I am fond of quoting that about 70% of my investment decision of an early-stage company is the team. My rationale is simple: everything goes wrong and only great teams can respond to competitors, markets, funding environments, staff departures, PR disasters and the like.
How you build out your team in the first few years can have a huge impact on the trajectory of your company.
So I naturally spend much time with the companies in which I invest helping them:
- figure out roles
- measure performance / quality of team
- identify gaps
- debate the right structure
and so forth.
There are no “right” answers – just opinions. And the folks at Startup Grind have been kind enough to invite me to present this morning in Mountain View on the topic.
- Be careful not to have too many co-founders. it’s the most expensive dilution you’ll ever face. And you need to be careful about giving up control to cofounders as much as VCs
- I don’t think VCs care as much about co-founders & economics as people think. I think they care that there is a deep bench of talent. But not anal if one founder who shares equity graciously with early employees who are treated as “co-founders”
- My idea startup team is heaving on tech personnel but also has strong product management. PM’s are underrated in Silicon Valley these days. For the wrong reasons. PMs are a vital part of a tech startup. Engineering is critical but it is not everything. Without strong PMs you build crappy products that nobody needs or that real people can’t use
- Early-stage companies shouldn’t: outsource core product development, have consulting firms build it for them to speed up time-to-market, shouldn’t hire too many business people until product is complete and early product/market fit tested
- Don’t hire a homogenous team. You need a diverse set of skills to succeed
- Don’t listen to VCs who tell you to bring in the big guns early. Some push hard for super experienced execs to join. If they join super early it is often a disaster. I’d take people who “punch above their weightclass” any day of the week. When you scale you bring in the heavyweights
- Your first sales people should be consultative sellers who can fuel evangelical sales. Don’t hire “relationship management” sales people too early
- Tech teams are comprised of three distinct managements skills: people, process & technology. Know the difference. Some people are good at all. But that’s rare. More often than not you need experts in each who work well together.
- Resist the temptation to build a group of “C Level” execs in an early stage business. I especially think “president” and “coo” are bad titles for early-stage businesses. Give everybody functional roles. Have them manage their area. If you need a COO then perhaps you’re not a CEO? Maybe you’d make a better part-time Chairman and let the COO run the business?
- Hire admin / office management after you raise a reasonable size VC round. It will pay huge dividends in avoiding the CEO tied up in admin and allow him / her to focus on bigger picture items.
- Equally – a great VP Finance can be leveraged well to take on finance, legal, HR and much of the operational tasks. Will prove INVALUABLE to reduce time CEO spends at: board meeting prep, fund raising and ultimately M&A discussions.
- Be careful about board construction. Limit the number of VCs. Equally limit the number of management. Can always appoint other startup CEOs to the board to take founder seats (which you control) and/or bring in industry experts as independents.
It’s all in this deck in a prettier format. Ok, well not that pretty since I do my own slides and often at 1am. But my slides are linked above and you can also download from SlideShare.
Since it is sometimes hard to get the full context from a conference presentation, I have included blog posts links on the topics in which I have written fuller posts in the presentation itself.
I’d love to hear your view on the presentation. What you agree / disagree with. And what your views / tips for early-stage startup teams are.