Can you build the right team at the right time? So we're going to turn our attention to teaming as we conclude our discussion on opportunity identification. So entrepreneurship is very much a team sport, this belief that is the solo individual out on their own all the time is a myth. And when you look at this piece out of some of my colleagues at Stanford they point entrepreneurship as an experience where entrepreneurs are spending the majority of their time as part of a group. They're meeting with management teams, board meetings, project teams, and as that venture grows they're spending more and more time with suppliers and partners and customers. So how to startups build teams? How do you pick your cofounders? How do you pick your earliest employees? Do you thoughtfully consider who has complimentary interest? Who likes what I like and who has the passion for what I want to do? Who has contrasting skill sets? Who are people that knows things and different than me and compliment my weaknesses with their strengths. Are there differentiated relationships among my team. While I may know people, I like to bring people onto my team and my cofounding team that know a lot of different people or do most start ups hire friends. And while your friends may be good team members and good co founders if they do have these complimentary interests, these contrasting skill sets and these differentiated relationships. A lot of what of I see, particularly with young entrepreneurs, is they are hiring friends that may not posses those traits. So think about your reasons for teaming. Well, you may want to expand or enhance your industry knowledge or domain knowledge. You want to bring somebody to team that understands the customer and the market. That understands the competitors and trends that have know-how within that industry. Maybe you have that, if you don't have it, you'll want to bring that on at the executive level, perhaps as a cofounder. You may need business knowledge. While we teach many of these elements within our program, you may want someone who is been there and done that in the strategy and finance and accounting and sales and marketing arenas. And that person might be an executive team member or one of your co founders. You might want someone that has the relationship and the social capital. The person that's in the no one knows who to know, you may want someone with some financial contribution. Now maybe they are an investor, and only an investor. Maybe they are an investor and they're going to be working with the team in a more day to day fashion as well. That can be a good co-founder, an early team executive member as well. So should you team with a friend to start your business? Or bring them on early in the venture? Well, I would caution you that many times teaming with friends usually ends the friendship and kills the business. There are two questions that I would ask. One, does your friend truly complement you're strengths and weaknesses? Two, if you had the money to hire someone experienced into that role, would you hire that friend? And if the answer, either of those questions is no, then that's not a friend I would bring onto the team. An ideal approach according to many people in the start up community is to, one start with people you know.only hire the people you know. Typically, it's a small team having a bad hire might be end of you company. It's time and money spent, it might be irrecoverable. 2, Find partners with resources that can commit long-term. Find individuals that are willing not to take a salary for a period of months or even years that have the savings. That they can support themselves through the initial growth and scaling of the venture. Don't hire college kids, find people that have experience. Integrate people with sales and marketing very early in the process and staff your group with people that believe in your mission, they're not only for your salary. Well, to this I would say that's the ideal, but its not the reality in lot of the ventures that I have worked with. What I find that a lot of the entrepreneurs I work with a re first time entrepreneurs and they may not know the right people. They might not necessarily have worked in the places and then the organizations or gone to the programs that connect them with the right people. They may not have friends that are wealthy. They may not have individuals that are in the circle yet that are willing to make that level of financial committment, or that have the means to do that. Then they may not be able to afford that experienced person. Now for a couple of these elements, I whole heartedly agree with, one is certainly that you want to integrate sales and marketing expertise very early in the process. Or let's say a monster co-founding team, it's great to have someone that understand sales and marketing. And that you want to find people that believe in your vision, if it's someone that is looking for easy money, that is hoping for an early acquisition, that's trying to get rich quick. Then they stick with you for a while but when they realize that it's a difficult proposition, to launch into a new venture, they may grow tired of that and leave. Or they may jump on what they think the next opportunity for easy money is, before you necessarily expect it and it's a downside, naturally, in the data if you haven't replaced them, perhaps in the near term. So while there is this ideal approach, I would suggest there is an approach for those that are, perhaps, less connected, or newer to entrepreneurial pursuits. Where I would start is, one, identifying the skills your venture needs. So that takes an honest self assessment of what you know, what you don't know and what's critical to your venture. If you're going to be a technology-based venture I would suggest bringing on some technology talent. And some kind of a co-founder or full time management position and not outsourcing your core elements. I would also recruit where you need help and recruit for a variety of means, it may be friends. You may have friends that have that right skills set and if they are committed, and if they have these skill sets that contrast yours, if they have those complementary interests. If they have relationships that are going to add value, that might be a friend that you can bring on board and have success with. I would also look to coworkers. Coworkers can be great team members, and that you know a bit about their expertise. You know a bit about their work ethic. If they come to your job late, and leave early, and don't do a lot of work while they're there. Well, if you were to bring them on your team you could probably expect the same thing. So I also say believe someone when they show you who they are and don't expect that they're going to make a radical turn around with your venture. If they are marginally effective at whatever employment they are now. Same for family, if you have family that may not be the most reliable that they have some problems in their day to day life. That would be someone that I would be relatively hesitant to bring onto my team because that might exacerbate or recreate itself within your new venture. So in that way again, maybe it's friends, maybe it's co-workers but I would still be highly selective. LinkedIn, Facebook, and other social networks can be very helpful for finding individuals as well. And this context LinkedIn with what it is and being able to index people on expertise being able to see what individuals backgrounds are not only by education, but more importantly by experience is a great tool to find people. You might reconnect with people there might be people that were in your circle years ago, that have gone on to do some pretty impressive things that you might not be aware of. But if you get connected on LinkedIn you might find they are the perfect cofounder, or that they're the perfect individual to join your team early on. You also might engage yourself in recruiting in face to face events, there are a variety of meet ups, and workshops, and clinics, and speakers, and social's. That happen in many different areas. They happen in many large cities and many small cities globally these days. As more people are more informed on entropernurship, what it is, and what the opportunities are. So we'll do some of those social and networking events as well keeping an eye out for who might be great team members now or later. I want to also understand the roles of cash and equity in your venture. You may be cash poor but equity rich. What I mean by that is you may not have the cash to bring on individuals, you might not be able to pay a salary or pay a very high salary. But every company, every company, starts with 100% equity, so in that context you have 100% ownership of your company to perhaps share with people that will join your team. And so, later in discussions on new venture financing, we'll explore that a little bit more. And what it takes to bring people on and what are some effective ways to bring them on with equity or a vesting schedule to engage them and recruit them into your venture. We also want to think about the element of creating a strong culture of hiring people that you like to work with that share your values. That represent those that you think can be long term advocates and champion, solve your venture and of your cause and of the solutions that you want to bring to market. There's also an extended team. Now the extended team maybe your board, and maybe investors, attorneys, accountants, other partners and suppliers. So the extended team is something to be cautious about as well. Hopefully if you are to choose a doctor, you're not just going to flip through the yellow pages, or search up doctor on the Internet. And pick the first person that comes up and trust them with your healthcare. However, many of the entrepreneurs do that when they're looking for attorneys or accountants. That is not the thing to do. Do the same thing that you would do if you're trying to find a doctor. Of looking for people that are respected, of looking for people that have references, of looking for people that may have worked with other individuals that you know. So in that way I would be as selective with selecting my extended team members as I would be for my own personal doctor. A key piece of that is the board of advisors and I think this is a great place to start. When you begin thinking about that extended team, I would start with a board of advisors. What that does is it gives you a mechanism to get regular feedback from people that have been there and done it. That have some expertise and that have some insights and they can provide an objective, informed level of feedback. Now they're a bit different than other service providers. If you go to a marketing firm, and you want them to market your product, they will put together a campaign, they will suggest what might work. They will attach a price point to it and they are happy for you to pay them $1,000 or $10,000 or $50,000 for them to execute that marketing plan. A Board of Advisor member may be able to work with you on that plan to see is it going to work or not? What should you do, what shouldn't you do? What is in other things that you can do with that $10,000 dollars? That might add value to your firm. Same thing with technology. If you go to a software development company and you want them to build your dream website that's going to do everything you could ever imagine. They may be able to do that for $30,000 and they’re happy to build it. They’ll provide no guarantees that it’s going to be profitable, they’ll provide no guarantees that you’re going to be able to get traffic on that site and convert costumers from that site. But they’ll take your money to build it, what a board of adviser would do is look at that plan, look at that wire frame. Think about that user interface, think about the costumer experience that that website is going to deliver. And give you some advise on what to do, when to do, how to do, if to do, before you go out and trying higher service provider. Boards of Advisors maybe compensated than the few different measures just to assures co-founders maybe, it might be equity based, it might be one or 2%. It may be cash based, if they're providing time, particularly regular time and expert time. They are potentially willing to do that as a volunteer for a short amount of time if they already have some sort of relationship with you. But in all likelihood, I would really argue to get value out of them any way to get their attention and to really link their interest and their motivation to you in a measurable and significant way. There's some measure of equity or cash that most start ups are going to find is necessary to bring on quality boards of advisors and to be a priority for them. So in summary, when we think about the team, we want to be very selective. We want to be very selective with our co-founders, very selective with that internal team, both co-founders as well as the early hires that we make, particularly those that we're going to give equity to. We also want to be very selective with our extended team. We want to beware the pitfalls of friends and family. Now there are successful companies formed by friends. There are successful companies that are run by families, but it's not the norm and it certainly brings a level of complication that you want to be aware of. We also want to remind you to leverage your relationships to establish your team. Think about who you know. Think about who you know, knows and how that might be a prospective great team mate. We also want to introduce and remind you this concept building of advisors. One thing you will remember here is such a great way to get expert advice, in a device is something that you can take or leaved. So boards of advisors typically don't have a formal role or a formal influence over you. So it's a bit different than a board of directors that pending the board may have the ability to hire or fire the executive team. They may have the ability to choose to spend or not to spend on large scale projects. That may have the ability to approve or not approve acquisitions or mergers so boards of directors may have varied roles structure obligations and authority to decide. Boards of advisors advised and for the early stage entrepreneurs that's where I would suggest starting. And then it gives you a rich source of advice that long term should help you make money and should also save you a lot of money and save you from mistakes and some pitfalls along the way.
