How to Form a Startup Team.
Undress the hard issues.
Startups are hard. You need a great Team.
A student recently came to me with a problem. He was having trouble with some of his team dynamics and asked me for strategies and best practices around maintaining a positive and productive group dynamic. This is an important question for early stage startups.
When you’re bootstrapping, starting your own company can be especially difficult because you and your team all have jobs that put food on your table and a roof over your head. Essentially, you work one full time job and another more than full time job. This is the main reason that startups rarely get off the ground with just one person. You need a team of passionate people who have complementary strengths and skills. These co-founders and early employees comprise the core of your business and should be selected with great caution. Many startups have failed due to a break down in team dynamics. In order to avoid this pitfall, you need to get your team together and undress all the hard issues from the beginning.
Here’s how I built a great team dynamic in my startup, NextMover, from day one.
Expectations and Commitment
It’s very important to get everyone’s expectations and level of commitment out on the table from the start. The early days are the most exciting. You’ve got a BIG IDEA and you and your co-founder(s) want to take over the world. The problem is that many people don’t realize how much time they can really commit to the company or exactly what they expect as far as compensation or equity. Getting everyone’s commitment out on the table lets you know how much value each person can really add to the company. You need to know that everyone on your early team is in it for the long haul.
Answering questions about equity at this stage might seem premature. But putting it out there makes everyone’s intentions clear when it comes time to sign your first term sheet and raise your millions. If you wait to cover this topic it can become a huge distraction later on. When you’re working with reasonable people it can be as easy as asking, “what do you expect to get out of this project?”.
I’ve found that those who intend to work on your startup full time as a second job will rightfully expect a lot of equity. I’ve also found that people who can’t commit a lot of time may have unrealistic expectations of what they should receive in terms of equity. A great book to read about raising money through venture capitol is Venture Deals by Brad Feld. After reading it you will realize how important every percentage point of equity is to you and your company’s future. Be careful giving it away to people who aren’t fully committed in the early days.
Core Values
I have a strong sense of values. These values guide me in everything that I do in both my personal and professional life. It is important to develop a set of values that guide your company. It is critical that your team share your company values. NextMover’s values are a direct reflection of my own personal values. These values drive our business forward; they are the foundation of the company’s culture. A great exercise for determining company values is to do a “Brain Dump”. Gather your team for about one hour and do the following:
The Brain Dump:
- Get a large sheet of paper or a white board.
- Ask your team to list out their core values.
- Write everything down, grouping the words into lists by similarity.
- Narrow your list down to 4-5 values.
This simple exercise will show you what your co-founders’ values are and if these values are a good fit for your company. Once you can agree on a simple set of values, you can hold each other accountable to these values and refer to the m when making important decisions.
Strengths and Weaknesses
In a startup, there are no real roles; no CEO, no VP of Sales— just a lot of jobs and tasks that need to get done. Everyone on your team will wear a lot of different hats and take on a lot of responsibility. When you’re strapped for time and trying to execute your business model with limited resources, it is extremely important to stay focused on what you’re good at. Diversity of strengths and weaknesses is a good thing because you want people that can complement your skill set. Identifying your teams strengths and weaknesses is essential to empowering your team to make decisions. Here’s how my co-founder and I figured out our strengths and weaknesses. A word of warning: it’s important to set expectations for this exercise. Start by emphasizing to your team the importance of being open and honest with each other.
Time to undress:
- Be honest.
- Make a list of your personal strengths and weaknesses.
- Make a list of each of your team members’ strengths and weaknesses.
- Set the example and read your personal first.
- Now listen your team’s lists about you.
- Repeat with each person.
Now you can have an open conversation around who owns what tasks. It sounds like it might be a tough exercise but it’s not as hard as it seems. After you’ve identified your team strengths and weaknesses you can easily decide what tasks are best suited to each person. For example, I’m not a designer but my co-founder is really great at design, therefor, it’s up to him to make decisions about design. We work collaboratively but at the end of the day the final decision on issues related to design fall to him. I trust in his ability and give him the freedom to work within his strengths. By the end of this exercise you should have a list (or a venn diagram) of who’s in charge of what tasks. Where there is clear overlap, you can agree to decide as a group.
Customer Development Team
Practicing evidence-based entrepreneurship is critical to your team’s success. If you don’t know about customer development read, Steve Blank’s blog or check out Patrick Vlaskovits book, The Entrepreneur’s Guide to Customer Development. Talking and listening to your customers is at the core of building any successful startup. When you incorporate customer development into your team philosophy, you will increase your chances of success greatly. Make sure that everyone on your team buys in to this process.
If anyone doesn’t buy in, then they may not be a good fit for your team.
The process involves a lot of hard work and the realization that your BIG IDEA is just a hypothesis that needs to be validated or invalidated. You are searching for a repeatable and scalable business model and your team needs to be mentally prepared to pivot.
If a team member is unfamiliar with this philosophy have them watch Steve Blank’s course, “How to Build a Startup” on Udacity.com and read Patrick Vlaskovits’ book. It’s time well spent to make sure you are all on the same page.
Respect Your Time
Time is highly valuable. Be respectful of both your personal time and that of your team. It is just as important to make time for your friends and family as it is for you to dedicate time to growing your business. Here are few ways to find the balance.
- Schedule one day a week just for family and friends—be present. This is a time to avoid anything work related. Just enjoy being together.
- Set a schedule for working on your startup and stick to it. I meet with my team twice a week in person for an hour. We also commit to completing a minimum of ten customer interviews together a week.
- Define objectives for each meeting with your team. This ensures that everyone is prepared and knows why your are meeting.
- Come prepared. Don’t show up to a meeting with your team without your work completed.
- Bring energy and enthusiasm, even if you fake it, because positivity is infectious. Startups are hard and your attitude directly affects your team. Everyone on your team at this point has agreed to be in the trenches with you so make it as positive as possible.
Launching a startup is a long and draining process. Establishing core values, building the right team, and keeping the balance are three ways to help you stay on track to success.
I originally wrote this article after my launching my previous startup, NextMover. I hope that this article adds value to your process as you’re getting your team and startup off the ground. I’d love to hear your thoughts so either leave a comment in the margin or tweet me @afkehaya.
