6 Lessons on Building a Startup Team

I am fond of quoting that about 70% of my investment decision of an early-stage company is the team.

My rationale is simple: everything goes wrong and only great teams can respond to competitors, markets, funding environments, staff departures, PR disasters and the like.

Mark Suster, Entrepreneur & Venture Capitalist

This quote is something I believe more and more over my time working with entrepreneurs. It’s all about the people.

And Mark and I are not the only ones. In fact, this seems to be common in most successful founders I meet.

So it was not a surprise that my interviews with successful founders for our Startup Journey Interview Series have surfaced a trend around the topic.

I’ve compiled a list of six lessons on building a startup team I’ve learned from conversations I’ve had with entrepreneurs who built a startup team the right way.

From the hiring process to nurturing your team, they share key insights that are invaluable to any entrepreneur setting out to build a startup team.

And the first step comes long before you need to build a team.

1. Build Relationships with Talent Long Before You Build a Team

The first lesson in building a startup team comes from a conversation I had recently with Yaron Samid, the founder of one of the biggest and most successful founder communities in the world, TechAviv.

He also founded BillGuard, a multi-million dollar fintech platform focused on saving you money while protecting you from fraud.

During the conversation, he highlighted the importance of building relationships with potential hires long before you think about building a startup team:

You should be developing relationships with talent well before you launch your company.

You should be hanging out at universities, meetups, online communities and conferences.

Say you are passionate about sustainable food tech and you want to start a company in that sector.

Months before you should be a part of that community. You should be having conversations and contributing content to that community before asking anybody to join you.

If you are in communities relevant to your startup, you’ll not only find talent, you’ll find customers — and maybe even investors.

Building meaningful relationships with professionals both in your industry and in the startup community will pay dividends in the long run.

And even if you don’t find someone to join your team, you will find people who can point you in the right direction.

This is a crucial lesson for founders and not just to find talent. Raising money, marketing, selling. All of those activities will greatly benefit from these early efforts in being part of the industry ecosystem.

2. Your Founding Team Sets the Tone for The Company

A good startup team needs good foundations. For you, that means first finding an aligned founding team.

The road to startup success is full of hurdles and, as Silicon Valley veteran Garrett Gafke saw first hand, it’s your founding team that will be your first line of defence to get through them:

Of course, my co-founders and I saw the lack of demand. Sure, we were told no a million times — like a lot of entrepreneurs.

After all, failure is the primary denominator in the entrepreneurial process.

What it comes down to is your own drive, values, and commitment.

The major factor is, that you and your co-founders make a commitment to each other.

Do not underestimate your partners in any journey, business or personal.

When times were tough, often what kept us going was our commitment to each other as a founding team.

But commitment to each other is not the only important aspect of building a strong founding team.

Something fintech founder Christian Nothacker pointed out to me in a recent conversation:

If you have the right team, you can get through any barrier and achieve everything you want to. I can’t stress enough how important your team is.

You need someone who’s fully dedicated to the project long term — especially when they’re a co-founder. But it stands true for new hires as well

The atmosphere you and your founding team create will be passed down to the rest of your team as you grow — from culture to day-to-day processes.

But on top of that, they should also have complementary skills to you, as New York Times Best Seller and Hiring Expert Geoff Smart pointed out when we spoke:

You should find a co-founder that has a one-third overlap with you in skills and two-thirds complementary skills.

There are hundreds of examples of this where there is a small overlap and a large aspect of complementary skills — take Jobs and Wozniak. Jobs has some basic technical background, but Wozniak was the tech brain. Wozniak had knowledge of promotion and sales and marketing but nowhere near as much as Jobs.

You’re experts in different fields but you’re able to speak the same language.

Then it’s about making sure that values and cultural aspects are consistent between you as well. As well as how hard you’re going to work you need to be on the same page about that as well.

But the main thing is to hire for skill complementarity. Do NOT hire someone just like you with the same skills as you, I’ve never seen that work.

According to the vision of all the legends mentioned above, It’s vital you bring in co-founders who align with the overall vision you have for the company.

And although I agree 100%, my personal belief goes even one step further. I listened to a Masters of Scale episode recently that featured Aneel Bhusri and he resumed my thoughts beautifully:

The first 150 hires are your cultural co-founders. It’s up to you, the founder, to get every one right.

Never neglect the importance of this lesson. You’ll thank me later.

Related: 8 Traits to Consider if You Want to Find the Perfect Co-founder

3. A Startup Team of Specialists vs. Generalists

As you begin to build your startup team, it can be tempting to hire generalists over specialists.

After all, there is an aspect in early-stage startups of wearing many hats — filling multiple roles to get the job done.

It’s also much harder to hire specialists. They’re scarcer and usually more expensive than generalists.

I recently had the opportunity to talk to New York Times Best Seller and Hiring Expert Geoff Smart about this exact topic.

During the conversation, he actually advised against hiring generalists:

Let’s start with the idea that startups need generalists, the argument always goes like this:

Oh, my college roommate is good at a bunch of things. He’s willing to work for little to no money and a bunch of stock options. Also, we don’t have a lot of startup capital so I can’t hire a bunch of specialists. I need to hire people who can wear lots of hats and then when we get bigger we can bring on the specialists.

Where I think that’s flawed is that I firmly believe that humans aren’t good at lots of things. From my 25 years of assessing thousands of people is that there aren’t that many generalists who are good at lots of things. There are people who are willing to do lots of things, but they’re not great at it.

I also believe that only a small number of things matter in a startup. Proving the product, landing key first customers, raising startup funding.

In any stage of a business, there are very few things that are important and people are only good at a small number of things. Therefore if you find a specialist who’s a rockstar at the given thing you need at your given stage of growth then you’ll end up having a lot more success than if you hire generalists who’re generally lousy.

It’s very rare to meet a generalist who’s great at everything they do.

Very early on I hired a CFO. I didn’t hire a CFO who was a generalist to also do sales and marketing and finance and IT, etc. Instead, I hired a guy named Ron who’s really good at financing and accounting at the startup level.

I didn’t have a marketing person or salesperson, because I could do some of the rainmaking myself. What I needed was a counter-balance to my skills and that was a CFO.

With that, we were able to grow the company until we could look at bringing in more specialists in the roles we were missing.

I don’t know that you’re going to have the power to move your business to the next stage if you just hire generalists.

Whereas I’ve seen hundreds of cases where they went without certain specialities until later. They prioritised what they needed at the moment to get to that next milestone, and found the best person for that job.

I talked with 26 self-made billionaire entrepreneurs and these folks were telling me:

“At any given time you’re only really hiring one or two key people, and if you hire someone who’s outstanding at that specific thing you’re going to get better results.”

Related to that are strategic priorities:

Startups that have 55 priorities generally don’t do as well as a startup that has one to three really clear and focused priorities.

With that in mind, you should hire people with a clear focused talent for what you need.

In short, when hiring for your early-stage startup, prioritise what you need right now.

For example, if you have expertise in Product, but are yet to build your MVP, you should be hiring a technical Jedi to bring it to life. Not someone who’s an average coder but can also help you market the product later on.

4. The Importance of Hiring a Product Person Early

Prioritising who you need to help you bring your early-stage startup to life depends on a number of factors specific to your startup.

There are, however, some vital roles that any startup needs to have in the early days. Chief among them is a product person.

This was another topic I touched on with Silicon Valle veteran Garrett Gafke. He attributes a large part of the success in his ventures to hiring a product person early:

A product person will be able to share and see where the vision of the business is going.

I was lucky to have someone very disciplined on the product side for us. I’d also come from the product side. I was already kind of a nerd in that area, I’d been around a lot of good product people and understood the basics. However, I still was not solid enough to be in the details.

Our product person was a key player and critical in making our very extensive platform work.

It comes back to bringing in those foundational people early and growing them through the process.

You know you have a good product person when someone from the company says:

“We need X feature for the platform, it’s a must-have!”

And they turn around and say things like:

“Great! Is it deployable across all customers? Is there revenue to be generated from this feature? Does it help to improve the users’ experience?”

You start to get into the typical business dynamics.

So, it’s really important to lay the foundations of a great product team with a strong initial product person on board.”

Out of all the reasons startups fail many are related directly to product — whether it’s poor quality, mistiming or just down to building something the market doesn’t need.

Having the right person at the core of your product team will ensure you mitigate these risks.

Related: 7 Key Product Lessons I Learned Interviewing Successful Entrepreneurs

5. Build a Team of Startup People

There’s a big difference between working in an early-stage startup and an established company.

For an employee, both have their pros and cons. In an established company, there is a lot less volatility for example. However, in a startup, you are far more likely to see how your work positively impacts the overall business vision.

The important point here is that there are people that thrive in one environment but not the other — which is completely natural.

As an entrepreneur, however, you have to keep in mind that you should be looking at profiles of “startup people” when you start building your team.

Something that an entrepreneur we already mentioned here, Yaron Samid, underlined when we spoke:

When you hire your team you must focus on startup people. People who can take volatility and work for lower salaries than the market.

They need to understand the value of the startup equity that they’re going to be getting. And you should be generous with your equity on your first few employees.

When hiring for a startup, I would optimise on intelligence and learning fast on the job over fancy degrees from fancy universities.

In the startup world, you need people who are street smart, creative, agile, adaptable.

If you’re building a consumer product and you suddenly decide to pivot to a B2B model you need to have software engineers who can pivot with you.

That requires a certain personality and skillset.

Another entrepreneur I spoke with, Alex Tonelli, faced this issue first-hand when building his now unicorn startup. He learnt the hard way the difference between hiring a “startup person” and someone who, although very talented at the chosen field, simply wasn’t built for the startup environment:

We hired an early Head of Credit, which was a very important position for our fintech. We hired him because of his background and his bio.

That was a big mistake and very costly for the business. That person had worked in a larger, institutional context.

He wasn’t nimble enough to understand how to build a lending program from scratch without the big infrastructure of a bank feeding the loans. He just couldn’t evolve.

By contrast, we hired another colleague with basically no work experience. We hired him as an intern at first. He was based in New York and, even though we told him we couldn’t pay him much, he was so excited to get to the company that he just hopped on a plane to San Francisco the day after we hired him.

He started as our assistant basically, then he started doing more and more. Eventually, he started outperforming the Head of Credit while helping out in that department.

To be clear, we didn’t make him Head of Credit, but he took over a large part of that responsibility. On top of that, he became a key player in other departments of the business and is now a senior leader.

So remember, as you build your startup team, you have to take into account the environments your candidates have experienced.

Related: Expert Interview: How to Hire Top Talent in Startups

6. Gather Tangible Data on Potential Hires

A large part of building a startup team will revolve around the conversations you have with potential candidates.

Knowing the right questions to ask to learn as much tangible information as possible can be a challenge, especially if you’re new to the hiring process.

It’s why when I sat down with hiring expert Geoff Smart, I asked for his advice on what you need to know when conducting interviews with potential candidates. Here’s his advice:

As boring as it sounds, you should find out:

What did they accomplish?

Who did they work with?

How did they do it?

What would their bosses say their strengths and weaknesses are?

That kind of data is very useful because it happened in the past and you can pair that with reference checks to verify what they said. Those two things give you 90% accuracy when hiring.

In terms of finding out if they’re persistent. Well if I talk to candidates about every accomplishment, low point, education, work experience, etc.

All of those aspects will paint a relatively clear picture of how persistent they are.

Even creativity, you can tell from the way someone describes their accomplishments. Imagine a marketing candidate who’s telling you they increased brand awareness by 28%. If you ask them how they did it and they reply, we bought ads — not very creative. But if they tell you: “We came up with a whole new way to access a whole different market and it boosted our sales by 400% and we won awards.” — That’s a creative candidate.

All the answers to these characteristics are in the facts and the data. It will tell you how persistent or creative.

Then you have your references where you can crosscheck what the candidate is saying.

This is vastly better than doing the brain teasers that have become fashionable of late.

This is a very limited way of evaluating people. Google, McKinsey, and all these big firms that were known for doing brain teasers have moved away from that. Because they realise if you ask someone how many bowling balls you can put into a Boeing 747 it shows you a very narrow slice of their problem-solving skills. You don’t learn anything about persistence, project management, interpersonal communication, etc. by asking people brain teasers.

You end up over-indexing on good mathematicians, but they may not be good and managing people, managing deadlines and the long list of things that also matter.

Brainteasers in an artificial setting aren’t a good litmus test for how people will perform in their job.

To ensure you build the right team for you, from analysing their skills to working out if they’ll fit into your startup environment, you simply need to gather the right data and verify it.

Bonus Lessons on Empowering Your Startup Team

Building a successful startup team is more than just a good hiring process.

Once you’ve found the right people and started to fill your startup roster, you need to empower them so they can execute your business vision to their full potential.

That’s why I’m extending this article to share two more lessons with you that embody exactly that:

Trust Your Startup Team & Delegate to Them

Trusting your team and delegating to them is vital for startup success.

Take this piece of advice from Jan-Philipp Kruip as a prime example.

He’s the entrepreneur behind FitSense, a B2B health and fitness fintech app that is now being used by some of the biggest multinational insurance companies in the world.

It was his ability to trust the people he brought into the fold that helped him succeed — as he explained to me in a recent conversation:

My basic premise is, I first trust people and they can lose that trust. In a startup environment, you don’t have time to build trust before you have to start delegating to someone.

If you’re someone who has a tough time trusting you need to take that into the hiring process. Ask yourself if you can trust that person from day one and start delegating.

To put it bluntly: You simply will not have the bandwidth to control every aspect of your startup, you’ll burn out. The sooner you learn to delegate, the better.

Delegating has this wonderful side effect:

The moment you trust someone they will take ownership of what they’re doing. Before you know it you can step away and watch this machine that you’ve created.

Jan-Philipp is not the only founder who found success through trust and delegation.

Wade Eyerly, the pioneer of subscription-based flying and the entrepreneur who’s set out to solve the national crisis of student loan debt in the US, also brought up a key lesson when I spoke to him about building a startup team:

My co-founder, Reed, suggested we bring in a third member of the founding team — a guy called Cory Cozzens.

I didn’t know Cory. The only interaction I’d had was with a girl Cory used to date, and I didn’t think much of her.

I started wondering if I could trust Cory as a decision-maker because of that (as silly as that is).

Then I thought, I just gave Reed a piece of the business, if he tells me we should hire this guy I can either:

Trust my co-founder’s decision;

Second guess someone I think is worth a percentage of my company.

I decided there and then I’m going to hire adults and trust them to be adults. I’m not the guy who asks you to be my accountant and then double-checks all your math.”

So I called Cory and offered him the same deal as Reed. And Cory was the right call.

That approach of not getting in the way of the people you bring into your team has led to tremendous dividends over time.

Focus on Your Team so They Can Focus On the Client

As I mentioned in the previous lesson, once you have the right people at your fingertips it’s vital you let them get on with their work.

What you should be doing, however, is making sure they are in the best position to thrive at what they do.

Something serial entrepreneur, Illit Geller, firmly believes in.

It was her “team focused” mindset that helped her succeed in her ventures:

Teamwork and collaboration is the name of the game — Initially, you’re a small team that does everything, just like any startup.

If I saw that my development team was working really hard on the next release and there wasn’t much I could do to help, then I would bake them cakes and bring them coffee — the point is there is always a way to help out!

In the office I would be hyper-focused on the team, making sure everyone understood the bigger picture.

I didn’t have an agenda to be the first one in and the last one out of the office. My agenda was to make sure that everybody was extremely focused, happy, doing their thing, understanding how what they do impacts the market and the client, and that they were supported and were able to look at the problems and face them the right way.

It’s like Richard Branson says:

If you take care of your employees, they will take care of the clients

Wrapping Up

As you can see from the lessons above, there is an actionable list of key factors to keep in your mind when building a startup team.

First, build connections in your industry and the startup community as a whole.

Then, find co-founders who you trust that align with the overall business vision. At the same time, make sure you all bring something to the table that the other one doesn’t. Bring in people you feel comfortable challenging on ideas and vice versa. Then keep doing it will all subsequent hires.

In that, hire for what you need at that moment. Don’t stretch your resources by hiring people for tasks that don’t need to be completed in your immediate runway. More than that, don’t hire generalists that are average at multiple tasks, but great at none.

Make sure you have a product person on hand to ensure you build a project that will delight your users.

Hire startup people. You need a team that is nimble and used to the startup environment of tackling new problems at a moment’s notice.

Look at the tangible data about candidates’ previous experience. Don’t get caught in the fad of brainteasers. Find out what they accomplished, how they accomplished it, who they did it for and why they’re passionate about it.

That’s it, now all that’s left to do is get out there and start building relationships!

Good luck and thanks for reading.