Find the Right Startup Team
In the first part, we will look into the importance of getting the ‘Who’ decisions right and the biases we all have when judging people.
In the second part, we will consider what roles you will need to fill and the questions you should be asking yourself about what attributes, experience and skills you should be looking for. For example, what is more important at the early stages, attitude or skill?
In the third section, we look into the benefits and downsides of going solo and reveal some surprising findings.
We will then dig into whether having a co-founder is right for your business and for you and what sort of questions you should be asking yourself when considering whether to co-found or not; questions about relationships (co-found with friends or strangers?), roles (who becomes the CEO?) and rewards (how do you split the equity?)
In the fifth part, we will focus on hiring, one of the most critical skills to get right if you want business success. We will examine the common hiring mistakes and run through what a good hiring process might look like.
In the sixth section, we will touch on whether finding a strategic partner is the right thing to do at the start and then finish with a look at your ‘inner circle’ of advisors, coaches and mentors and how important they are to your success.
Start With Yourself
Research: We’re Not Very Self-Aware, Especially at Work | Erich C. Dierdorff and Robert S. Rubin (link)
First, when individuals were less self-aware (i.e., there was a large gap between the assessments of their own behavioural contributions and the assessments of their team members), the teams substantially suffered. In fact, teams with less self-aware individuals made worse decisions, engaged in less coordination, and showed less conflict management. These findings held even when we controlled for teams’ overall levels of teamwork.
Second, the most damaging situation occurred when teams were comprised of significant over-raters (i.e., individuals who thought they were contributing more than their team members thought they were). Just being surrounded by teammates of low self-awareness (or a bunch of over-raters) cut the chances of team success in half.
Importance of People
Leaders of great companies ask: First Who, then What | Kinesis (Article + Video link)
In his book, Good to Great, Jim Collins creates a lasting and memorable metaphor by comparing a business to a bus and the leader as a bus driver. He emphasises that it is crucial to continuously ask “First Who, Then What?” You are a bus driver. The bus, your company, is at a standstill, and it’s your job to get it going. You have to decide where you’re going, how you’re going to get there, and who’s going with you. Most people assume that great bus drivers (read: business leaders) immediately start the journey by announcing to the people on the bus where they’re going—by setting a new direction or by articulating a fresh corporate vision. In fact, leaders of companies that go from good to great start not with “where” but with “who.” They start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats. And they stick with that discipline—first the people, then the direction—no matter how dire the circumstances.
The following transcripts go with each of the videos above.
Cofounder relationships are among the most important in the entire company. Everyone says you have to watch out for tension brewing among cofounders and you have to address is immediately. That’s all true and certainly in YC’s case, the number one cause of early death for startups is cofounder blowups. But for some reason, a lot of people treat choosing their cofounder with even less importance than hiring. Don’t do this! This is one of the most important decisions you make in the life of your startup and you need to treat it as such.
We had one YC batch in which nine out of about seventy-five companies added on a new cofounder between when we interviewed the companies and when they started, and all nine of those teams fell apart within the next year. The track record for companies where the cofounders don’t know each other is really bad.
Lecture 2: Ideas, Products, Teams and Execution Part II
So when you’re thinking about bringing on a co-founder, what should you be looking for in them? Well, I actually think the single most important thing to know about someone before you start a company with them is how do they handle stress.
Eighty‑four percent of the startups in my data set had two or more co‑founders who were coming together to found it. And so that means that you have 1/7, one out of every seven ventures or so that are going and trying to do it all themselves, be Superman, be putting the cape on and trying to go and conquer the world all by themselves.
And the other side of it is they are competing against teams that have come together, the 84 percent that are the two co‑founders or more who are each bringing important things to the table, who are complementing each other’s weaknesses, being able to get each other through the bottom part of the roller coaster when things get really tough, providing the emotional support, filling in the human capital minuses and holes that each of them have, filling in the contacts that the other one doesn’t have.
And to the extent there that a founder can look and evaluate both themselves, but also start mixing those easier to evaluate, things with the harder to evaluate but sometimes even more important things that they should be looking at when they are trying to decide whether they want to bring a co‑founder on and who that should be. Those things include your working style, the things that you value, your motivation.
All of these harder to evaluate things are at least as key for you to be able to evaluate when you’re looking at potential co‑founders and the decision whether to bring them on board or whether to be solo or not.
One of the dangers is that there’s a very natural human inclination to look to people who are very similar to me. And to the extent there that means they are going to be much more similar to each other, that’s where you have to step back and make sure is this person really adding things that I don’t bring to the table
Founder’s Dilemmas: Should I Co-found? With Whom?
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Should I Co-found? With Whom?
Once a decision is made to found a company, one of the first and most important decisions concerns whether to “go solo” or to form a founding team. There are good reasons to form a team, but it is essential to address the question: with whom should I found?
When the light bulb goes off and the founder is wanting to make that leap, one of the key decisions they face is am I going to go and do this alone or am I going to go and try to attract at least one co‑founder to come and do it with me. This is a data set that focuses on high potential startups, in particular the information technology and life sciences industries. It is very much the majority that go and find co‑founders to do it with them. Eighty‑four percent of the startups in my data set had two or more co‑founders who were coming together to found it. And so that means that you have 1/7, one out of every seven ventures or so that are going and trying to do it all themselves, be Superman, be putting the cape on and trying to go and conquer the world all by themselves. And the other side of it is they are competing against teams that have come together, the 84 percent that are the two co‑founders or more who are each bringing important things to the table, who are complementing each other’s weaknesses, being able to get each other through the bottom part of the roller coaster when things get really tough, providing the emotional support, filling in the human capital minuses and holes that each of them have, filling in the contacts that the other one doesn’t have. And to the extent there that a founder can look and evaluate both themselves, but also start mixing those easier to evaluate, things with the harder to evaluate but sometimes even more important things that they should be looking at when they are trying to decide whether they want to bring a co‑founder on and who that should be. Those things include your working style, the things that you value, your motivation. All of these harder to evaluate things are at least as key for you to be able to evaluate when you’re looking at potential co‑founders and the decision whether to bring them on board or whether to be solo or not.
If you are a founder who wants to be able to have your vision, control the idea, be the one who brings it to realization, not have to share decision‑making with other people there, that leads you in a very different direction compared to a founder who wants to build the biggest most valuable and high‑impact venture who knows that he or she is missing something that is going to be needed to get to that. And there to the extent their working style and your values all align with bringing someone else on then it’s very compelling for you to bring that person on, get the key things that you’re missing filled in, have the emotional and moral support through the toughest parts of that roller coaster ride. And that is where it is much more compelling for that person to go and bring that co‑founder on to help them.
One of the dangers is that there’s a very natural human inclination to look to people who are very similar to me. People who are like me I find much more affinity for. I am much more likely to go and co‑found with those people whether they look like me in terms of the functional background that I bring to the table, the academic background that I have, the gender, the race, other ethnicity issues that people find on all of these dimensions. I am much more feeling compatible with a person who looks just like me on those dimensions. And to the extent there that means they are going to be much more similar to each other, that’s where you have to step back and make sure is this person really adding things that I don’t bring to the table. And to the extent there, that you are doing yourself a disservice within the team because you haven’t built the strongest team and making sure that that best friend that you really want to go and co‑found with or that person from college who always struck you as being really good within the same major as you are in, being able to evaluate those concretely and objectively and saying do they really add key pieces that are important for me to be able to bring to the table. Before you go and make that commitment to co‑founding together is a key step that you have to go through in terms of that thought process.
What he found number one on the list: 65 percent of the reasons for failure were the people problems. The interpersonal tensions within the founding team, the tensions between the founders and the people who were brought in as hires to be able to augment the team to be able to fill in their holes.
Free Founders Agreements for UK Startups | Seedlegals
Founders’ agreements are the most first important docs to sign when you start a new venture:
How To Create A Founders Agreement For Your Startup | Startups.com
With all of the things that go into launching a startup, it can be tempting to forget to draft your founders agreement. You’ll be good, right? You’re all buddies. You trust each other. You’re in this together!
And while all that is certainly true, you still need to get a founders agreement. A founders agreement, like all contracts, is there to help you not only navigate your day-to-day operates but also to come to your aid when things don’t go as planned. Don’t skip this step, founders.
Making the First Hires in a Startup - The Hard Truth | Guy Shackar | Medium Article
Making the First Hires in a Startup – The Hard Truth | Guy Shackar | Medium Article I literally thought it would be just like building my fantasy NBA team where I’m going to have a really hard time deciding between LeBron James or Steph Curry. Unfortunately, building a dream team with accomplished superstars is way more complicated than I could have ever imagined. One can argue that the quality of the team will predetermine a company’s likelihood to succeed. After all, the people are the most crucial asset in a young startup — no doubt about it. The only problem is where in the world do we find these people? Most people would pick stability over uncertainty ten times out of ten, which by the way does not mean they are less talented in any way. But when you add this filter to your perfect contenders, you’re actually slashing the list of potential candidates dramatically.
Making the First Hires in a Startup — The Hard Truth, by Guy Shachar
How to Hire | Henry Ward, CEO of Carta | Article
Much like startup performance follows a power law, so do startup employees. The most effective employees create 20x more leverage than an average employee. This is not true in an efficiency company—the best employees might work 2x faster than their peers. But in a high-leverage startup like ours, the effectiveness gap between employees can be multiple orders of magnitude.
What are pre-employment tests? | Criteriacorp.com
Pre-employment tests are an objective, standardised way of gathering data on candidates during the hiring process. All professionally developed, well-validated pre-employment tests have one thing in common: they are an efficient and reliable means of gaining insights into the capabilities and traits of prospective employees. Depending on the type of test being used, pre-employment assessments can provide relevant information on a job applicant’s ability to perform in the workplace.
As a result, pre-employment tests should only be one element within a comprehensive set of criteria used to evaluate applicants, including resumes, interviews, job experience, education, and anything else that is relevant for a position. Pre-employment tests provide the most value when applied at the top of the hiring process to screen out candidates who aren’t a good fit. Ultimately, however, organisations that use tests are making their final decisions based on many factors, of which tests should be one important component. Companies should expect tests to streamline and improve the hiring process, not replace it.
Startup CEO: Building Your Team | Recruiting & Hiring (Kauffman Founders School)
Pick great people, motivate them and make sure they are doing the absolute best possible job, in the most productive way.
Top Recruiting Challenges:
- Defining the job properly. Usually creating new job. Need to take time to think about what a person needs to do. Easy to hire for?
- Not think seriously about creating a recruiting process – as serious as getting married or adopting a child.
- Onboarding. They think the recruiting process ends when they hire them. Recruiting process not end until 90 days after new hire has joined
Randy Street - Your Business is Who You Hire | Randy Street | Video
In this video Randy Street summarises his book Who: The A Method for Hiring
Book review: “Who — The A method for hiring” by Geoff Smart and Randy Street | by MAA1 | Medium
Who – The A method for Hiring (link)
“Almost everyone I speak to complains about how hard it is to hire good product people.
Who — The A method for hiring, published back in 2008 by Geoff Smart and Randy Street has been a very welcome addition to my learnings about hiring.”
The Case for Team Diversity Gets Even Better | David Feitler | HBR Article
We know intuitively that innovation goals are well served by cross-functional “SWAT” teams that are diverse in their membership. As Andy Zynga argued in an earlier post, diversity is a means to overcome the cognitive biases that prevent people from seeing new approaches or engaging them when found. But while this 9 Module 4 further reading seems only logical, is there empirical evidence to support it? When such diversity is enforced can we expect it to produce results? How do we know “more is better”?
7 Practical Ways to Reduce Bias in Your Hiring Process | Rebecca Knight | HBR Article
7 Practical Ways to Reduce Bias in Your Hiring Process | Rebecca Knight | HBR Article A vast body of research shows that the hiring process is biased and unfair. Unconscious racism, ageism, and sexism play a big role in who gets hired. But there are steps you can take to recognize and reduce these biases. Where should you start? And how can you help others on your team do the same?
If There’s Only One Woman in Your Candidate Pool, There’s Statistically No Chance She’ll Be Hired (hbr.org)
New Employee Onboarding: A Success Template For Every Hire (Article) | Trello (link)
Employee onboarding is more than job training and management: it’s personal. When it comes to new hires, it isn’t all just handshakes and health insurance forms. These are the newest members of your team we’re talking about.
Some day, these employees will be responsible for a huge project that affects your company, they’ll be the people sharing laughs with you in the break room, and eventually, training and onboarding new hires themselves.
Like all first impressions, you only have one shot to get it right. The first week is the time to be as thorough as possible with management and HR logistics as well as intangibles throughout the onboarding process. Important information that falls through the cracks or isn’t conveyed properly means that employees’ knowledge bases are inconsistent. Inconsistencies at work, when multiplied, can turn into a disparate company culture.
Startup Boards (link) + Board Functions and Responsibilities (link)| Brad Feld | Kauffman Entrepreneurs Video
Brad Feld, entrepreneur and early-stage investor, provides valuable guidance on how to establish a board of directors who will be there to support you, direct you, and call you out when you fall short.
The board of directors is a formal construct for every company that essentially provides governance for the company. Their duty, in a variety of formal and informal responsibilities, is to ultimately serve the best interest of the company. The CEO should create a transparency with the board that builds the board’s faith in the CEO as the person to run the company.
The CEO runs the company—period. The decision the board needs to make is whether or not they support the CEO. If the board supports the CEO, it should be easy for the board to let the CEO run the company.
Benefits of getting a board early
I think early stage companies benefit from creating boards early. And the reason for this is that it establishes a level of formality around the running and execution of the business. Now, the level of accountability that they have to the board in a formal way is pretty lightweight. Again, at those early stages, it’s mostly informal. But it does force them to interact with the board on a regular basis. It does cause the entrepreneurs to learn how to build the muscles of having board meetings, of having to talk about where they’re going with the business on, you know, a quarterly, annual, multi-year time horizon with an objective set of board members that in a lot of cases are good practice for what it’s going to look like when you scale up your company and have venture investors and a much more sort of serious heavyweight board.
The other reason to have a board early on is that engaged board members can help you tremendously with the growth of your business. If you think about one of your roles as an entrepreneur, it’s to collect people. You’re trying to collect great people to the business—great employees, great investors, great customers, great advisors, great board members. And you can use the board as a tool to engage some people in your business in a much more substantive way that helps you build your business, and grow and expand your business. So don’t lose sight of the value, especially early on, of what a board member can do to help accelerate your business based on their own experience and their own connections.
Advisory Boards vs Formal Board
The board of directors is a formal construct and has formal responsibilities. An advisory board is an informal construct that tends not to have any formal responsibilities. A lot of entrepreneurs create advisory boards for their companies for two reasons. One is to try to show that there are, you know, capable, interesting, famous people associated with their companies. And then the second is that a lot of entrepreneurs don’t want the formal relationship with a board, especially early in the life of the company. My general feeling about advisory boards is that they tend to be pretty weak. There are cases where entrepreneurs do a very good job of managing an advisory board, but in those cases, they have to be very proactive about managing the advisory board and getting the advisors actively engaged with the company. I encourage in those cases to consider which of the advisory board members would make good board members, and then formalize the relationship by having them be board members because then they’ll take a lot more responsibility and engagement both informally and formally
Inner Circle Team
What’s the Difference Between a Mentor, an Advisor, and a Coach? Each Plays A Unique Role | Zak Slayback (Medium)
Once each of these makes sense, you have the opportunity to search out specific people to play each specific role. It’s possible that a mentor can also be a coach or an advisor can also be a mentor but, generally speaking, each of these focuses on their own specific domains in their own specific ways. The best way to think of the differences between each of these categories is to ask yourself, “what role does this person play? To what end? For how long?” In which domains do you expect this person to have expertise? How long do you expect to work with them? On what endeavors?
What’s the Difference Between a Mentor, an Advisor, and a Coach? | by Zak Slayback | The Startup | Medium
The Difference Between Advisors, Mentors, and Coaches | Dan Martell (Video)
In this episode, Dan Martell covers the difference of working with an advisor, a mentor or a coach. Each one is important but they’re all different, especially in the way you approach them and pay for their value.
How should I compensate mentors and advisors? | Startupedia
I recommend using the FAST agreement. FAST, it stands for founder advisor standard template. We developed this about 2 years ago and my guess is about a quarter of all mentoring advisor relationships around the world use the template.
What the template essentially does, is it says: okay, what’s the stage of the company? Are you a very early stage company in the middle, or slightly later? And what’s the commitment level of the mentor? Are you gonna be meeting once a month or you gonna go and actually help day to day with business development and some other activities?
And then it actually has a recommended or actual precise amount of equity compensation for each category, so in the early-stage engaged mentors might get 1% of the company, whereas in a later stage less engaged mentor will get below o.25%. So one of the reasons we built this agreement is to make the negotiation with the advisor or the mentor very easy. It’s like what level of effort do you want and what level of development is the company? Check check, signed, and done. So, you compensate mentors generally with equity and if you need an easy way to do that, use the FAST agreement.
5 Ways To Find Mentors and Make Them Matter | Glenn Llopis | Forbes Article
Think of ways you can add-value to the relationship beyond sharing the success stories you have created from their goodwill. Buy them a book, send them a link to an article, connect them with a friend or someone that can add-value to their goals. Create opportunities for your mentor and manage them closely. This is why the best mentoring relationships last a lifetime. Because what is being formed is a special kind of trust that you both greatly appreciate and respect.
Founders Network | Kevin Holmes (Video)
Kevin Holmes describes the downsides of traditional one-to-one mentorship and the benefits of peer mentorship which as he describes it has various similar advantages to coaching.
Never Eat Alone Book Summary – Keith Ferrazzi (link) | 2000 Books (Video)
A summary of the book which helps you figure out how to build relationships over the long-term
The Secret to Networking in 2020: Relationship Action Plan (link) | Keith Ferrazzi (Video)
If you want to truly level up your network to achieve your goals this year, you’re going to have to create a “Relationship Action Plan” for yourself.
3 Tips To Make Networking Worthwhile l Adam Grant (Video)
Adam Grant, author of Give and Take, talks about 3 ways to improve your networking.
Adam Grant: You’re More Likely To Get a Job Through Weaker Ties | Adam Grant | (Video)
You get better information from people you used to know than from someone you currently know.
Learn to Love Networking (link)| Tiziana Casciaro, Francesca Gino, Maryam Kouchaki | HBR Article
Many if not most of us are ambivalent about networking. We know that it’s critical to our professional success, yet we find it taxing and often distasteful. These strategies can help you overcome your aversion. By shifting to a promotion mindset, identifying and exploring shared interests, expanding your view of what you have to offer, and motivating yourself with a higher purpose, you’ll become more excited about and effective at building relationships that bear fruit for everyone.
Study: For 78% of Startups, Networking Is Vital To Entrepreneurial Success (link) | Federico Guerrini | Forbes Article
A new research, “Informal Innovation: Entrepreneurship and Informal Communities”, released today by the Economist Intelligence Unit, confirms what everyday experience might have already suggested: informal professional networks and communities are more important for entrepreneurial success than formal structures such as incubators and accelerators. So, drink and party on, without too much remorse.
But, in general, for all those surveyed, active networking appears to have a positive impact on the performance of their businesses: the greater the number of networking activities entrepreneurs engage in – the study finds – the higher the chance of having a positive return in terms of profitability, revenue growth, innovation, capitalization and talent.
Networking with People You Can’t Meet In Person (link)| Dorie Clark | HBR Article
As appropriate, look for opportunities to engage with that person, retweeting their posts with your own audience, answering a question they may ask, or sharing a thoughtful response to one of their updates. This isn’t a quick-hit process; you certainly don’t want to look like a stalker and share 25 of their posts in a week. Think long-term, and strive to engage in some small way every few weeks over a 6-12 month timeline. The goal is simply to make your name familiar to them in a positive way, so that when the moment is right and you have the opportunity to meet them in person, they’ll be pleased to do so.
Stand Out Networking: A Simple and Authentic Way to Meet People on Your Own Terms (link)| Dorie Clark | Ebook
Drawing on wisdom from her own experience and from experts like psychologist Robert Cialdini, marketer Michael Katz, and authors Judy Robinett and Keith Ferrazzi, Clark provides valuable insight on how to be a good networker, including concrete tips on how to:
- Turn initial small talk into meaningful exchanges
- Unlock the power of social media as a networking tool
- Transform casual online contacts into real-world connections
- Make the most of conferences
- Set a schedule for keeping in regular touch with your network
- Repair and strengthen troubled relationships
- Create your own events and become a connector
5 Misconceptions About Networking (link)| Herminia Ibarra | HBR Article
Our mind-sets about networking affect the time and effort we put into it, and ultimately, the return we get on our investment. Why widen your circle of acquaintances speculatively, when there is hardly enough time for the real work? If you think you’re never going to be good at it? Or, that it is in the end, a little sleazy, at best political?
Mind-sets can change and do but only with direct experience. The only way you will come to understand that networking is one of the most important resources for your job and career is try it, and discover the value for yourself.
Never Say No To Networking (link) | Kathryn Minshew | HBR Article
When new entrepreneurs ask me for advice, I sometimes tell them to NYFO — Network Your Face Off. Nearly everything I’ve accomplished in the past two years, from speaking on CNN to watching my company cross 1.7 million users in less than a year, can be directly traced back to connections I’ve made and help I’ve received from a network that is vast, diverse, and active. Of course you can’t possibly take every meeting. But regularly connecting without a reason or purpose — with people who seem to be doing interesting things — can have unexpected benefits.
An Introvert’s Guide To Networking (link)| Lisa Petrilli | HBR Article
Introverts who avoid networking are making a critical career mistake. Being an adroit networker is non-negotiable — and not as hard as it might seem. If you’re an introvert, what networking strategies have you found that work?
Here is Why Employee Referrals are the Best Way to Hire (link)| Paul Petrone | LinkedIn Article
The more you research it, the more it becomes clear: almost always, the first step of any hiring process should be asking your existing employees if they know someone good for the role.
Why? Research shows getting a referral is a cheaper way to hire, a faster way to hire, generally produces a better hire and lowers the turnover rate at your company.