A strong – and resilient – startup team is key to success, which is why investors often say that “the team is more important than the idea.” In looking for strong teams, investors are trying to decrease their risk. Whether or not you’re seeking funding, you can decrease your own risk and increase your likelihood of success by using investors’ criteria to assess prospective team members. The “must haves” for all Founding Team Members are:
- Character
- Capabilities
- Confidence
- Coachability
Character
No amount of competence can compensate for a lack of character. Specifically, investors look for integrity and tenacity. Can a dishonest person launch a successful business? Sure, but the likelihood of the company being cited for regulatory violations and getting caught up in scandal and lawsuits is more risk than most investors are willing to bear. Lack of tenacity? Don’t bother – the road to startup success is fraught with challenge and unexpected setbacks. Only the tenacious need apply.
When interviewing prospective team members, dig into their work and project history: On a scale of 1-10, how would previous bosses and collaborators rate their integrity? Did they leave when the going got tough? Does their experience include examples of resourcefulness and problem-solving in the face of daunting challenges?
Capabilities
Product/technology-specific expertise is probably a no-brainer but needs to be said nonetheless. A language arts major CEO trying to launch a medical robotics company isn’t likely to get very far unless they – or many other team members – also have deep experience in healthcare and robotics. Are there exceptions to this? Of course. If you dig into those exceptional companies’ backstory, however, you’re likely to discover a painful tale about the long and difficult journey to get investors to take them seriously.
Product expertise isn’t enough, however. Investors also look for the following:
- Intelligence
- Problem-solving capability
- Business skills, such as deep market awareness, product management skills to translate that market awareness into a feasible product roadmap, and selling skills
Selling skills, really? Isn’t Sales something you hire for later on after you have a production-ready product?
No. From the first “pitch” to get a spouse or partner onboard for a high-risk adventure, to finding alpha clients for early testing, to getting funding, to enrolling beta clients for pre-launch confirmation and polish, to getting more funding, the Founders will need to “sell” the vision and value proposition over and over again. The purpose of the Sales team hired later on is simply to enroll more customers in the promise of that value prop.
So what are you looking for here? A technically-focused engineer’s or biochemist’s style may be different from a more business-oriented CEO, but their passion for the product must shine through and resonate with at least some key stakeholders. Investment firms increasingly have their own technical teams to perform due diligence. They will be the audience for your team’s technical expert. Every member of your startup team, however, should be able to connect with one or more important stakeholder group.
Confidence
Founders must have sufficient confidence in their capabilities to move ahead in the face of daunting odds. Confidence is not, however, the same as bravado, and confidence without character is just a “con.”
True confidence is grounded in belief – belief in the quality of your product; in your value prop; and in your team’s ability to bring the product to market. This belief is as important for selling as the product itself and should shine through in every conversation about the product.
So how confident are you in your own capabilities and in your ability to learn what you don’t already know? What are you looking for in a prospective team member that would indicate confidence? Are you open to the possibility of team members expressing confidence differently than yourself?
Coachability
Coachability is the essential complement to confidence. Coachability is a combination of self-awareness, humility, and interpersonal skills that allows someone to receive and act on feedback. It doesn’t mean treating all feedback from all sources as equal, but it does require recognition that no one person can know everything about the customers, the industry, the product, production and distribution methods, pricing structures, and the global economics that impact all of the above. To become a successful entrepreneur requires finding, talking with, and listening to qualified advisors at various stages of the process as well as listening to one’s own team members.
Are you coachable? Are all of your co-founders coachable? How do you and your co-founders respond to questions, suggestions, reading recommendations, and referral ideas? Do you accept and thoughtfully consider each offer or are you defensive? I’ve seen investors pass on what otherwise looked like a great opportunity because one or more of the Founders was uncoachable. Life’s just too short.
Investors and other companies that support startups have written about the qualities investors look for during due diligence. Check out Leaders Wanted – Assessing Leadership Teams, Getting Funded (Part I): The Startup Team, What Startup Investors Look for in Entrepreneurs and Their Teams, and the tools for assessing team members from the Entrepreneurial Operating System® (EOS).
The quality of a team also depends on how well the members work together. A band of superstars who can’t collaborate will not be a winning team! Upcoming posts will cover tips and tools for getting – and keeping – everyone on the same page.
As always, whether your team is struggling or you’re trying to get off on the right foot, feel free to reach out for a free consultation: Schedule a call or email me – [email protected].
