You may have a great idea, but your company's fate depends in large part on the strength of your team. In fact, many venture capitalists say that the character, complementary skill sets and working style of the key players are some of the most important factors in selecting companies in which to invest.
We spoke with Naeem Zafar, who teaches entrepreneurship at the University of California, Berkeley, and serves as CEO of startup Bitzer Mobile, to walk us through the steps you should take to assemble a group that will start you on the road to profitability.
The first and perhaps most difficult step is to evaluate your business partners. "The quality of people in this phase will define the DNA of the company later," Zafar says. "It's critical to be ruthless."
He points out that having even one person who is not up to snuff can derail the entire team. "It's very difficult to find the A players if you have a couple of B players," he says, "and very quickly you end up a mediocre organization."
The key, he adds, is to "ask yourself every day: In the whole world, are these the best people I could be working with?" If the answer is yes, it's time to designate roles and divide responsibilities.
"When we were starting our last company, we decided that for anything technical, my co-founder would make those decisions ultimately--so we would not debate them ad nauseam--and for anything business-related, I would make the decision," he says.
Now is also the time to figure out the company's equity structure--a crucial step that will help avoid expensive legal problems down the road.
Advisors, part-timers, contract hires
There are five types of advisors essential to any startup: a market/domain expert, a connector (a well-connected person willing to make introductions), an industry celebrity (who will lend a name but not necessarily be directly involved), a personal coach and a technical expert. Attend industry events and read business journals, trade publications and blogs to find people who may want to work with you. "See who you have the right chemistry with, who is intrigued by your idea and who you can rely on," Zafar says.
As the business grows, if tasks start to go undone due to lack of time or expertise, it's time to bring in extra personnel. Determine what skills you and your partners are lacking and seek out part-timers and contractors to fill in the gaps. Zafar suggests searching LinkedIn for people with the expertise you need, then sending a straightforward e-mail requesting a few minutes of their time: "Typically four out of 10 people will say yes if you approach them honestly, correctly and with an interesting topic."
Any outside help should sign a legal agreement that enforces confidentiality and confirms that you retain ownership of any work produced.
When should you hire your first full-time employees? Often, finances will dictate your readiness to take this step. When you score an infusion of capital--whether through bootstrapping, venture capital or a bank loan--you're ready to add staff and kick your company into a higher gear.
When considering candidates, think about whether they have the temperament necessary to succeed at a startup. In brand-new companies, business processes and roles are often fluid, and the ability to be flexible is a must. "I'm highly skeptical of somebody who has been too long at a big company because they simply don't understand that [at a startup] there is no job definition--you do whatever it takes," Zafar says.
Ultimately you have to find people who can pull their own weight and work for the greater good. "You have to decide: Are you going to hire people who have major strengths or are you going to hire people that lack major weaknesses?" Zafar says. "The funny part is people who have major strengths also have major weaknesses … the ultimate example would be the New York Yankees, or a pirate ship, where everybody is extremely good and has extremely big egos and they almost can't stand each other, but as a team they somehow make it work. Not every founder is comfortable with that; most want harmony. But harmony doesn't create excellent products."