It only takes three people to build a startup
There’s this notion that building a successful startup means hiring tens if not hundreds of people.
Which in turn makes early stage founders think they need to have big teams before launching the initial product.
Or even prior to having a clear understanding of the problem they’re about to solve.
But as well as the cake, this is a lie.
Moreover, one should be able to serve the first customers without having a team bigger than three people.
Hacker. Hipster. Hustler.
Lately I’ve been advising increasing amounts of early-stage entrepreneurs, and there’s been a similar characteristic in all of them.
They’ve started brainstorming ideas during some event or next to a beer, and reached to a conclusion that there’s a problem they should be solving.
All good here! That’s how it’s supposed to go.
But the problem usually has been that they’ve not had all the necessary skills for delivering. Thus needing to bring more people along. First, calling to the childhood friend that supposedly knows how to code. Then meeting an acquaintance that has at some point gone to art school. Finally having a team of seven or more that are ought to start building the thing.
Perhaps, they even have all the necessary know-how to make it happen.
However, the team now consists of three people that will do most of the work and many more that just happened to be there at the right time.
It would be all good if the latter would understand that they will not be playing a big role along the way. But mostly they won’t. Instead feeling entitled to own a significant part of the company, as well as a founder status.
This in turn means that the cap table will be all fucked up, even before there’s anything to show. Non of the “founders” will have a big enough piece of the pie to make it worthwhile. The decision process will lengthen. And to top it all, investors won’t be too happy to join (if you unfortunately have to bring them along).
So, a couple of months in, the CEO (or whoever is really pulling the strings) has to break the news to the unfortunates that they’re not really needed for the the journey at hand. At least that’s what (s)he’s supposed to do if hoping to build the next big thing.
Now the ties will be broken and tears shall be shed. The company might survive, but a mark will be left. Although all of that could have been prevented if the team lead would’ve kept it to only three people, before taking the first step. Hacker. Hipster. Hustler.
Why so?
Because in the early days, there’s only three things that really need to be done. Someone needs to build the product AKA the Hacker. It needs to get pretty and convenient to use AKA the Hipster. And somehow it needs to reach the first customers AKA the Hustler.
Of course, it might happen you need someone to act as an industry insider. But even if the builder, the designer or the jack-of-all-trades is not the person, then this doesn’t mean you need them on board. Instead, you need them on the Board (of advisors, investors or something else).
There’s only that much they (the industry insiders) can do during the initial phase, and when you really want to disrupt something, then you don’t want to be constrained by your own experience how things have been run for decades.
For example, Amazon was started by a retail layman and the founders of Uber had never built a taxi company. Same will happen with the disruptors of tomorrow — they will be built by outsiders. But that’s a separate topic.
Coming back to the three people needed to get a company going. Limiting the size of the team significantly lowers the costs and increases the potential size of the pot per each member. It also puts more pressure on all of the pieces to focus and get it done.
In the meantime, it also creates a stronger team (hopefully). Only because more time will be put into bringing the people together. Thus, there won’t be any accidental people.
Once there’s some traction and those three people physically can not manage all of the business, then it’s time to start growing the team. But not before!
That’s simply the best practice, which leads to generating the least amount of empty air…
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