The entrepreneurial news seems to be flooded with new and nifty ideas in AI, blockchain, cryptocurrencies, and robots. Not to speak of DNA editing and other biotech ideas far outside my realm of understanding.
What I do understand and what investors also understand is the importance of the team behind those ideas. Because ideas are literally a dime a dozen. What is far more rare and valuable is the ability to execute to bring that idea to commercial success. VCs have told me that would rather take an A team with a B idea than a B team with an A level idea. Because chances are the B level team won’t be able to execute the A level idea. But the A team will be able to quickly pivot from an B level idea to an A level idea, then execute to make that idea a commercial success.
I was reminded of this when reading the article in The Wall Street Journal entitled Rising Venture-Capital Firms’ Strategies for Success. It’s not until the end of the article that we get to the reality of the value of team over idea:
And as many startup investors are quick to point out, it is not just about the business idea, but the personal qualities of the founders. Mr. Mhatre says Lightspeed spends time “trying to really understand the people we should believe in and get behind.”
Mike Volpi, a general partner at Index Ventures, says the best entrepreneurs “have the personality to be able to overcome long odds.” The most successful founders, he adds, are good at recruiting, leading, learning and have “a strong sense of self-determination.”
Would be founders should take careful note of Mike Volpi’s criteria, while overcoming long odds and leading are truisms, being good at recruiting and learning are not. The best founders will come to their venture with a network of friends, colleagues and acquaintances from which they can pull the best and brightest for their firms. They will also be very demanding recruiters, holding out for the best fit for their team. Far too many engineering founders I see tend to be very opportunistic about building their team, especially for business talent. All to often they will go with someone from a local
B-School rather than conducting a wide and thorough search. As one of my colleague’s once told me, “The easiest thing to do in a startup – especially one funded by venture capital – is to hire.” The hardest thing to do is to build a culture in which the hiring process staunchly adheres to the values of the founders. And my advice to founders is to play an active role in the hiring process until doing so gets really painful due to the pressing demands on their time, then hang on a bit longer.
If you think that sounds crazy, please read the Business Insider article Why Google CEO Larry Page personally reviews every candidate the company hires. At the start of 2015 Google was hiring about 6,000 people a year. Cofounder and CEO Larry Page approved each of them, according to Google HR boss Laszlo Bock, who writes about Google’s hiring process in new book “Work Rules!.”