Time for a Team Talk
May 31st, 2020
Having a brilliant product idea is one thing, but having a complimentary, skilled, ambitious and expert team of founders, with that same novel and exciting idea is a whole other story. Here we have outlined the importance of creating an effective founding team and the elements required to make it a successful one. Taking advice from some of the top investors around, this article is a must-read for any founder looking to expand their team to create a successful company in today’s markets.
A successful founding team usually succeeds as they know something about the market that other people don’t. A single individual is not able to build a brilliant company; it takes novel ideas developed by people with relevant experience, academic education and competence. According to Mark Suster at Upfront Ventures, the mere task of assembling a well-balanced and complementary founding team already shows and investor the founder has the ability to recruit, connect and support a group of talented people. Many investors are also looking at why a particular team of founders is building a specific product. Investors will question whether a group of founding members are the right fit for the market and product, regardless of their apparent skills and expertise. Founders with a good network of investors is another mark of a team going a great job, according to Trae Vassallo at Defy. Vassallo reiterates that having an expert team is never enough and emphasizes the importance of having a good network of advisors that will help to support and expand the business.
What a founding team signals to investors
As a founding team, self-awareness is non-negotiable. An excellent team is made up of individuals with expertise and knowledge in particular areas, that complement one another. The ability to acknowledge one’s weaknesses and strengths and the willingness to be able to conversate these areas in order to distribute tasks appropriately, is vital for any successful founding team. Let’s be honest, this is not always an easy undertaking, but one with the upmost importance. To have a founder that is talented creatively can be complemented by a co-founder with excellent operational abilities. When both parties understand and appreciate the importance of honest communication and contribute their respective strengths, a company’s likelihood of success is undoubtedly going to increase.
Learning on the job
In the words of Reid Hoffman at Greylock Partners, building large companies is no easy task and for the most part, the founding team is usually working together for the very first time. It is therefore vital this initial team has not only a varied skill set but, most importantly to Hoffman, an “infinite learning curve”. To be straight, founders need to be equipped to deal with learning on the job. They need to learn how to scale management, scale the executive team and scale the going to market efforts whilst simultaneously scaling the financing, all at unprecedented speeds. According to Hoffman, the ability to learn from and correct mistakes at a fast pace is the number one skill the founding team needs to have. By doing this, a great idea can build into something that has the potential to transform an industry and, perhaps, shape the world.
Understanding the market
When Ann Miura-Ko form Floodgate examined the reasons behind several companies’ failures she highlighted that one of the keys elements these founders were lacking was that the team were not rigorous enough about the product and its market. Miura-Ko stressed that in any business setting, it isn’t just enough for a team to know about the product, but they need to demonstrate their awareness of how the customers want to buy and at what price. The combination of solid product knowledge and understanding of the product market is an essential part of the founding teams’ responsibility for developing success. Further to this, even if a founding team has developed a brilliant product, if team members have limited insight into product distribution, it can severely hinder the progress in the early stage of the company.
Experience the issue first-hand
A founding team must demonstrate a unique insight or expertise in a particular market through personal experience or observation. One of the most inspirational methods of a founding team demonstrating their understanding of more than just the product but the market itself was by Legions founder, Sanish Mondkar. By personally experiencing life as a barista for six months, the founder and CEO lived through the problem of how businesses schedule employees for work in the gig economy. The knowledge, now deeply embedded with Mondkar, allowed the founding team to get right to the problem, by spending ample time experiencing the issues before building a successful product to overcome them. This is just one way a founding team can show their expertise but, to many investors, the demonstration of grit and determination to understand the problem right at the core is a very worthy indication of a team set for success.
How to stand out to Sequoia
Showcasing your founding team
During an online fundraising process, the deck and associated documents are going to give your potential investors a firm, and often game-changing, impression of the founding team. When a team describes itself ‘on paper’ an investor is purely interested in the facts. The sort of facts that describe where you have worked and in what capacity, where you studied and how much you achieved, relevant awards and press appearances, how long your team has worked together, even the mention of side projects, such as a band and sporting successes. In short, James Currier from NFX believes that when describing your team in the written sense, it is important to get the facts down, pure and simple. He even adds that the longer your team has worked together the better, so encourages the founding team to be explicit about how long the team has been co-working. Currier then goes on to say that when you meet an investor in person - that’s when you can showcase your passion, tenacity, commitment and just what type of person you truly are.
Deck it out
Having already touched on the importance of conveying your founding teams’ skills to a potential investor, it is also wise to note most investors reviewing a deck will be looking at three key aspects: the team, the market and the product idea of the founding team. These three aspects are going to give your investor the best initial understanding of the likely success of your product idea. With all formal applications, the quality of the deck is super important - a deck with mistakes that is poorly written won’t necessarily give an investor a different opinion on the product itself but could likely make the reader question the quality and diligence of the team members. The same goes for decks that are too long, detailing too explicitly the ‘ins and outs’ of the company, except this time, investors will question whether the founding team has used their time in the best way, further showcasing what type of entrepreneur you are. In short, your deck is going to give an investor a pretty good indication of the rigor and thoroughness of a founding team, attributes that are key for entrepreneurial success.