May 27, 2020

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by: Jonathan Hung

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Tags: startup

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Categories: Investing, Startup Funding

How To Build Your Startup Management Team

Founding a startup sometimes feels like a monumental task. You’re fervently working on a new product, creating the corporate structure, finding investors, and learning how to run a business all at the same time. The most critical component of your startup isn’t necessarily the product you build or the paperwork you file. It’s building your startup management team. Without the right startup team, you’re more likely to run into issues.

Many entrepreneurs assume that if their startup doesn’t succeed, it will be due to the product failing, an inability to compete, lack of market share, or some other measurable reason. However, disharmony on the team is one of the top ten reasons why startups fail. It’s so prevalent that estimates show disharmony can sink up to 10% of startups.

If you want to give your startup the best chance of success, you need to build the right startup management team. Here’s how to accomplish that goal.

Table of Contents

Your Startup Management Team Runs On Trust

Take the Time To Find The Perfect Team

Look for Diversity of Thought And Skill Sets In Your Startup Management Team

Look for Soft Skills Not Just Hard Skills

Know the Roles For Which You Should Hire

Invest In and Learn With Your Startup Management Team

With The Right Startup Management Team, Your Business Will Go Far

Conclusion

Your Startup Management Team Runs On Trust

In the beginning, the most important thing a founder and team members can have is trust. You need to trust them to be looking out for your business’s best interests, and they need to trust you to do the right thing as well.

This two-way street of trust and honest communication is so vital. Founders need to surround themselves with people who will speak “truth to power.” Having yes-people around won’t push you to create a better product or do more for your customers. Yes-people don’t generate new approaches that you might not think of but work out well.

Jeff Bezos, the founder of Amazon, has a famous phrase that he uses with staff called “disagree and commit.” This phrase means that you might disagree with someone’s thinking, but you’re fully committed to making it work. It’s also a sign of trust. By saying that, Bezos is essentially saying, “you haven’t convinced me of your argument as to why we should do this, but I trust you enough to know you want to do the right thing so let’s go ahead.”

When building your startup management team, you need people like that. These are the people who aren’t afraid to pitch you new ideas, even if you may disagree with them. It would be best if you had people with whom you can have honest conversations, get feedback, and even disagree and commit if necessary.

Trust is at the core of every successful startup management team. Make sure that above else, you hire people that trust you and whom you can trust.

Take the Time To Find The Perfect Team

As a founder, you might be anxious to get going and start developing your product. This mentality can lead to an “easy hire, fast fire” decision-making approach. The problem with this way of thinking for your first startup management team is that change is very costly in the early stages of your business.

Angel investors, for example, often don’t invest in a particular product or idea. Instead, they invest in the team. The same is true even for later rounds of funding. The logic is that a quality team will find a way to succeed. They’ll have the intelligence and courage to tackle new challenges and find their way around any complexities that arise. The team is arguably more essential to the earliest stage investors than the product or vision itself.

Do not rush the team. Do not hire thinking that you can adjust it later because doing so can be both difficult and costly. A good rule of thumb is “Fire fast and Hire slow” Change is constant, so the startup management team you start with may not be the team by the time you hit series A or B funding. That’s perfectly fine. For the initial stages, however, investors need to have confidence in your team. Therefore, hire carefully and build a team that will give prospective investors confidence in your business.

Look for Diversity of Thought And Skill Sets In Your Startup Management Team

Statistically speaking, a startup team with people of a similar skill set, background, or ethnicity tend to fare more poorly than those who are diverse. When building your startup management team, look for members who complement each other. If you’re developing a new app, for example, you shouldn’t only hire coders. You’re going to need marketing, sales, accounting, and other skills as well. Startup employees tend to wear many hats, but make sure that your team can perform all the essential duties that the company needs to function.

Diversity in your startup management team will also make it easier for investors to fund your company. When you approach an angel investor, instead of having five people that can code, you can demonstrate how each person on the team brings a unique contribution to the organization. You can show how your marketing manager is a wizard at creating campaigns. Similarly, you can show how your sales manager increased sales at their previous company by 200%. Of course, for your company, these positions and examples will be different. Nonetheless, when you can demonstrate to potential investors that your business has a wide variety of talents, they’ll be more confident putting money into your business.

Look for Soft Skills Not Just Hard Skills

Hard skills are essential to have in your team from the beginning. You want people who can perform the crucial day-to-day activities that it takes to run a business. However, soft skills are equally important when it comes to building your team. Soft skills, like communication, critical thinking, and leadership, are instrumental in managerial roles. These are skills that will give your team the dynamics it needs to succeed.

As a quick example, let’s suppose there’s a startup named Acme Co. This company has four members. They have a CEO, CFO, sales manager, and marketing manager. Now let’s suppose they make a deck to pitch to a venture capitalist. They sit down at the meeting. The CEO goes through the pitch deck, and the VC begins asking the other members pointed questions. The CFO fumbles through the answers, appearing aloof and uncaring about the business. The sales manager contradicts the CEO, claiming the CEO’s numbers were wrong. The marketing manager talks about expansions into markets that the CEO hadn’t discussed at all, even though he’s never led such an effort in the past.

Will the VC invest in this team? Probably not. No matter how qualified their hard skills are (they could all be PhDs in their field), the team has broken dynamics. The CEO doesn’t have the same vision as the sales and marketing managers. Additionally, the CFO seems to have problems as well – maybe they’re looking for another job on the side and are uninterested in the outcome of this business.

VCs know that teams with these dynamics are not likely to succeed. Therefore, they will be reluctant to invest.

Ultimately, you must ensure that your team has the soft skills necessary to succeed. Communication enables a cohesive vision. Critical thinking allows managers to ask tough questions and discuss topics rationally. Finally, leadership gives executives the ability to rally people around the business and promotes a healthy culture. These soft skills aren’t necessarily on the resume, but they’re essential to have within your team.

Know the Roles For Which You Should Hire

A quality startup management team doesn’t need to have every single C-level position. Usually, the very first members hold one or more titles, and as the company grows, each member becomes much more specialized. Most businesses need people to fill the following roles:

  • Chief Executive Officer: Each business needs a CEO. Usually, in the early days, one of the founders is the CEO, although if it makes sense to hire this externally, that’s an option.
  • Chief Financial Officer: In the early days of the business, a CFO plays a substantial role, keeping finances on track and ensuring the company has enough cash to survive. Therefore, it’s vital to hire a trustworthy person that can hold this role.
  • Sales Manager: As you’re getting ready to monetize your product and get it into the hands of customers, you’ll need a sales manager to oversee this process.
  • Marketing Manager: Typically, marketing operations should begin very early in the company’s lifecycle. Without marketing, the public won’t know what your business is offering. Therefore, usually, the initial startup management team has someone that is an expert in this domain.
  • Board of Directors and Advisors: Startups usually don’t hire for these roles, but they form an essential component of your core team. You should make sure that you have people on the board and advisors who you can trust, discuss ideas, and will provide you with honest feedback.

Of course, your business model may be different and require more niche roles in the earliest phases. These roles are guidelines that should apply to most businesses.

Invest In and Learn With Your Startup Management Team

Building the team doesn’t end with picking the people. You need to invest in individuals to ensure that they continue to produce quality work and feel motivated to help your business succeed. Additionally, everyone on the team needs to be willing to learn and grow to meet customer demands.

Many people mistakenly believe that they need to hire people based on what they know. While this is partially true, it doesn’t tell the whole story. Satya Nadella, the current CEO of Microsoft, once said that a learn-it-all beats a know-it-all. Know-it-alls may have deeply specialized skills, but they may not be willing to learn and grow when the time comes. By contrast, a learn-it-all is humble, driven to succeed, and ready to engage in personal and professional growth when needed. These are the types of people that will make your team stand out.

Customers, especially, are falling out of favor with “know-it-all” companies. There used to be a time when a company would spend 1-2 years developing a product, dreaming up things that customers would want that far in the future. Now, companies tend to iterate faster and be more responsive to customer feedback. Companies themselves are adopting a “learn-it-all” approach to customers. Instead of the business telling the customer what the customer wants, the customers are telling the company what they want.

Fostering this type of adaptable culture means making investments in personal and professional growth goals. When building your startup management team, it’s essential to make sure you’re communicating openly and honestly. It’s vital to encourage all early-stage employees to grow and learn as much as possible so they can be in the best position to create meaningful solutions for their customers.

With The Right Startup Management Team, Your Business Will Go Far

The right team can make a world of difference. The right set of people can brainstorm problems of dramatic revenue drop-offs, while the wrong group would be complacent or arguing with one another. The right team will analyze customer feedback, learn from it, and find quality solutions, while the wrong group would be dismissive.

There are many real-world examples of what a stellar team can do. At the core of any excellent team is trust. Without that, none of the other skills matter. You can have the perfect accountant, but if you can’t trust them with your organization’s finances, there isn’t much hope that you can have a productive working relationship. Almost every successful business had founders that believed and trusted the initial people involved.

Conclusion

Pick your startup management team carefully. Choose people you trust, who have the hard and soft skills you need, and who have diverse backgrounds. Once you find these people, make sure that you invest in them to keep them motivated and happy to remain with your company. Change, of course, is inevitable, but finding the right initial team and being able to have them get you past the initial phases of your company is so critical. With the right set of people in place, investors will have confidence in your company, customers are more likely to love your product, and the sky will be the limit for your business!