Will you choose having an A+ team with a B+ business plan or a B+ team with an A+ business plan? The wise ones would pick former. But, the way to identify that premium talent and manage it well is a daunting task. Here’s a low down on the challenges that might do the trick for you.
Engage Diversified Talent
You should build a team keeping in mind what growth you intend to achieve at least in five years time. Otherwise, there is always something called potential versus performance which means people who have outperformed for your business today may not be there to take it forward in future. This is where you have to be very objective in your approach of hiring quality performers, instead of getting attached to them and finding it difficult to let them go.
Moreover, “Instead of hiring people like themselves, what entrepreneurs need to have is diversified talent,” says Dr Om Manchanda, CEO, Dr Lal PathLabs. The diagnostic chain went public last year in December. However, the tough part is not to have a diverse talent, but to lead that diversity as there would be disagreements between people coming from different personal and professional backgrounds.
The real problem starts when those disagreements on different matters are misunderstood and as a fallout leads to quick attrition. “Entrepreneur should lead the diversity to benefit from it. In addition, for professionals moving from a corporate environment to a smaller set-up, entrepreneurs should align their long term incentives with the business’s long term plans as it is kind of a risk that they are taking by joining you,” adds Manchanda.
Pull Yourself Back
It is very important as an entrepreneur to understand when you should stop micro managing everything while you scale up. It goes without saying that you need to be a multitasker and hands-on in every aspect of the business. But, what entrepreneurs must know is when they should take a step back from that role and bring in teams to delegate all that work, while overlook everything.
“We were just 10 people when we started in 2004. I would start my day with programming and end with calling prospective customers, while over the weekend I would generate the invoices. So, initially as an entrepreneur I was looking at everything,” says Bhanu Chopra, CEO of Noida-based SaaS start-up RateGain which offers hotel revenue management solutions.
Chopra pulled back himself from the multitasking role when RateGain reached 150 in headcount. “I realized that I could not do everything on my own and needed more senior leaders. So entrepreneurs should know when to switch from being centralized decision makers to de-centralized ones,” adds Chopra. RateGain is now a 500-people company.
Comfortable with Ambiguity
As a start-up you really don’t need people who are good at one particular job. So, what it means is you need to hire people who can work in ambiguous situations. They should be able to work upon different areas and subjects, if required. Though they may not be master of everything, but they should have the ability and courage to take decisions in tough situations, instead of being spoon-fed while of course excelling at their core job.
“What we observed building our business was to hire people who are more generalist and can adjust to the fluidity of the business model. For e.g. they should be comfortable with several different things that we work on every month, some of which might work, some might not. They should not lock themselves up in the boundary of their experience,” says Alok Mittal, CEO, Indifi Technologies whose initial 20 hires from 25 people weren’t from the lending business background.
Start-ups inherently are at a disadvantage or are handicap in hiring the best talent for different reasons like compensation issues, or not well known in the market or the inherent risk of joining it. However what’s even more critical before hiring the best talent is setting-up the right culture. “There should be a lot of emphasis on what culture do founders establish early on. The sense of commitment and ownership that people should have to get things done comes after that,” adds Mittal.
Chemistry work wonders everywhere. It’s what you need to crack through different phases in life including your start-up life. You need to have a great chemistry with your investors, mentors, co-founders etc. What comes last and often least is the chemistry with employees. The impact becomes apparent when startup enters growth or late stage of its cycle as market consolidates and investors hammer entrepreneurs to show growth.
“Entrepreneurs are able to make a great co-founding team, but in terms of employees they aren’t. It is not created with math, but with chemistry and we realize this at a very late stage when we are about to fail. Start-ups like Druva, Stayzilla, LogiNext, LazyLad (GHV Accelerator portfolio start-ups) are doing good because they know how to team up with employees through chemistry.
The team comes as a rescue to you when your investors raise eyebrows on your business model and your capability whether you are from IIT or IIM,” says Vikram Upadhyaya, Chief Mentor, Accelerator Evangelist & Angel Investor, Green House Ventures (GHV) Accelerator. Gurgaon-based accelerator invests up to $100,000 and offers a 12-month programme.
Get Angel Ready
Particularly at seed or early stage of a business for an investor specifically, ideas are a dime a dozen and it’s all about execution all the way. This means having an A+ team which can execute that idea is imperative, not just for investors to invest in that idea, but more importantly for that idea to become a business. Hence, angel investments often act more as a validation of a great team than the idea.
“We look at the team’s background, does it have the understanding of the space it exists in and can it execute the plan. We understand many start-ups don’t have complete teams, but it is very important for us to know that do start-ups realize what they don’t have in terms of talent, can they bring in the leadership team to plug the gap etc,” says Padmaja Ruparel, President, Indian Angel Network (IAN).
With more than 400 members from 10 countries, IAN is perhaps the largest angel group globally, having invested in above 100 start-ups across 17 sectors.
This article first appeared in the Indian edition of Entrepreneur magazine (May 2016 Issue).