Evaluating Startup Team Dynamics
I recently spoke on a panel where an audience member asked a question about what heuristics investors apply to assess the quality of teams. This is a great question. Most of the answers — including my own — related to team composition. Things like the number of co-founders, domain expertise, complementary skillsets, etc. These are important considerations, but we conspicuously overlooked a critical element: team dynamics. That oversight was a failure on my part which I hope to remedy with this post.
Necessary Ingredients: Team Composition and Team Dynamics
We already talked about team composition, which is one necessary ingredient. The other is team dynamics. You can have a team comprised of excellent individual players, but if they don’t work well together they won’t be successful. To lean on a sports analogy, the Steelers arguably had the most talented offensive roster in the NFL the last several years, but underachieved due to lack of player chemistry and individuals putting their egos ahead of team achievement. And don’t even get me started on the 2004 Olympic basketball “Dream Team” that got blown out by Puerto Rico.
Hopefully I don’t need to convince anyone that team dynamics are important. The challenge is that team dynamics is harder to evaluate than team composition. It’s easy to count the number of founders and examine their resumes to understand the skillsets represented. Understanding how that team works together is far more subjective.
It’s important to spend time with the founding team to evaluate how they interact. I’ve developed the following heuristics over the last few years.
Heuristics for Evaluating Team Dynamics
History and Track Record
How long have the team members known each other? Have they worked together before? What was the outcome? I’m much more confident backing a repeat founding team that has years of history working together than a “Startup Weekend” team that has known each other for a few weeks. Teams without deep roots often fracture as soon as the excitement of a new venture wears off and hard, thankless work truly begins.
Commitment
Are all of the founders committed to the venture full-time? Is there a plan for all of them to be full-time? Lack of alignment on commitment level can breed resentment. The team members working full-time on the business and foregoing a salary may become frustrated if they feel teammates aren’t equally committed or making equal sacrifices.
Alignment
How do the team members interact together in a pitch situation? Are they on the same page? Do they share the same vision? When one member rudely interrupts another or two members of the team seem to have conflicting answers to a simple question, that’s a major red flag for me.
I vs. We
When discussing accomplishments, do individuals take credit or give the group credit? People that use the word “I” too frequently can be egocentric and unable to play well with others.
Conclusion
None of these heuristics is foolproof, but hopefully they shed some light on the types of considerations to take into account. I’d love to hear what filters others are applying in the comments on this post.
