Everyone says the team is the most important thing in a startup. No one does anything about it. Time to change that.
We’re not doing a very good job of building startup teams.
Ask any investor what they’re looking for in an early-stage company, and they’ll tell you they invest in teams. It won’t be the only thing they’ll mention as investment criteria, but the team will usually be the first or second thing they’ll mention. Marc Suster wrote over a decade ago that his primary investment decision would be about the team (70%) and then the market opportunity (30%). That seems to match what most investors say. The team is one of the primary levers—if not the primary lever—for creating value and return on investment.
Ask any investor what the biggest risk to success is in one of their companies, and they will usually tell you that team problems are the big ones. 37% of founders surveyed say that a startup’s biggest challenge is getting the team right. David Cohen of Techstars frequently points out that the two big startup killers are not having a market and team problems. There are many surveys about startup success and failure, and most of the reasons for failure come back to the team.
We all get it: the team is important. Critically, vitally, non-negotiably important. Nothing new there.
But then ask investors and founders what they are doing to optimize that opportunity—or to mitigate their risks—and the answers are far less satisfying. They usually come down to some variation on “we give them the best mentors and resources, and then we hope for the best”. Some are a bit better, and many are far worse, but that’s pretty close to the state of the art in building successful startup teams—the very thing we know is simultaneously our biggest strength and our biggest weakness.
We have a big disconnect here—we have something that we say is important, but we’re leaving a lot to chance. I don’t think most founders and investors neglect team development out of ignorance or stupidity; the entrepreneurial community consists of some of the smartest, most thoughtful people I have ever met. Nor do I think people fail to address team development because the value isn’t clear. Founders and investors know that a strong, healthy, focused team will increase the chances of a company’s success—usually exponentially. I think the problem is more fundamental than that.
I think most people don’t know what to do.
That’s not the entrepreneurs’ fault, by the way—there’s a lot of bad practice and total nonsense out there. In a stage of a company’s life in which time and money are severely constrained and product and market are highly fluid, what little there is out there for getting the team right is time-consuming, expensive, and not fit for purpose. Most team development is built for large companies, overly prescriptive, “one size fits all”, practiced outside of the company’s primary context, and often based on nothing more than superstition. If one end of the spectrum is doing nothing, the other is the pricey and cumbersome adaptation of things that work at large, mature organizations.
Cultivating the team is essential to startup success, but our ways of approaching that work are poorly designed. In fact, we haven’t designed them at all. Fortunately, this is what startups excel at: iterating toward a better way.
Building a great startup team doesn’t need to come from an outside expert, and it doesn’t need to be a drain on time and capital. This is a capability the founders should develop themselves, and that process of crafting the best team should look like this:
Driven by the team itself
Embedded in normal work activities
Designed to promote daily habits rather than exception events
Fast and iterative
Free or cheap
Crafting a great startup team shouldn’t be an activity outside of the work; it should be a part of the work. There is much more to discuss about the “how” of this idea, but the “why” is simple: startup teams are in the business of designing themselves.
Mentors, advisors, accelerators, investors, workshops, books, consultants, coaches, and mastermind groups all have the potential to help, but the tough work of designing a high-performing team in a startup falls to the team itself—and to the founders. We don’t get to outsource this one. Nor should we.
Any founder who has experienced a great team—either creating one or being a part of one—knows that that experience is extremely satisfying. The team executes with confidence and rhythm. People trust and support each other. Conflict is healthy and deepens trust. People get in flow and enjoy working with each other. Problems get fixed and decisions stick. The product gets better and better, more people use it, and the company grows.
That’s what great teams do. That’s what makes a company a great investment. That’s what we’re here to talk about.
