is on headcount. Um, the biggest mistake I see on a headcount level is that companies don't spend enough time to address what every role is gonna be doing in this company. And not only for the short term, but as, as the company grows or as the company shifts and pivots, how will a specific role shift with it?

So give you a little example here. Let's say that you're a company today that produces, let's say you develop a B2B project management software like an Asana, right? Or a base camp or so forth. If you are planning on sticking to that same, uh, product for the next five years is one thing, but if you're planning, let's say, on diving into other verticals, let's say like task management, like, uh, let's say you wanna start, you wanna operate not [00:07:00] only on B2B project management, but you'll see you wanna go into some other industry.

Um, there's different considerations there. A lot of times companies, and what I've seen founders do is that they try to hire mostly for their near term. And what happens is that once there's some changes and like, you know, in a lot of startups. The plan, you don't stick to the plan religiously because there's a lot of changes happening in your market and in your day to day that pivots happen.

So a lot of times decisions are made with a very short term view where we either hire too many people that become obsolete in, you know, in a short period of time, or we take our foot off the gas and we don't actually build up our skillset to actually be able to, to go into different verticals and so forth.

So you're pretty much missing opportunities. That's one of the biggest mistakes I see. The, the last one that I'll talk about, just very common and I see across the board is I. Founders actually limit their own company's scalability. And what I mean by that, um, I've seen a lot of [00:08:00] founders, um, and I've seen this very commonly, is that founders make it, it becomes very hard for them to let go, especially if they're a founder who is one of the people who's building the product or service.

And this happens a lot with technology minded founders, right? Especially if you're the, you're the founder and CTO or you're someone who has their hands deep into the technology. Um. It becomes very difficult for them to let go of decision making product decisions and being ingrained on a day-to-day basis with the product itself.

Whereas when you're a founder, especially when a company starts growing and you move into more of like a CEO role or whatever you want to call it, you're the head of the organization. Your goal is no longer managing the product. Your goal is to manage the business. And you need to think of things from a business perspective.

So a lot of founders that I see, they just narrowly focus on the era that they love doing and the era that they're good at in a lot of cases as the product or the services so forth. And they [00:09:00] ignore a lot of the other things in the organization. And those are the things that actually, you know, detract them from scaling or help them or, or even actually take them to failure at some point.

So these are some of the common things that I've seen in, in most cases, um, in those situations. 

Mehmet: Now I'm gonna ask you something still related to scaling, but both of us, we share almost like the same, uh, I would say experience and exposure of working in different regions. Yeah. Now one of the thing about scaling, it's not only about like what kind of people you're gonna hire is like some nuances that would appear here and there, especially like if it's a US based company expanding in Europe, the Middle East Asia and so on.

Now, when do you think a company, of course, from leadership perspective, they are ready to scale globally from of course, headcounts perspective. What's like some of the early signs that they have to have? Of course, [00:10:00] you mentioned our product market fit. We know that they, they have the product market fit.

We know that their product is something that can be sold or bought by customers, you know, everywhere regardless. But. Because myself, I've seen this mistake, and by the way, you might also shed some light, not only US companies coming to other regions and also like maybe from other regions who might want to enter like other markets, more developed markets like the US or Europe.

So what, what, uh, you know, um, I would say clarifications or like, uh, best practices you can share with us, uh, today. Now? 

Nahed: No, I think that that's, that's an amazing question and it's, it's something that I've also had experience with. I've taken US companies global and, and international companies, you know, like in the Middle East Europe and so forth, also in, in, in the other direction.

Um, so there's a few triggers that I typically advise companies on before they make that decision. Primarily. If you, if you wanna take a step back here [00:11:00] and given the audience of the show, startups, technology, CTOs, and so forth, let's talk about technology companies specifically, right? When you're a technology company today, by default, when you're starting off.

You are global, whether you like it or not, especially if you're like a SaaS company or so forth, because anyone can come up and sign up to your, to your, you know, to your software or so forth depending on, you know, what kind of offering you have. But generally speaking, you are technically global, whether you have a global presence or not.

Now, that's when you're talking about customer base. But when do you actually need presence globally, be it with employees or a physical presence and so forth? There's a few triggers I look at. One is the first thing I typically, you know, trigger founders and their, and leaders and so forth to think of is our, is our availability in an international market physically going to improve our ability to offer our product?

Is it gonna help [00:12:00] us gain market share, or is it gonna give us an advantage that we do not have today? That could be something like localization expertise. It could be that there are some markets where the sales channels are not typical, like what they are in the US or Europe or so forth, where you need maybe more of a physical presence, or maybe you need partnerships with local vendors or things of that sort.

So are the market dynamics different to a point where you need to actually have presence in that market so you can actually sell? Or is there some sort of advantage you're getting? That's the first trigger I look at. The second trigger I look at is, is there talent that you're unable to access in your local markets that will give you a competitive advantage and they're available in those international markets?

Those are really the two biggest things I look at. The final one is, well, this is more like an HR compliance thing, is. Are you looking to hire people on a full-time basis, contract basis, freelance basis, and so forth? Because depending on your answer [00:13:00] to that question, it determines how you actually hire people in international markets.

And here's where I've seen a lot of startups actually stumble a little bit because, um, I had some experiences with startups before where. They did not know the labor laws of certain countries they were entering. Uh, not physically. They, they would just online find someone. Let's say, let's say you're based in the US and you wanna hire someone in the UK or Germany.

So they go out, they hire someone randomly, uh, they don't understand the labor laws and how things should happen, and all of a sudden they get audited and they're like, whoops, you're not meeting the labor laws, uh, of this country. And they get slapped with a five figure fine. Um, so these are some little nuances there.

So, but those are really the main triggers I think you need to look at, um, before making that decision. Once you make that decision and you wanna move internationally, there's a few things you need to be careful of. First off, you need to make sure that any market you're entering. You need to understand the rules and regulations from an employment perspective [00:14:00] because that will determine how you can hire people and it'll determine also the costs you need to incur, whether you need to partner with other entities to hire, or whether you can do it directly.

So there's a lot of details that happen on that level, but typically speaking from like a top level view, those are some of the main triggers that I usually advise startup founders and leaders on, uh, before making the decision that yes, we should move global and international when I'm talking about an employment and headcount basis.

Mehmet: Cool. Now I want to ask you about, you know, the process itself and you know, having what we call it the HR department and maybe the whole talent acquisition team and so on. So I think, you know, shedding some light on this part now, like for you, how you help them. Do you take that part from the startups, kind of, you know, become a fractional.

HR for them or you advise them? I, I'm curious to know, because based on that, I'm gonna ask you a couple of questions later on. So like, walk me through if I'm a [00:15:00] startup founder, I came to you today, what you offer me. 

Nahed: Yeah, definitely. So I think that's an amazing question. So there's a few things that, uh, I work with companies on.

So primarily the fractional model that is very popular is kind of the last thing I look at personally with, with startups. And the reason I say this is the following. My goal when I work with a startup is to help build their own capabilities on the people and HR level to where they can self sufficiently operate.

Because when you're a scaling company, right, a fractional person, especially with the types of companies I work with, mostly, those are the ones that are on the scaling path. A fractional person is gonna be a very short term stop gap. It's not someone who can sustainably run the kind of operation you need in a scaling company that's growing quickly.

So generally, there are three things that I help companies with if I wanna bucket them into like three separate things. The first one, which you touched upon is the hiring and talent acquisition. I help them scale their ability to hire [00:16:00] the right talent. What, what? What does that mean? It means understanding how they do hiring.

Who are they trying to hire? What is their plan for growth? And building a framework for them. In terms of how to attract and identify the right talent, how do they evaluate them through their, you know, evaluation, process, interviewing, testing, whatever it is. And once they onboard them, how do they set them up for success?

So that's the first kind of bucket of things that I help with because hiring is typically the most important area of hr, especially for early startups, because when you're a small company, every person plays an outsized weight in the organization. If you're a 50 person company, you're gonna have every single person in your company, or at least you wanna have, you wanna have a Michael Jordan in every one of those positions, right?

Because you can't afford not to when you're a 1000 person company, then you, you don't need that level of talent density to succeed. So that's the first thing I kind of work with them on. The second thing, which I think [00:17:00] is one of the most important things that people don't think of who are in hr, like myself, is building the operational infrastructure.

So. We're talking here about their internal operator operating model, their HR operations, their HR tech stack. How does it connect and interconnect with the entire enterprise? How does it enable the work to happen? And is it actually helping the business achieve its goals better? Or is it just a jumbled up concoction of policies and procedures and, and tech that actually hinders the company and slows it down?

So that's the second thing I work on, is how do we design an HR tech stack, an operating model in HR that is scalable, that is not shortsighted, and it helps the company actually move faster and achieve its goals faster? And the last thing is what I call the HR scalability, um, work. So yes, you need to set up an operation and you need to set up the HR tech and all that kind of stuff, but.[00:18:00] 

When you're talking about HR scalability, you're not only talking about operations in tech, you're talking about everything that touches HR from how you, uh, how you reward employees to how you look at performance. The higher culture works to, um, how the organization structures put together all these things when they're working together in harmony and their, and they're built for purpose.

They help the company move much quicker than they need to. So those are really the main three buckets to help companies with. Now the last thing that you mentioned is, yeah, fractional work. Well, there might be companies typically, sometimes, and I've went through this a lot through my career, is. We'll do all this stuff with a company, but they're like, you know what?

We're not scaling as quickly as we thought we were. We want, we want someone to help guide us until we get there. And then once we're ready to have a full-time person, help us actually hire that person and help onboard them and really pass on everything we've been doing with them, and then have them really replace me as a fractional person or someone on my team.

So, [00:19:00] uh, so yeah, those are kind of the models I work with. But for me, those three main buckets I mentioned initially are the three main ones I kind of help companies with. They're, they're fixed in scope, they're fixed in timeline, they're fixed in cost. They're like, yeah, this is what you're getting. This is how long it's gonna take us to do it.

This is what you can expect. And my goal is always to help build internal capability at the company so they can run things on their own and not be at the mercy of a consultant or a contractor and so forth. 

Mehmet: Cool. Now it's, it's good to describe it this way because actually this is the question I prepared, but I prefer that you explain the whole process and the whole, you know, spectrum of, of, uh, things you help founders with and startups with.

So, I can ask you the question that I have prepared. So, how do you handle an objection of a founder, or especially if maybe they are first time founders, maybe they haven't been in, in that before, maybe they didn't understand ever [00:20:00] how HR works, and they might come to you and say, you know, like, I, I get your point, but, you know, like it's just you're adding an administrative, uh, department.

Uh, I don't want to handle this, right? So, uh, I, I can't like, deal with this and, uh, we don't want to add the burden on the cash flow. Having a department just managing HR stuff, like we can go and rely on for talent acquisitions, maybe. Some companies that they do this or maybe, you know, they would, they would try to do it themselves and for the day-to-day operations you just mentioned.

Yeah, fine. Like, we know some tools, we're gonna just. Yeah. Hook our systems in and, and we took forward. How do you handle such objections and why? Actually, they should not be thinking the way I just described it. 

Nahed: No. So what the, the kind of objection you're describing is a very typical thing that I kind deal with every day, to be honest.

Um, and the reason being, and you, you kind of touched on this very [00:21:00] beautifully, is that HR is perceived as one of those necessary evils, something you kind of have to do at some point, and you try to push it off as far away as possible, and it's normal, right? When you're a startup, your focus is on how do I increase revenue?

How do I grow the customer base? How do I keep, how do I put my company in a position where, especially as a founder, I am financially independent, maybe I wanna exit, you know, you're thinking of mostly the business side of things now. A lot of why there's a negative sentiment around HR is not the fault of founders, it's actually the, the fault of HR practitioners.

And let me explain why HR traditionally is seen as an administrative function because HR people have done a very bad job of showing how HR can actually be an enabler to business success. And that's how I position it, but also it's in a very evidence-based manner. So let, let's, let's talk a bit more details about how that works.

And I think we'll get to that. How do you, how do you actually answer that objection [00:22:00] for HR to be successful or even useful? In my opinion, if it doesn't help the business do better in terms of revenue or in cutting cost and not cutting cost by cutting head count, by actually making the operation more efficient in an HR way, that's someone who's not in HR will not know how to do.

Um. How to build a strong culture that will retain top talent and attract them. Those are all things that impact your ability to deliver as a business right. Now. The other side of this is why I think HR people have not done a good job of really positioning the function as a strategic partner is because unfortunately, a lot of HR people don't understand the business, which is the biggest problem here.

You know, one of the main things I do, one of the first things I do typically when I speak to founders and before we talk HR, is, Hey, let's talk about your financial statements. Let's talk about your business strategy and plans. Let's talk about where you're trying to take your business. Where are you today?

Where do you want to go to, and how soon do you want do it? If you don't understand the [00:23:00] business context, if you don't understand what a business is trying to do, how they're trying to do it, and by when do they wanna do it? You're trying to do HR in isolation of that, then yes, it is a useless admin function that you should actually push off as much as you can.

But when HR is actually tailored and built around what you're trying to achieve as a business, and it is set up in a way to actually pour rocket fuel into the company and help you just get to where you want to get to faster, that is where the value is. And I typically come into these conversations with hard evidence and numbers.

When I look at financials, I identify exactly some areas of opportunity that we can actually improve in terms of hr. So give you a little example here. I worked with a company, uh, this was maybe three years ago, approximately, where, and this is, I'm gonna use an example that you actually touched upon, which I get a lot, is, Hey, why do we need to do this?

Let us just hire a third party recruitment company to help us actually [00:24:00] fill these positions that we need to whenever we need them and not worry about it. Uh, I don't wanna hire people full-time. I don't wanna deal with this. Uh, and again, you know, you don't need have, when you want to have HR people, they don't have to be full-time.

You mentioned this earlier, right? They can be fractional, you can have part-time, there's different models, right? But you need some kind of level of, of, of HR advice, uh, you know, as a startup. But to go back to the example, I was working with this company who they did not have any HR folks. They were hitting around 60 employees at the time that I started working with them.

They're a US based company. Um. They had one person who was doing some of the admin hr. When we're talking about admin, we're talking about like running payroll, you know, processing benefits, the stuff that you kind of have to do and someone's gonna end up inheriting that work. Um, so, but they did not have a talent acquisition person or team or any like solid HR foundation.

So anytime they needed to hire, they were hiring a third party recruiter. And this company went from 20 people to 60 people within a [00:25:00] year, and they were actually on track to go to about 150 in the next two to three years. So when we did the math together, they were spending on average right per hire around 20 to $25,000.

Right. This is on recruitment fees. And on top of that, they're actually spending on advertising on different places like LinkedIn, glass or they were just. Pretty much spit balling stuff all over the place. When we looked at their entire spend on an annualized basis, the company was surpassing half a million dollars a year in terms of HR spend, right?

Which was happening on a, on bits and pieces. When I came in and worked with them, we trimmed that half a million dollars down to 50,000 in six months, and that did not impact their ability to hire. It was really about fine tuning how their operation worked. We did not hire a full-time person. We just helped them optimize really how the recruitment should happen, when they should go to seek recruitment support, and we [00:26:00] start built.

We built in some internal capabilities in HR that help them. Be able to attract talent without having to always seek third parties and build sort of an internal operating, you know, system, uh, to help them really drop down that cost. So that is something typically a founder will not think of very quickly, right?

Is, yeah, I didn't help you maybe generate revenue with this specific example, but I TriMed down almost half a million dollars in cost for you that you can deploy in places where they will have a better impact on your business. You could deploy them in marketing, in product development and so forth. So there's a lot of examples of that sort.

But my, my typical way of doing things specifically is that you need to see where the business is at. What are they trying to do? I need to understand how things are put together and how they work. Like if you're a software company and you have Scrum teams, right? And feature teams and so forth. If I don't understand what is a, what is a Scrum team?

How does it work? Who are the components of it? And. How [00:27:00] much manpower you need to develop a feature. What is your timeline? What is your time to market? All these different things. I cannot do my job properly. And that is unfortunately where a lot of HR people drop the ball because they don't understand these things and they're unable to show value and add value in that way.

Mehmet: Right. Now you mentioned, um, culture couple of times, Matt. Yeah. And this question I had in my mind for a long time, of course after speaking to a lot of founders, people in HR and so on, I think I kind have my own version of it. But one thing we see a lot and we know why it's coming, but I like always to hear different perspective.

So here's the thing, of course, and every founder or founders when they start, of course. They put in mind what they are building. They have their purpose, they have their [00:28:00] whys and all this. Then they figure out they need to gather a team together to build, right? And then they start to say, yeah, we're gonna have this culture.

Right? So they try to build the company culture and then the company culture, when they scale, it becomes part of everyone knows the HR employees book, right? The favorite book that no one reads. 

Nahed: Yes. 

Mehmet: Now the question is that always I had in my mind we hear these stories like when we were like small team culture was perfect and then slowly, slowly we started to grow.

And then actually you can see even. And today, this is why I, I like the internet. The internet is the best, you know, uh, witness for all things. So you go to the startups, which became scale up and even like full grown companies. And you see, for example, you go to Glassdoor, you go to any side that they have reviews or you read any forum and you start to figure out that [00:29:00] after they grew that culture started to shake, 

Nahed: took a 

Mehmet: no side.

What's your take on this? Is this, is this a destiny or. You know, there's some other ways to, to fix this. I would love to hear your opinion 

Nahed: that that's, that's an, that is an amazing question and also something that is very frequent, um, to start from the end. Know it's not destiny, because if you look at companies like Netflix, companies like Zapier, companies that have hundreds and thousands of people, their culture has remained intact.

But let's, let's take a step back here and, and look at, hey, from startup, how does culture look like and how does it actually get to this stage? Right? Because I think it's important to understand why does it get to this point? Because if you understand the why, you'll know kind of how to, you know, how to get away from it and how to actually do things to, to avoid it.

Uh, something you mentioned with, which is a very typical understanding of, of cultures. That [00:30:00] culture starts off very strong early on because it's a small knit team. The founder is the person who sets really the cult, the founder of founders or the founding team, depending on the structure. They're the ones who are the champions of culture.

And then as the team grows, all of a sudden things start falling, falling off. You mentioned something about, Hey, you know what, eventually culture gets passed onto, like hr, it lives in that employee handbook or, you know, culture, playbook, whatever you wanna call it. No one reads, no one cares about. And even maybe the HR people don't even know, uh, about anymore, which is, which is true.

I've seen cases before where the HR teams themselves or any leader in the company, we ask them, Hey, what are your cultural values or pillars? They're like, uh, they mention one or two, but they, they don't know for sure. Um, the reason why this happens is exactly the reason which we're talking about is the assumption typically is that, and I think that's a wrong assumption, is culture, is the responsibility of hr.

Uh. I have [00:31:00] a, uh, I have kind of like a wake up call for most founders and HR people specifically. Culture is the responsibility of everyone. And what do I mean by that? From the founder to every people manager, to every employee, the culture remains what it is. If you keep living it and you hold yourselves accountable for living it, when you decide that culture is no longer my responsibility, and you pass the ball onto someone else and you think that there's no longer anything you need to do to uphold the culture, that is where it starts falling off.

And it really starts with the founder because when the founder decides that, Hey, this stuff is not something I need to worry about anymore, is where you, you're kind of going onto the first step down that road. So what do I mean by it's this responsibility of everyone, every business leader, especially the leaders, and especially the people who manage others, they have to.

Use the same culture [00:32:00] standards that the company developed and designed with purpose. So what does that mean? A culture, typically when it's developed. A culture isn't just words with fancy definitions and statements and making it sound like this is a kumbaya place to work. And, you know, we're gonna, we're gonna save the universe, and, and that's it.

Culture has to define how you do work within the organization, how you make decisions, how people treat each other, right? How do teams operate? Uh, it defines your day-to-day experience as an employee, as a manager, and so forth. So those things first have to be clear to everyone. If you just relegate them to a handbook and hope people read them, you're, you're dropping the ball.

Founders have to always have check-ins with their leaders on culture. There needs to be town halls around culture. There needs to be workshops around culture. There needs to be, when you're evaluating employees, when you're, uh, when you're, you're giving them feedback and so forth. Culture has to be part of it.

It [00:33:00] shouldn't always be about what you're achieving as results, but how did you achieve those results? If you're not operating in a way that aligns with culture, you probably shouldn't be there. So culture dies when leaders decide that it's no longer their responsibility. HR is an enabler and a guardian of culture.

HR is pretty much, you know, kind of like the police officer sometimes who can detect and determine where is culture falling off? Where are we doing well? Where aren't we doing well? And sort of help strategize in terms of what are the things we need to do to uphold those culture standards. But HR cannot alone.

Make the culture strong or keep it strong. Because if, if you wanna think of it, HR is not working day-to-day with every single person in the company. It is the actual leaders and the people managers and the employees between themselves. HR is a support function. It is not a function that is working day-to-day with every single person.

HR is talking to the employees and to manager and others to understand and gather this [00:34:00] intelligence and help build a strong culture. But culture ultimately is the responsibility of, of everyone. And as, as soon as it stops being the responsibility of everyone is when it dies off. So that's kind of, if you will, my, my, my spiel around that topic.

Mehmet: Cool. Now, couple of things came to my mind, and actually I speak about this in, in different, uh, contexts also as well, which is you, you kind of touch on it as we tend to always. Take a playbook, whatever you want to call it, framework and then try to apply it across. So everyone remembers, you know, the first people to bring the ping pong table, you know, to the valley, Google.

So every single company start to do the same thing. And yeah, you start, we started to see like there is also the culture copycat model also as well. So we've seen it in sales, we see it in, in, uh, in [00:35:00] marketing. So it looks like also people copied these, which it's good. I'm not saying it's bad, but I mean, and I won't just, I'm saying this as a, as a command because you mentioned something previously about like when you bring someone for the hr, they should understand the nature of the business because you can't just like bring, I don't know, like whatever worked in X company and then it gonna work in Y right?

So, and I think this is. This is our biggest problem in hr in other fields also as well, we try to generalize a lot. Do you agree with me now? 

Nahed: Oh yeah. Look in, in hr, I think it's a big problem and you, you really hit that nail on the head because. A lot of HR people, they will take the playbook that they learned 10 years ago at a company and they will copy it from every single company they go to, regardless of size, regardless of business and so forth.

Again, it's a symptom of not being able to, to contextualize and understand the context and nuances of every business and how you need to, to change [00:36:00] accordingly. I think there's always value in learning what others are doing right, and understanding it. But I, for example, I don't like the the term best practice because when someone says best practice, it means that that is the best way of doing it.

There is no other way to do it. Mm-hmm. That is how everyone's been doing it. That is how most people do it. So let's do that. Best practice. In my eyes means that, hey, this is one way which has been successful. Right? And it's one of the ways which has been popularly successful because it works in many use cases, but doesn't mean it applies for my use case.

Typically what I do when I work with, with other companies and startups and stuff, and again, I've worked with more than 150 startups over my career. So what I typically do is, yes, it's always great to understand what others are are doing. And because there's a lot of learnings you can get from other people and other businesses and so forth, be it good or bad.

But at the end of the day. You have to take what works for the business you're at. There are some things or best practices that will not work for the business you're in. You might actually have to, in most [00:37:00] cases, I'm actually an advocate of developing your own practice because it is, it is best for you because it's tailor made for your company.

Uh, that for me is what best practice is. Hey, what, what is what works best for me as an organization? Because I have very unique circumstances. I have a very unique structure. I have a very unique model that, although I might be in the same industry as a million other companies, but every company is so unique that there's always gonna be nuances for differences.

So I completely agree with you there. Uh, copying, I think just blanket copying without understanding what it is you're copying and why is not good. It, it actually leads to more failure than success because you're trying to fit, you know, a, a, a, a circle in a square P, right? Uh, it doesn't work that way.

Mehmet: Absolutely. And the reason, you know, I'm, I, I brought this is, which would lead to the, to the next topic I want to ask you about is burnout and layoffs. Because, you know, when people start to feel, you [00:38:00] know, they are just being in a, in an environment which is mimicking something else, they, they, they panic, they freak out.

Like, yeah, we don't want to be in this same environment that maybe they worked there also before, you know, when they were startup, they've seen it. So, so as we say, like we've seen this movie before, right? Yes. Now 

Nahed: Dejavu, PTSD. 

Mehmet: Exactly. So from founder's perspective, how they can avoid burnouts, you know, of course in coordination with, with the HR team, burnouts and this is the first thing, so burnouts lead to people resigning and we've seen it actually in both startups and, you know.

Full, full fledged companies. The silent resignations. 

Nahed: Yes. 

Mehmet: And the other thing, this is also when, when the culture is not, you know, properly built. So what would happen is that they're gonna grow very fast and then they're gonna start to do mass lay layoffs. [00:39:00] And the problem is that I've seen it also, so people start to say, hey, like, but you said we are family.

You said like our culture, like we all get tied to each others and you know, tell me a little bit, working with like that number of startups, what have to Yes. 

Nahed: Yeah. So, so, so there's three things I'm gonna address your recent question. Sure. One is business as a family, two is burnout and three is layoffs.

Okay. So I'm gonna start with business as family 'cause I love that one. If you hear a business tell you or found, tell you we're a family run in the other direction. And, and there's a reason why I say this. A business is not a family, it's a business. It's a group of people who have mutual interests and mutual gain, right?

You're not gonna go work for free for any company because you're family. You might work with your family member for free, or you might actually treat a family member very differently or, or put up with different things, right? If a family member doesn't do their job very well, you're probably not gonna fire them immediately like you would someone else.

So, when I usually [00:40:00] run away from this whole businesses family, because if you're trying to sell that idea, you are already starting off on the wrong foot. You're being misleading with your employees because you don't lay off family, right? You can't lay off family, family's family. You're stuck with them for life, right?

So that, that, that saying, I think is, is a step in the wrong direction. I think it's important to have a transparent understanding on how the relationship works. So let's talk about burnout here. 'cause burnout's related to this, um. Burnout, unfortunately, has become sort of like a badge of honor in a lot of startup worlds, right?

This hustle culture, this 16 hour, you know, workday just working nonstop until you sort of crash and burn. You could probably do that in your early twenties. I did that before my early twenties. I'm sure many people in their early career have done that, and you kind of, you wanna do it because you're so eager to do it, but it's not sustainable.

The problem with, with, with just overwork and, and [00:41:00] hustling too much, it starts usually with the founder, unfortunately, because the founder is someone who's super passionate about their business and they're doing it right now. There's two types of founders that I've seen who've been able to successfully prevent burnout.

In organizations, there's the founder who will be very clear about expectations with their team and be very clear that, Hey, I'm someone who's gonna be working 16 hour days. You don't have to. And that person will actually tell their team that, Hey, why are you still working over time? What's going on here?

Are you overworked? Is there too much for you to do? Do we need to rebalance how work is being done? And try to understand why are people working too much? Although even if they work too much, it's, it's their decision, but they're not expecting it upon others. Right. The other type of founders I've seen successfully prevent kind of burnout is that they, they themselves are people who are very high on making sure that work is done with a specific timeframe.

They will work five days a week, eight to nine hours a day. And to [00:42:00] them it's that, hey, if we're doing more than that, it means that either we're, we're taking on too much work that we can't handle, or we don't have enough people, or our processes are broken and we're not moving as fast as we need to. So they look at it from that perspective.

Um. The founders that fail at preventing burnout are the ones who blindly and naively expect that just because employees are working for them, that they have to, as part of the startup culture, work that way, right? Mm-hmm. So burnout typically speaking, and there's a misconception that, you know, if you work longer or more, it doesn't mean your productivity's better or you're gonna actually deliver better results.

You know, I think there's, there's so many studies out there that show that, hey, actually, people who approach burnout are not as productive, right? They actually make bad decisions. They help they lose the company money. Um, I've seen examples of this when I was working with companies where people made very bad decisions just because they were [00:43:00] overworked and burnt out.

Like, I've seen finance directors, uh, add a zero to an invoice or, or remove a zero from a check. Um, you know, I've, I've seen different types of mistakes that typically you won't see when someone is. Really fully energized. So burnout is something that's, that's completely avoidable. A lot of cases, it's, it's one of three things.

It's either you've taken on too much work and you need to scale back, right? Or you don't have the right people in terms of either amount of people or the type of people, the skill sets to do the jobs you need to do. So you need to shuffle things up. Um, and, and the third thing is, the way you work is not ideal.

You work in a way that slows you down. Maybe you have too many approval processes. Maybe you're funneling decisions to an individual person. Um, like, hey, if, if, let's say there's one person who signs off on all product decisions and they take a vacation for, for a week, everything stops, no decisions are made.

So little examples there. Um, [00:44:00] so, so that's in terms of burnout, the layoff one I think is very interesting because layoffs are always almost, I'm not gonna say always, almost always. A result of bad planning. 

Mehmet: Mm-hmm. 

Nahed: Almost always. Um, it's, when you look at the news, it's always painted to be like, the market dynamics aren't great.

You know, the economy's taken a hit. We have co COVID, for example, is an exception, right? When you have, when you have exceptions of that sort, then you look the playbooks out the door. No matter, no matter what planning you do, you can't plan for something like that. But exceptions aside, on a day-to-day basis, when companies get to lay off territory, they're doing a few things wrong.

One is they are not fully addressing every single hire and why that hire needs to exist in the organization. What I mean by that, what I typically advise founders and leaders to do is when they wanna make a new hire, I give them a questionnaire, a list of questions to [00:45:00] think of through their mind before they make a decision.

Some of these questions include, right, so what is this new hire adding to the table today that we do not have? Right. Is it a skill or is it capacity? Right? Are they adding a new skill set we don't have, or are we trying to add capacity more of the same? The answer to that is very different in my mind, because if you're adding a skill, then okay, great.

What are you trying to do with that skill? Are you trying to add a new capability? Are you trying to build a new product or services, so forth? If you're adding capacity, why do you need more capacity? Right? Before we start hiring, let's look at the operation itself and see, hey, are there, can we actually realize efficiencies in the operation before we add headcount?

Because you, you know, adding headcount to a broken operation, actually it doesn't do you very well. Um, so that's one example. So planning is the biggest issue here. The f the biggest issue in planning is that managers and founders do not think through well enough why a role needs to exist, especially when they're [00:46:00] small, when they're sub 100 people.

Um, because every hire. Takes up a significant percentage of your expenditure. And if they're not carrying their weight and they're, they're not adding real value, then the expenditure is gonna be higher than the value they bring in. And that's where you start seeing finances drip. And that's where companies get into layoff territory.

Um, that's really the biggest reason I see why companies go into layoffs. And a symptom of that is what I call that false sense of urgency. A lot of times, and you've probably seen this when you've worked with startups, especially those that are growing a bit, every manager wants to hire people yesterday, like, and they make it sound like if they don't hire someone today, the sky's gonna fall.

We're not gonna meet our projections. We're not gonna do this if we don't have this one person. Right. We're not gonna make it if we don't have that additional resource. Oh my God, it's Armageddon. No, it's not. You know, the sky isn't falling today. It's not gonna fall tomorrow. Uh, it's not. [00:47:00] If your business is hinging on having one person here today versus two weeks from now, there's something much bigger than that person wrong with your business, right?

There's a lot of things wrong that are outside of headcount and manpower. Um, so that's kinda my take on layoffs. Layoffs is typically a symptom, a symptom of bad planning. It's preventable, um, severely preventable, even in economic downturns when you're very purposeful in hiring. Every hire is well thought out of, and also something which I help companies do a lot of cases to avoid layoffs is.

Hiring based on skillset, not hiring based on a fixed job description. Mm-hmm. There's a lot of skills that people have and a lot of skills that you can deploy in a business that can be transferable into different places in the organization. Uh, and having a wide scope of skill sets as opposed to just always hiring for a very narrow job description that might be obsolete or might not be needed.

If, for example, we lose, we lose X amount of revenue, or we lose X number of customers, then [00:48:00] oops, we need to cut half of that team. Uh, so there's different techniques and ways of doing that, but eventually, yeah, it all comes down to planning and not thinking through why a resource is needed. Absolutely.

Mehmet: Just out of curiosity, how much AI is playing a role currently in the whole thing that you mentioned that from planning to, you know, getting, you know, the, the, uh, not job descriptions. I don't like the word JD at all job descriptions, but I mean, uh, helping in, in crafting, let's say at least the kind of roles that, uh, you know, the business needs currently.

Uh, what are you seeing in that space? And I know like you are also close to some HR tech, so we would love to hear like what you're seeing other than AI also has trends in that space. 

Nahed: Yeah, no, definitely. I love that question. So I, I'll, I'll, I'll look at this in a few perspectives. I'll tell you what I'm seeing.

In terms of AI usage, especially in the HR [00:49:00] space, I'll tell you a bit of how I'm using it personally and what I'm seeing also from the tech space because I'm, I'm also on the advisory board of, of some tech companies who are deploying ai. Um, what I'm seeing in the industry, generally speaking with, with, with AI in HR specifically, it is still very early exploratory stages.

And what I mean by that, um, there's a lot trial and error. A lot of people are trying to do different things. But what's most common today, which I'm seeing, which is becoming a bit common, is AI in HR specifically, is being used mostly in three different areas for the most part. One is compliance and labor law.

The, and you know this about ai, right? AI models are as good as the prompts and inputs you give them, and especially if you're asking AI to analyze data and so forth, right? How good your data determines, how good the output is. So a lot of AI's output is dependent on how good your inputs are. Um, so labor, law and [00:50:00] compliance, the beautiful thing about that is that the labor law is the labor law.

You can access it anywhere. It's available online. And most government websites, or even if it's not, you can just download document and upload it to ai. It's fixed, it's clear, it's concise, and there's a lot of documentation on on it, right? So especially like in a market like the US we have 50 states, 50 different kinds of labor laws in different states.

There's some common federal stuff, but there's a lot of nuances. So it is almost impossible. For a startup who has maybe no HR folks or maybe one person at best to manage all those changes that happen on 50 states. So you just, hey, you just dump that documentation in AI model. You ask it a question. It's fairly, very accurate in terms of the responses and guidance and gives you, so I know labor law attorneys are probably hating this right now because I'm sure their business has gone down.

Uh, because typically, like in the US they charge like anywhere from $500 to $800 an hour. Uh, for that, for those kind of [00:51:00] services, you can just dump them in any, any capable AI model it get, it gets done. The second thing is crafting things like policies, procedures, and job descriptions, generally speaking.

Now, how that is being used is hit and miss because a lot of HR people typically just say, Hey, I want a policy, let's say on remote work enter, and it just blurts out something for them, right? But the, the ones who are doing it properly are the ones who are actually giving a lot of context looking at the business.

Needs and, and giving as, as much input as possible, but also then fine tuning the output to their needs. But it's a, it's an amazing time saver. And I do this as well when I'm typically, if I'm drafting like long documentation and stuff, I'm very detailed in what I'm looking for. But usually AI is a good, is a good way to use as a first draft to give you sort of the initial building blocks and then you go from there and contextualize.

So those are really the biggest areas I'm seeing, uh, HR practitioners use it today. There's been some experimentation in interviewing and, you know, there's some tools out there that, that do like [00:52:00] video-based sentiment analysis and language analysis and so forth. Not a big fan of them because one is, there's a lot of red flags from a labor law perspective in using them right now.

So depending on the country you're in, you might get into legal hot water for using some things of that sort, but also assessing a human being's. Capability to do a job based on an interview has always been sort of a coin flip to some extent. It is not an exact science. Um, so relying on one input to make a decision on whether someone's good at doing a job or not is, uh, not very realistic.

It's actually delusional, in my opinion, with someone thinks of it in, in that way. Um, how I use AI a lot these days is, um, I've become a big fan of analyzing big amounts of data. So typically what I used to do is when I wanted to, let's say, analyze again, I'm very heavy on data and analysis and so forth when I'm working with companies.

I used to look at all these spreadsheets and information, and I'm someone [00:53:00] who likes using r and r studio, so I'm big on our programming and data analysis. So I used to sit there, you know, do all these joins, these graphs and all that kind of thing. Today what I do is I clean up the data the way I think it's gonna be best for the AI to digest.

I dump it into a model, and then I ask for certain analysis. I ask for certain charts and so forth. Things that used to take me a long time to do it does it in a much shorter timeframe right? Now, again, in some of these cases, typically speaking, I don't do this plainly, outright because there's some, sometimes there's some sensitive data that you shouldn't really use on an, with an AI model.

So typically I'm, I'm very picky with the kind of data I use. I only use anonymized data. I use data which can be traced back to a company. Things of that sort, because, you know, there's privacy concerns that, and typically with the kind of engagements I do, you kind of be cognizant of those things. Um, what I'm seeing with a lot of HR technology today is that they're, especially the hr, the HR piece and, and ai, they're trying to figure out ways on how [00:54:00] to.

Make HR processes much faster and much more efficient and effective. Performance management is one that I'm seeing a lot of companies try to dive into today. It is probably the most hated process in HR by managers, by employees, and even HR people because it's typically considered very subjective. It is considered to be, uh, not always, not accurate.

It's, it's not aligned with what the business is trying to do and so forth. So there's some ai. Companies today that are trying to solve that by doing something that a human being can't really, can't really do very well, is taking inputs from multiple perspectives related to performance, analyzing the data and giving some insights, and then giving that to the manager to help really add on to their ability to deliver value in terms of giving reviews and so forth.

So looking at things like goals, metrics, KPIs, um, uh, informa communication, exchanges on slack, emails, you know, feedback that you got in an all hands, all [00:55:00] that kind of information. Analyzing it, summarizing it and saying, Hey, this is an overview of what this person's been doing this year. This is what they've done.

Great. These are some development error that I think is based on these inputs. And here you go. Add onto that, your input and go from there. So that's something I'm seeing a lot. Um. Uh, today I'm also seeing, um, a lot of work on employee engagement and survey tools and so forth, just because AI is pretty good at data analysis and just looking at raw numbers and giving you output, especially when it comes to analyzing sub uh, analyzing, uh, comments and analyzing, uh, you know, sentiment and all these different things.

Especially with HR surveys, a lot of them aren't just numerical. You get a lot of feedback, which is verbal, you know, people write down some comments, paragraphs and so forth. Right. It's very good at analyzing and summarizing that information. Those, those, those are some of the things I'm seeing, uh, frequently right now.

Mehmet: Great. Before I let you go now, tell me a little bit about the podcast. What, [00:56:00] what's it about? And it, you have a kind of a catchy name, organized cows. 

Nahed: Yes. Yes. So, so Organized Chaos is the name of the podcast, correct. Um. Because I believe that a lot of startups, you know, startups are kind of chaotic anyways, right?

There's a lot of chaos going on and my goal is like, hey, let's organize that chaos. Right? Nice. It's, startups are always gonna be a little bit chaotic. They're not gonna be a Microsoft or a Google, like a well old machine. Um, right there. There's always gonna be some chaos in there, but if you organize it.

And you set that up in a way where it's ready to scale, that's where you see success. That's where the name comes from. But what is the podcast about? The podcast is designed for two different audiences. One of them is founders and startup leaders, and the other is HR professionals. Um, mainly those audiences.

What I try to do on that podcast is give them really my playbook for how I've taken companies from seven to nine figures, and by using HR as that rocket fuel as I call it, [00:57:00] um, because it's not typically thought of. HR is not typically thought of as a business enabler and right, and a catalyst to growth, whereas I've been doing that differently, and that's kind of what I try to do on the podcast.

So the podcast, typically, there's two, there's two different models to it. There's some episodes where I'm just providing. Some of my knowledge and some examples and cases and, and pretty much just passing on knowledge to founders and HR folks. And the other group, uh, on the podcast is I actually interview founders and HR professionals at startups who have gone through a lot of the things that I talk about on the show and give their own experiences and their own advice and, and their own really, uh, specific cases and successes and failures that they've seen to really help founders and HR professionals succeed at startups.

So again, for me, my goal is to really, that, that like, like that's free knowledge that I want to give people, uh, as well, uh, people also who are, who, who are more interested in, let's say, reading. Uh, there's a newsletter version of the podcast which summarizes the key learning points. So, hey, if you don't wanna [00:58:00] listen to, like, most episodes are within the 20 to 30 minute mark.

So if you want to, Hey, give me the, the. The short and sweet version, you know, too long, didn't read in five minutes. The newsletter's there for them. Um, and I'm actually working right now on a, a course for HR professionals who are working in startups or wanna work in startups. It's called the HR Operating System for Startups.

Um, so, uh, it's on the website right now. There's a wait list. It should be launching in August or September. Uh, specific for HR folks who wanna, it's, it's pretty much me just giving everyone my, my playbook, uh, my templates, my frameworks, everything that I've really done over the decade plus with a hundred plus companies, uh, and really passing that knowledge on to, to HR practitioners.

Mehmet: Love that. So the question where people can get in touch now. 

Nahed: Yo. Thank you. So there, there's a couple of ways. One is, uh, LinkedIn, easy to find. Just type in my name, I'll pop up right there. Um, or you can go to organized chaos.fyi. That's the name of the website. [00:59:00] My email is hello@organizedchaos.fyi. So you can reach me there.

Uh, and I, I don't have an assistant or anything. I'm the one who responds to all my emails and, and all the messages. So always happy to, to chat with anyone who, who's looking for it. 

Mehmet: Great. So really, I enjoyed the conversation. I like the energy. I like, you know, you, you're sharing all, um, you know, what you have collected over the years also, uh, with the audience.

And I think it's very, um, important for founders to focus on these things because I know some people they think, yeah, well let's, let's figure out that later. But, you know, if you are really, um, you know. Going to build, uh, last long companies, uh, and companies that they're gonna scale and become like iconic companies, as we call them.

So you need, you need to build everything, every single thing in the foundation, including your HR and hiring on, on a good basis. And this is where, [01:00:00] you know, add a lot of gems, I would say. And of course, I advise people to go, you know, check the, you know, the podcast and check the newsletter, which we're gonna put the links for them.

If you are listening on your favorite podcasting app, you'll find them in the show notes. If you're watching this on YouTube, you'll find them in description. So again, I thank you very much for, you know, this conversation today, and this is how I end my podcast. This is for the audience. If you just discovered our podcast by luck, thank you for passing by.

I hope you enjoyed it. If you did, so give me a favor. I. Subscribe, share it with your friends and colleagues. We are trying to do an impact. We're trying to, as night is doing, we're trying also to give back and share the knowledge with as many people as we can. And if you are one of the people who keeps coming again and again, and they are so loyal to the show, thank you very much.

I really appreciate your support, your help. Not only this, because of you and of course my guests, you took the show to next level this year. So [01:01:00] from the beginning of 2025, we've been like ranking in couple of countries, but what start to happen in May and now in. June, at the time of this recording, we are ranking in five and six countries at the same type in the top 200 Apple charts, which is I didn't see before.

This is not because of me. This is because of course of my guests and you the audience. So thank you very, very much for the support and keep the feedbacks coming. Also as well, I read them all as night. I don't have an assistant. I read every single email. Thank you very much for tuning in and we'll meet again very soon.

Thank you. Bye-bye.