5 Reasons Why Creating a Team Of People With Similar Background Is A Bad Idea
About 90% of startups fail. The reasons are varied. According to CBInsights, the top three are quite obvious: running out of cash, absence of market need for the product, and being outcompeted.
However, there are plenty of companies that had enough financial resources and a strong and innovative product to skyrocket, but nonetheless burned out amidst internal contradictions and conflicts. Fourteen percent of all startups fail because the team is incompatible.
A bare-bones startup team includes…
Money is the life force of a startup. As long as a startup has resources to support and develop the product, it stays alive. For early stage companies every penny matters, and hiring a team is quite an expensive step. A Glassdoor study shows that the average cost-per-hire rate in the US is $4,000. So it should be considered whether the value of a new employee will outweigh expenses related to hiring an extra person.
It’s difficult to manage a company being a one-man band, holding equal focus on the product, accounting, promotion, and sales. Ideally, the initial startup team is composed of the following trio:
- a tech guy, fully responsible for the quality of technology;
- a marketing and UX/design person, both an artist and a trend setter;
- a person with an entrepreneurial mind and strategic thinking, whose duties are PR, sales and basic accounting.
This distribution of roles helps the team to effectively cope with the growing volume of work without losing the sight of the big picture.
Sometimes the team might have just one or two people, sometimes more; it all depends on the finances and complexity of the product.
What makes a good team
It goes without saying that a good team is composed of professionals, who possess the necessary hard and soft skills. A software developer with no knowledge of the code or a sales manager with poor presentation skills add no value, but waste both time and money.
But strong expertise is only half of success. Without common values and a Big Goal, such experts would form a group of individuals, but never a team. Like in Ocean’s Eleven, good teammates compensate for each other’s weaknesses and complement each other’s strengths. Implicit confidence in each other, equal commitment to achieving success, and a variety of backgrounds among team members are the key to building a strong company that would survive an economic downturn and skyrocket during the prosperous times.
Why people with similar background weaken the team
As I’ve mentioned before, a really strong team is composed of people with a variety of experiences and educational backgrounds. This factor may not seem obvious and important, but there are at least five reasons why you shouldn’t hire people with similar backgrounds.
- Similar strengths and weaknesses
In an ideal world, team members compensate for each other’s weaknesses and complement each other’s strengths. People who speak languages other than English have greater chances of successfully expanding internationally. This is equally true for personal attributes. A good communicator and a strong, but introverted technology specialist are more beneficial than just two good communicators.
2. Absence of role clarity
Flexibility is a valuable quality, especially if a startup is at its initial stage and team members are interchangeable to a degree. However, sooner or later, defining the zones of responsibility becomes a matter of survival. Accounting, technology, design, and sales all require time and consistency to achieve the results and make fewer mistakes.
3. Internal competition
If zones of responsibility differ for all team members, chances are high people won’t interfere with each other’s work or argue about the details. If you employ two people responsible for design for the same project, chances are extremely high that they will kill each other arguing ove brand fonts, or else spend weeks doing this. Another example is when team members have the same ambitions. A company with two ambitious leaders, who participate in strategic development, is doomed, even if it brings a unique innovative product to the market. In his book The Founder’s Dilemma, Noam Wasserman claims that 65% of startups fail because of founder conflicts.
4. Narrow expertise
Expert knowledge in just one area won’t cover all of the company’s needs. Imagine a restaurant, where the only staff are waiters. This is clearly an exaggeration, but you get the idea.
5. Limited thinking
It may seem that like-minded people can easily come to a decision, because they don’t argue, but this is not a strength. Without looking at the situation from various standpoints, it’s easy to miss the details, which are essential in strategic planning. Plus, new ideas emerge much slower in such a team, which is an unaffordable luxury in the fast-paced startup world.
Is it a good idea to go into business with friends?
It all depends on your ability to become colleagues and avoid mixing personal and professional lives. Chances are high that your friendship will dissolve, or worse, you can turn into enemies, like it happened to the founders of Yik Yak, an anonymous social media app that was founded by former college classmates and ‘fraternity brothers.’ Eventually one of the founders filed a lawsuit against other co-founders for being ousted from a startup.
History knows many examples of colleagues becoming friends, but there are far fewer stories of friends creating a successful company and becoming closer in the process, like it happened at Airbnb or Thrillist.
If you and your friend want to start a company together, try the wallpaper test first. If you wallpaper a living room together and still talk to each other afterwards, your chances of preserving your friendship and succeeding in your common business are higher.
Conclusion
Gathering a reliable team is hard work. It requires experience, understanding of people’s motives, peculiarities, and cultural contexts. Sometimes choosing the right member of your startup team can be a matter of luck or listening to your gut feeling. No matter how great your product or idea, never underestimate the importance of a good team and do your best to gather and retain your own Ocean’s Eleven (or whatever number is right for you).
