I spoke recently at MIT's Sloan School of Management about how to build an insanely great founding team. This subject is a personal favorite (and a popular coaching topic here at UpStart Bootcamp) so I'd like to share my thinking…and hope you'll do the same!
First, what is a founding team and why should it be insanely great? A founding team helps you storm the castle every day. You're married to your co-founders, emotionally and financially. Chosen well, no one will work harder or care more about your company. The job of a founding team is to learn what works and to recognize when or how to change it. Founders often earn equity only—rather than a salary—until key financial goals are met. Early on, founders are one of the biggest reasons you succeed or fail. Over time, they also set your company culture, which impacts your whole business and is incredibly hard to change. No doubt, you want an insanely great team.
What characteristics should you look for to build this insanely great team?
1. The right skills to go the distance: Identify the three to five primary business operations you must get right in the next three years at least. Then look for someone with the skills to lead each of those for the next three years, preferably with a proven track record. (Translation: investors will be game to fund that person, and you.) Avoid the common mistakes of outsourcing, or hiring an unqualified friend to lead the critical areas of your business.
2. A hands-on approach: A co-founder should want to be hands-on doing the work, not just leading it. It may be months before you bring on other employees. Even a co-founder who manages a team needs to be able to roll up his or her sleeves and get dirty with the details to ensure the start-up hits, and exceeds, goals.
3. Can-do problem-solvers: The best entrepreneurs I know are highly curious, and driven to solve problems in a positive way. This is what gets them going in the morning, and keeps them up all night. Rather than stop them, roadblocks inspire their creativity. These people are excited to work with other problem solvers, and get frustrated by people who don't share this trait. A team of problem solvers has an exponential effect. A dud rains on the parade.
4. Hunger is a good thing. Ego, not so much. You want co-founders who are looking to make a mark in terms of money, reputation, or other personal goals. Individual performance rarely succeeds (otherwise you'd go it alone!) and collaboration increases your chances of success. Ego can eat away at collaboration so look for people who can leave it at the door. Not sure? Ask them about a success working with others and pay attention to how many times they say "I" versus "we." You can also ask references.
5. Values, goals, and risk: How you do the work is as important as the work you do. You need to trust your co-founders and that begins by being on the same page about values, goals, and risk tolerance. For example, talk about how you're going to resolve differences because you know you're going to have them. And about how you'll handle ethical dilemmas, like honoring an agreement when not doing so would be financially beneficial.
6. Smarts and passion can trump experience (despite what I said earlier). Smarts plus passion is the start-up secret sauce. Pass on anyone without this combo as a co-founder. Period. In a perfect world, co-founders have everything listed here, and more. In the real world, if you find a candidate with all I've mentioned, as well as wicked smarts and passion for your idea—but that person lacks the exact right past work experience—don't be afraid to plunge. Smarts and passion will help him or her figure it all out.
What's on the top of your list for an insanely great founding team?
David Ronick and Jenn Houser are serial entrepreneurs and start-up advisers. They partnered with Inc. to create Upstart Bootcamp@Inc., a program that guides entrepreneurs to start up smarter. To learn more about business planning, take UpStart's on-demand course. Or get a free reality check to find out if your plan is ready for action.