Building your startup team

Solving jigsaw puzzle

I gave a presentation on how to build your startup team to the MIT Post-Doctoral Association last night and realized it would make a useful post.

When you build anything, say a house, for an example, you need a list of requirements from which you develop a plan.

The first item to think of in terms of your requirements for a startup team is what type of business entity are you building?

  • Lifestyle or social impact firm – the goal of both is sustainability, not growth per se. As such, they might be a partnership or even a sole proprietorship. But in most cases the team will be small and self-sufficient.
  • Linear growth or revenue fueled – this type of entity may have growth, but it is slow and steady, not the geometric growth of a venture-funded company. Often no outside capital is required – the firm runs on customer revenue.
  • High growth, scalable venture –  these ventures have hockey stick growth fueled by venture capitalists seeking 10X return on their investment.

While there are only two jobs in a zero stage startup: building the product and selling it, in the high growth company many other functional areas are needed:

  • Engineering
  • Product management
  • Marketing and sales
  • Finance and administration
  • Operations

Before you start building your team you need to define the roles and responsibilities of each functional area. The rule of thumb for high growth companies is that the first dozen or so hires should come from the founders’ networks. That saves time and money and also reduces risk by hiring known quantities.

Once you have your hiring plan in place you need to focus on hiring for culture fit. The company’s culture is defined by its vision, mission, and values. These need to be in place before you start hiring. Founders must be aligned on the company’s culture and goals before any other staff are brought on. Alignment of founders is critical. If one wants to build a company quickly and then flip it so they can take their millions and go to the beach, while the other wants to build an enduring company with real impact on the world, the company is bound to fail.

What should you look for in your hires beyond intelligence, expertise, and experience? Here’s my list:

  • Curiosity
  • Desire and ability for continuous learning
  • Creativity
  • Willing and able to collaborate
  • Good communicator
  • High level of initiative

Technology changes rapidly, rendering obsolete much of what is learned in school. Thus you need to hire autodidacts who have the curiosity and desire to learn on their own. Because products are built and sold by teams, you need good communicators who can collaborate well across functional areas.

Steve Case was the founder of AOL and is now a partner in Revolution LLC, an investment firm. I cam across two quotes from Case in an interview with him which I think best express the value of the team in a startup venture:

It ultimately comes down to people and teams, that entrepreneurship is a team sport, it’s not about any one person.

If you get the people right, almost anything is possible. If you don’t get the people right, I’d argue nothing is possible.

Here are the basic steps in building your team once your plan is in place:

  • Get the word out – first hires should come from the founders’ networks
  • Screen and select – don’t be opportunistic! Don’t settle for “B” players. “A” players hire “A” players; “B” players hire “C” players, as they fear anyone smarter or more talented than they are.
  • Test drive – give your final candidates a small project to complete before you decide to hire them.
  • Interviewing – it’s a team process. In a startup everyone should interview all candidates. Founders should stay in the interview loop indefinitely.
  • The Offer – keep in mind recruiting is a sales process. You have to sell the candidate on why they should join the company. Talented people will have multiple opportunities.

Hire slowly, fire quickly. It can be too easy to hire, especially if you have substantial capital from VC funding. Your team needs to be adaptable. Some people can not adapt well to change. You need to either find a better position for them in the company – as someone might be “playing out of position” or let them go. If you have a critical, immediate need, bring on a contractor until you can hire someone who meets your company’s standards.

Keep in mind when building your team, no one bats 1.000. You will make mistakes. The key thing is recognizing mistakes and acting quickly to correct them. That goes for the venture as a whole, not just in team building.

Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

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