Values are not a luxury that startup founders can ignore
I meet, on average, 4 founders of new startups each week. Some are at the concept stage looking for validation, others have built prototypes and looking for beta users, and still others, albeit a minority are looking for co-founders, team members, etc.
Building a startup is a team sport. The single biggest mistake a founder can make is to try to go at it alone. The second biggest mistake is picking the wrong team. Industry research firm CB Insights’ postmortem of failed startups lists this as the #2 reason for failure.
So what do you do if you find yourself in the position of choosing a co-founder or first employee(s)?
Reading books like Jim Collins’ “Good to Great” help. Advice like “surround yourself with the best people” and “get the right people on the bus” sounds good but frustratingly abstract. Here’s another way to look at it.
If you are evaluating more than one person for a role, say a technical lead or a business lead, and all are fairly evenly qualified, don’t automatically select the one most functionally proficient or who agrees with you. Be sure to take the candidates’ values into consideration. Do they align with yours?
There was once a startup with three co-founders. All three were talented in their respective functional areas. They were college mates and decided to launch the startup together after spending time in Corporate America. Two had equal equity positions and the third a slightly smaller stake. Things were moving along. There were the usual startup bumps but nothing too catastrophic.
Of the three, two were more fiscally conservative than the third. These two also possessed lower risk thresholds. When things were going well, these two went along with some of the practices considered unusual for a cash flow negative startup. The company had a policy of automatically upgrading everyone to the latest laptops, tablets and phones whenever a new model was introduced, the rental of a luxury vehicles for every sales call road trip was also standard operating procedure and there was a company-paid social every other month.
Then the company hit a major roadblock. A decision made by the team did not pan out as planned impacting revenue. The less fiscally conservative of the three, who also had a higher risk tolerance, was sure that the set-back was temporary and that continuing business as usual was critical to maintaining culture and engagement. This caused strife among the founders which bled into the employee ranks and morale suffered. Performance suffered and the investors took notice. Things went quickly downhill.
The fallout wasn’t just layoffs, investors brought in new leadership and the three no longer are friends. Had the three shared similar values, and communicated openly about concerns, the company could have weathered the set-back more productively and things could have turned out differently.
Bottom line: when interviewing co-founder candidates be sure their values are aligned with yours. Getting the job done matters. But how a job gets done can mean success or failure when things are not going well.
