People. Building a business is all about recruiting great people. When an investor looks at a new company, contrary to popular belief, the number 1 focus is not the business plan or even the product offering, it's the Team.
I’ve had the opportunity to sit through pitch after pitch, and what becomes very clear, very soon, is the quality, diversity and talent of those standing before you. In Killer Teams, there exists this powerful combination of vision, creativity, capacity, integrity, intelligence and grounding.
I’d like to spend some time and discuss in general the topic of people, and more specifically, that of building a great team. I've followed these 8 rules and successfully raised millions in venture capital.
Rule #1 — Do not hire yourself; seek that which you are not
All startups have founders, but what is the right number? I believe that two is ten times better than one, and that any more than three becomes downright halting. For me, the ideal number is two. Why? Two founders balance each other out, they provide a different, but highly vested opinion, and they hopefully have complementary, but different skill sets.
Additionally, when the founders are too many, the business slowly but surely tends to grind to a halt. Decisions become sterile, diluted and lacking a clear path to success.
Rule #2 — Hire smarter than you. Really, it’s ok!
In a startup, unlike a big company, the value of an employee to reach beyond her defined role is invaluable. When given the choice, hire for smarts and prefer a generalist, over a specialist. Smart people can and will adapt. Remember that in a startup, course change is not just likely, it is assured.
Rule #3 — “A” leaders build “A” teams
My strongest belief in people and hiring is, “A leaders build A teams.” I like to think of my team as like an NBA club. My job is to make sure I’ve got the best 5 players on the court, that they're working together and that I am actively building my bench, should someone go down.
Starting a business is not the time to hire your best friends, relatives and all the others that come referred by your “friend” circle. When raising Angel funds, it is not uncommon for the investment to come attached to an implicit request that you hire a relative of the investor. DO NOT DO IT… I could write a whole book on just that subject. Please, trust me on this one.
Rule #4 – Seek people with a fanatical work ethic
Next on my list of qualities I desire in a team is work ethic. Startups are just not the place for those that see the world as a nine to five proposition. I remember when I arrived at Elance, we had a scheduled meeting at 1 am. I’m convinced that the work ethic of Silicon Valley defines it as one of the prime places on earth to launch a company. In the valley, a fanatical work ethic is expected. Entrepreneurs work days, nights and weekends. The typical “corporate” type will get blown out in a matter of days. And, as Gary Player once said, “The harder they work, the luckier they get.”
Rule #5 – Look for passion
Startups have many things; cash is not one of them. As such, there exist in startups this kind of surreal arbitrage. People are asked and expected to work hard
and yet are paid little. Obviously, stock plays a huge role, but it is more than that. Entrepreneurs have a passion for what the act of creating a great company is. They value the role, the mission and effort, above simply a paycheck.
Remember that experience is often highly overrated, borne in very different work settings and often can even be used as a “bully pulpit,” to stop real creativity. I’ll take youth and creativity every time. In this case, hunger is a “good” thing.
Rule #6 – Favor technologist
I too favor technologists. Maybe this is because I’m a bit of a nerd too, but I want people who seek the edge, first adapters, people who crave that which is new. I want people capable of changing the way the game is played. People not only comfortable with thinking outside the box, but people who flatly refuse to get in it.
Rule #7 – Attitude is everything
Attitude plays a huge role in success. I’ll break this down into three distinct qualities or attributes:
1) I like risk takers. I want people who push and push hard. I want people willing to walk the plank, people who are willing to fail in an effort to prove a concept out. Risk takers seem to always start with “Yes,” we can do this, and are not those that stream out a river full of “no because.”
2) I want people who do not get too high with success or too low with failure. An even keel wins out and allows for longevity.
3) I want people who play to win. Second place to me is first loser. We take our work seriously and we take an attitude of whatever it takes, I’m going to win…period.
Rule #8 – Integrity still matters
For all the hard work and desire to win, integrity still matters. I’ve defined integrity as what you do when others are not, or cannot see you. Quality companies stand by their employees and their customers. Integrity demands that I am doing my very best, that I am doing it honestly and that I have aligned my interest with that of the company and the people it serves. A lack of integrity is an automatic fail. Enough said.
Lastly, I’d like to conclude with a few thoughts on what a team should look like to an investor during a presentation.
1) It should be very clear who is in charge. I know this does not sound to democratic, but every team needs a stop, a go to guy or gal.
2) The team needs to function as a team, and yes I mean during the presentation. Having a charismatic founder or visionary is wanted, but the team needs to fill deficiencies, be multi-faceted and well organized.
3) The team clearly understands what it means to be frugal and not operate in “OPM” mode. By that, I mean they must cherish cash above all else, and not spend or allocate like it’s “other peoples money.” They know, no cash…no business.
I hope and trust this list of rules and thoughts will help you in building your team and company. Remember what I said earlier; above the idea or product, the team matters most. The majority of companies spend 99% of their time on product and 1% on team. Don’t let your great idea or passion fall by the wayside, because you failed to build the right team and infrastructure. You want to rock the world? Build a killer team!
Obviously this is a huge and broad topic. I welcome your thoughts and hope it leads to a more informed discussion in the comments. I consider you part of our team, as together we are so much more capable.