From the Ash's

Building a competent team is probably the biggest difficulty entrepreneurs face throughout the life of their startups.  Venture capitalists are always quick to explain that they focus first on the entrepreneur and his team and then on other aspects of the business, with very rare exception.

In fact, earlier this evening I attended the MIT $50k Entrepreneurship Competition - the world's foremost university business plan competition - at which Bob Davis as the keynote speaker.  Mr. Davis is currently a general partner in Highland Capital Partners, a Boston VC firm, and he was the CEO of Lycos from its inception in 1995 until a few months after it was acquired by Terra Networks to form TerraLycos.  Mr. Davis made the point that he and the other Highland Capital partners evaluate startups on three criteria:

1. Team
2. Market
3. Product

What does that tell you?  Well, simply put it means that one of the world's foremost entrepreneurs, and the people with which he works, believe that the primary key to success is to have the right team.  In fact, oftentimes team members will only be suitable for a certain phase or phases of the startup and must be swapped out.  Jo Tango, another general partner at Highland Capital, keeps a timeline depicting the phases for which he feels the CEOs of the companies in his portfolio are suited to run the startup company.  Most of the time the lifeline of the CEO is only for two or three phases.  That's not to say that they will not be able to see the company through later phases of its growth, just that they will have to grow along with the company.

So now that you know it's critical to have an A team, How do you field an A team?  This question is actually made up of a number of questions, the larger of which I will go into in this article.  This article will go through how to field a team, establish and maintain a culture, and attract strategic partners.

Tapping your Network

What does networking have to do with this?  Isn't that what you do to build connections, sell products, or get a job?  Well yes, that's definitely some of the uses of networking.  However, there's a lot more power that you can derive from having strong networking skills (check out Dr. Yaneer Bar-Yam and the New England Complexity Science Institute for some cool ideas about network structures).

How YOU Network

Notice the title of this section is not "How TO Network".  I'm not going to prescribe a certain way for you to network.  Everyone does it differently, some people are timid, some are gregarious, many are in between.  In all honesty, it doesn't matter that much aside from understanding certain basic dos and don'ts (to be discussed in a later article).

There's an old Sun Tzu quote from his famous book, The Art of War, it's simply "know thyself".  That's just a small excerpt from the quote but it's important.  In order to understand how to field your team, you need to understand how you meet people.  For example, I go to a lot of networking events and I absolutely love to meet people and talk about everything that each of us is doing.  However, I hate to be asked if I "already have a team" and would never think to ask that question of someone else.  That's just how I operate, and a lot of other people operate differently.

Diane Burton, an Assistant Professor at MIT's Sloan School of Management, who's work I will cite often in this article, likes to ask four questions.  She says, "use one minute for each question and write down up to five names".  The topics are:

1. Who do you do your work with? 
2. Who do you socialize with?
3. Who do you go to when you're grappling with a big decision?
4. Who do you go to for emotional support?

Use only a minute for each question then look at the names you've written down.  How many different names did you write down total?  Five? Twenty?

If you only have a few names written down, then you have a pretty limited network.  Chances are it's a cohesive network where everybody is in touch with everybody else.  If you have a lot of names then it's likely an expansive network where your contacts don't often know each other.  Most people have something in between.

Fielding the Team 

Which type of network do you think is best for building a team?

If you said expansive then you're right.  If you said cohesive, I bet you have a cohesive network.  The reason an expansive network is important in team building is that you want to be able to tap into the largest pool of expertise that you can.  If you can find someone in your expansive network with their own expansive network that knows someone who fits your team then they'll  bring a new and valuable perspective to your team that will improve your startup's chances for success.

There are lots of ways to recruit your teammates, and I won't go into them here, but I will suggest that you be honest with them from the get-go and make sure that they're excited to work with you.  You need to foster that excitement throughout to keep everybody working at it.

Pouring the Foundation

Once you have the team, you should lay a solid foundation to hold the team together.  That means creating a Code of Honor, a Founders Agreement, and, when you incorporate, and Operating Agreement. 

The Code of Honor is a set of basic rules that everyone on the team follows.  Rules such as "never abandon a teammate in need" and "never leave a disagreement unresolved".  Check out Blair Singer's book The ABC's of Building a Business Team that Wins for more info about creating a Code of Honor.  Another book worth checking out is Stephen Covey's The 7 Habits of Highly Effective People, which talks about building your character to improve your performance in team environments.

The Founders Agreement talks about the dynamics of the team - who will do what, who will contribute what goods and capital, and how many of the specifics of company ownership will be handled.  Joe Hadzima, Chairman of the MIT Enterprise Forum, wrote a great piece on the Founders Agreement, which can be found on the MIT Entrepreneurs Club website: http://web.mit.edu/e-club/hadzima/founders-memo.html.

The final document to create is the Operating Agreement.  This document is actually a document used a lot by lawyers in forming and structuring companies, so there are a lot of template documents to help you create your own Operating Agreement.  Just search on Google if you want to create your own, although it may be best to involve a lawyer to help you understand things.