Building the right founding team

This post will be one of the articles on ThePathForward.io when we have the formal launch on September 9th. There’s currently a placeholder site which explains what The Path Forward is (a guide for ecommerce and marketplace entrepreneurs in their first year). When it goes live we will add a bunch of practical guides like the one below and some case studies. We will continue to add articles and we hope that others will too and that The Path will become a community owned project.

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Key takeaways

– The essential capabilities in the first months are product design and development
– The company also needs the hustle to get stuff done and find the first few customers
– In the first months it’s best to optimise for the best skills, even if they aren’t in-house
– Don’t compromise on quality for co-founders and other permanent decisions

Building the right founding team

The founding team sets the mould for future employees of a company and the oft repeated cliche that A players hire A players while B players hire C players is very true. So getting those first few team members right is key. And that includes the choice of co-founder.

Yet founders want to move fast and there is an inevitable tension between speed and quality. The challenge is that any compromise made in the choice of co-founders or other early staff will be with the business for a long time, and possibly forever.

In the first couple of months a company should be doing research to prove the need for their idea and find a point of real emotional connection with customers. Then they should capture that need in a compelling value proposition and test it with a prototype.

Completing these tasks requires capabilities in product design and development, as well as the hustle to organise research and find initial customers. One way of doing this is to have a hipster, a hacker, and a hustler on the founding team (Dave McLure has described this combination as the minimum viable team, although it’s possible that two people could cover all three bases between them).

Another way is to bring the capabilities into the business on a more short term basis. Most commonly that’s done through freelance arrangements and sweat equity deals. Outsourcing to agencies is hard to make work at this stage because everything about the business and product is still fuzzy and changing all the time. The key is that whoever is building the product fully understands and buys into the company vision.

What’s most important during this formative period is to quickly validate the idea, not build out a team for the sake of it or because investors say they want to see it. It will become easier to pull great people into the business once the idea is validated, and that includes co-founders.

The first couple of months for a startup are a bit like the big bang at the beginning of time. Lots of key decisions with far reaching consequences get made in a short period of time and the final thing that’s important at this stage is that someone is supporting and challenging the CEO. She should test and probe thinking, operate as a sounding board, help with the emotional challenges of startup life, and provide pressure to perform if/when motivation falters. She could be a co-founder, angel investor, or an outside board member.