I want to talk about building a startup team. But rather than talk about how to build a team, I want to talk about something far more fundamental: the need for founders to accept certain truths about what is required to successfully build a startup team. The “what and why” rather than the “how”.
There is a set of assumptions, understood and adopted by every successful founder, that guides them towards successfully building their team. As a founder, you too must adopt this mindset. Doing so will save you from falling into the trap in which the vast majority of founders find themselves, and from which most startups never return. These assumptions can broadly be stated as such:
- Recruiting is by far one of the most important aspects of building a successful business;
- Without assembling the right team, your startup has virtually no chance of success;
- A massive effort is required to build your team; effort that you personally must carry out and which must be prioritised above almost all other activities.
Recruiting as a vital aspect of growing a business
No one can build a business alone. Even Steve Jobs was quick to admit that. You need great people to build awesome products. You need people to market and sell those products and to come up with — and execute — ideas that you (admittedly) would never have conceived alone. No matter how brilliant an entrepreneur you are, the fate of your startup ultimately rests on the shoulders of the team around you. Therefore, recruiting activities are paramount.
In the early days you’ll rely heavily on your own network to build your team. You’ll bring in trusted friends and make a few opportunistic hires that will lull you into the false belief that recruiting is an easy chore. Later on, however, as your business gains traction and your hiring accelerates — at the same time as your personal responsibilities grow exponentially — you’ll start to realise the massive effort required to scale a company from 5 to 20 employees and beyond. At this point, you’ll need to build a systematic, multi-functional recruiting machine.
Notice how I said you’ll need to build. Because no one else is going to do it for you. As with many challenges in the startup world, you need to fend for yourself.
Ask every successful founder you know and they’ll all tell you the same thing. It’s the founders’ responsibility to build the team and failure to do so will land your company on the scrapheap faster than you can say “I beg you to come and work for me.”
Assembling the right team as a prerequisite to success
There’s an often cited piece of research from CB Insights that analysed 100+ startup postmortems to determine the most common causes of failure. It won’t be a surprise to anyone with the faintest exposure to the startup ecosystem that most companies fail because they run out of cash or because no one actually wants their product. People might be surprised, however, to find that the third most common reason is the failure to assemble the right team.
But the strongest supporting evidence doesn’t come from analysing failed startups, it comes from studying the ones that succeeded. At the core of every one of them exists a fundamental trait possessed by the CEO that compels them to hire only world class team players. Oracle’s Larry Ellison admits that “on your own, you’re nothing. But when you’ve got a team like this around you, they can make you look great.” Even the most cursory Googling of “why X company succeeded” will lead you to articles about their founders’ espousing the virtue of hiring great people from the outset.
It’s also important to note that assembling a strong team and being able to speak fluently about your hiring plans will give investors a great deal of confidence in you and your abilities. Ron Conway, the famed angel investor, says:
We start with the people first. We think the ideas that entrepreneurs start with evolve and change dramatically from the beginning and sometimes end up unrecognizable, so we believe in investing in the people.
The massive effort required to build a startup team
I have the privilege of meeting many first time founders in my role, mostly from startups working with our investment team. When I sit down with them to discuss their hiring plans, the first thing I ask is “what effort will you make and how much time will you spend building your team?” The answers I get are varied and always telling. Some get it right. Others dreadfully underestimate the effort they’ll need to build their teams.
A solid rule of thumb for venture-backed startups is that founders should spend at least 1/3rd of their time building the team. Ask any founder that has taken a company from a startup to a billion dollar success and they’ll all tell you the same thing: As a startup, hiring is completely the responsibility of the CEO and one of the most important and time-consuming activities you should be engaging in. Don’t fall into the trap of thinking “oh, I have so many other responsibilities, there’s no way I can spend more than a few hours per week recruiting.” That’s a recipe for failure. Find time.
Here’s what Mark Zuckerberg says about his own hiring efforts:
The most important thing for you as an entrepreneur trying to build something is, you need to build a really good team. And that’s what I spend all my time on… I spend probably 25 percent of my time recruiting, finding good people… to put them in more impactful roles.
The most successful founders don’t just accept the massive effort required to build a team and then carry out of the work alone. Instead they involve every single employee in the hiring process, weaving recruitment into the fabric of the company’s culture. They designate entire days to recruiting and enlist everyone in the company to pitch in. They constantly reinforce the need for referred candidates. Essentially, they turn the company and workforce into a hiring machine.
Are you the founder of a venture-backed startup? If you work a typical 70 hour week, do you spend 23 of those hours building your team? If not, you may need to reassess the efforts you spend on recruiting. Every successful startup founder can’t be wrong.