I was recently asked to teach a class about Startup Teams and Advisors. Unfortunately, after agreeing to do so, I was unable to participate due to the fortunate arrival of my first born. In writing my apology email to the organizers, I thought that the very least I could do was put my thoughts down in writing. Below is the result. Please let me know if you have any questions or comments in the comments section below.
Thanks! - Ben Larson, Co-Founder
Nothing is more important than your team. If you were to poll early-stage Silicon Valley investors and successful entrepreneurs, and then you do a weighted average on the importance of "team," you'd likely find that 90% of the value (and likelihood of investment) lies in the team. The team includes your co-founder(s), your first hires, and your advisors or investors.
THE CO-FOUNDER
Have a co-founder or two. Period. Many investors actually require it as part of their investment thesis. Why? There are three major reasons:
- Your First Signs of Traction: Before you have a product or any form of sales, your best "proof of concept" is being able to convince someone to go on this journey with you and risk their own financial ruin, reputation, and relationships. A co-founder should not be contingent on you providing them a decent salary. They need to be "in it to win it." Even better if this person has a strong track record that provides confidence in delivering on the task at hand. In the minds of investors and future team members, you're suddenly not a just a person and an idea, you're now a team that may be on to something exciting and worth looking at.
- Emotional Insurance: I've said this a million times: building a company is fucking hard. There will inevitably be downs, often more frequent than the ups. It helps you and your team to have leadership that can prop each other up during these times. It definitely helps sometimes to have someone at your side that can convince you that it is worth forging ahead.
- Two Heads are Better Than One: In addition to emotional support, it is just good strategic practice to have a trusted sounding board. You are making important decisions every day that can change the trajectory of your company. It's important that you have someone that shares your vision that can provide a different perspective, sanity-check your strategy, and even proof-read your communications.
Each time I've launched a startup, my first step was finding a co-founder. Sure, I developed the idea, prepared a pitch, and mocked-up a product, but I only truly announced it to the world and convinced myself something was worth pursuing after convincing someone to go on the journey with me.
SHOOT FOR THE STARS
You want to build a billion-dollar company? Go find the person who has done it before for a product similar to yours. Seems like a tall task, but you can do it. Leverage your network, get introductions, and convince someone that you are the person worth mentoring and worthy of their most valuable resource (time). Besides, this is another piece of "traction" that can invoke that fear of missing out (#FOMO) in potential investors and team members. There are really three different buckets of advisors you will have:
- Star Power: Let's face the facts: name dropping works. Notable people, while instilling confidence, also have very valuable networks. So, if you can convince someone like Mark Zuckerberg or Richard Branson to simply to lend you their name, be CC'd on emails to potential investors, or occasionally lend you their ear and network, by all means, do it.
- Been There, Done That: As stated above, finding someone that has walked the path already and provided returns for their investors is a great person to help you build your business and confidence in others. While you're battling the day-to-day and keeping your product moving forward, they keep the big picture in mind and can ensure you're on the right path.
- Work-Horses: Some advisors will roll-up their sleeves, get involved, and maybe even write a line of code or two. Finding an expert who can jump in the trenches with you can be very valuable in the early days.
The main point here is unless someone is putting in real valuable work for free, make sure they become a strong part of your narrative. The random mentor with questionable experience and little applicability to what you're doing provides little confidence to your future collaborators.
TEAM BUILDING
A litany of books have been written on the art of building your team, so to cover the topic in a paragraph here is near impossible. I'll simply try to touch on the high-level concepts that most books don't focus on as it pertains directly to your early stage startup.
- Recruitment: Preparing to recruit should feel very similar to fundraising. The better prepared you are, the higher quality candidates you will attract and the more you will have to offer when negotiating pay and equity. People want to be a part of something special, they want to feel that they fulfill a very important need, but it's helpful for you to be able to do this while making them feel like this train is leaving the station with or without them.
- Scaling: As your business grows and you transition on to different phases of the startup lifecycle, you'll begin to realize that a large amount of your time will be consumed by recruiting and team building. Some say up to 30% of your time on an ongoing basis. Referring back to one of the first points made in this post, it's all about your team, so it's worth it. But what you will also realize is that the team who got you here will not necessarily get you there, which brings me to my next point.
- Hire Slow, Fire Fast: Startups move fast. This is your advantage, so you want to find the right people, ensure that they aren't going to bog down your team, and that you have what is essential to your growth. Understand that some people that are great at laying foundation aren't necessarily right for scaling your structure. In this case, you will need to stay vigilant about who remains on the team. While cultivating a supportive culture and following all the right HR procedures, the minute you start to question whether you should get rid of someone or not, that is likely the right time to begin letting them go.
Finally, whether you're bringing on co-founders, advisors, or team members, be relatively liberal with equity. You want them to take ownership of their role, and nothing does that better than actual ownership in a shared vision. Besides, you can always protect yourself with standard vesting clauses. As they say, it's better to have a piece of a large pie than it is to have all of nothing.
I feel I could speak endlessly about this topic. It is arguably one of the most important topics for an entrepreneur, so to attempt to fit it into a single post is a fool's errand. If you'd like me to expand on any topics, address areas I didn't touch on, or would like to engage in a friendly debate over something you disagree with, by all means, let me know.
