Douglas J. Roth
Senior Investment Associate
Investors in early-stage companies will always tell you the most important attribute they invest in is the team. Founders at successful companies will similarly say that their job is far easier when they have a core team around them that they trust, can rely on to deliver results, and are all pulling in the same direction towards success. So, if assembling an investable, highly functioning team is paramount to the success of the venture, how can an entrepreneur build such a team? One need only look to the school playground for valuable lessons.
Photo Credit: Boise Weekly
The most popular activity at recess, back when I was in 5th and 6th grades, was kickball – essentially baseball, but the “batter” would kick a red inflatable rubber ball similar in size to a soccer ball. We didn’t have set teams, so choosing sides each day generally went something like this: The two kids that went to get the ball and plastic bases from Mr. Kramer, the gym teacher, were the designated captains. A quick “Rocks-Paper-Scissors” would determine who got to choose first, and then the captains would alternate picking players.
Inevitably, the first pick would be Chris. This kid could kick a home run over the fence and across Oakland Avenue regardless of what was pitched to him. Really the only question was how many runners would be on base when Chris was up. The second pick would typically be Bobby, a solid hitter and the best first baseman in school. The next several selections in the kickball draft alternated between the kids everyone knew could either play in the outfield or were “Gold Glove” infielders. Always chosen last were Scott, Robert, and Dean – kids you would do anything to avoid having on your team. It was better to have second base empty than to rely on one of these kids. I know, I know, we were cruel, but hey, this was kickball and you wanted to win.
Now imagine your father gets a job in another town. On the first day at your new school, you’re one of the two captains choosing a kickball team. You have to choose players among kids you have never met and know nothing about. The other captain is good friends with all the best players. What are the chances you’ll end up with a “Chris” that can kick home runs or a “Bobby” to play first base? You’re likely to end up with Scott, Robert, and Dean manning your infield and a horrible first day at your new school.
The most successful entrepreneurs build their teams with folks they already know. A few of these folks are ready, willing, and able to make the leap and be part of the founding team. Others are holding down day jobs, helping out when they can, and prepared to jump in as soon as funding is secured. Entrepreneurs that make early hires from within their network clearly learned a lesson or two on the playground. They recognize the importance of building a core team from individuals that they know, trust, and have previously worked with.
Every startup is cash strapped, resource constrained, and time limited. There are too many things that need to get done. All the early employees need to wear multiple hats and work across functional areas. Regardless of one’s title, nearly everyone also contributes to the sales and fundraising efforts. It is the core team that likely makes up the entrepreneurs direct reports. It is the core team that one must rely on to advance all the different parts of the company’s development. It is the core team that must be trusted in front of prospective customers or investors. It is the core team that will be hiring, firing, and building the various departments that fuel the company’s early growth. It is the core team that will be working nights and weekends together and nearly become family. Do you really want to choose your work family from resumes sent in from Indeed or Monster? That’s like choosing kickball players at a new school. Good luck with that…
All young companies will inevitably be faced with unexpected setbacks, whether it’s cash running out, product development delays, lack of market adoption, or, more than likely, all of the above plus some others. This is when the core team will be tested. This is not the time for entrepreneurs and the core team to be figuring out how to work together or how they interact under duress. By hiring known quantities – people from your network that you trust – an entrepreneur can be confident they have the right team to get through both the good times and the bad.
Back in 5th and 6th grades, a kickball victory was determined by whichever team was leading when the bell rang to end recess. Weather permitting, we would all be out on the playground again the next day choosing teams and playing another game. The outcome may have changed from day-to-day, but the core teams remained fairly similar, as the captains selected players they knew could perform. A startup victory can also sometimes be determined by a bell – the ringing of the opening bell at the NYSE or NASDAQ. The more important similarity, however, is that there are serial entrepreneurs that will re-form a core team that looks awfully familiar to their previous venture. Although the outcome may be different, the benefits of working together with a familiar team are well known to these repeat entrepreneurs. This is a lesson well-worth considering by first-time entrepreneurs.
What do you think, should you build your team with people you know?
This was originally posted on Doug’s personal blog.