Five Steps to Building Start-up Teams

Starting a company and making it successful are huge challenges for an

entrepreneur. In fact, such challenges are so huge that founders usually conclude
that they can't do it all themselves. This means that they must hire other people.
But how can entrepreneurs ensure that the benefits of those new hires exceed the
risks?

To answer that question and five others that are vital to start-up success, I set
out to interview at least 150 entrepreneurs and ask them how they build and grow
their companies. My new book, Hungry Start-up Strategy (forthcoming in November
2012), details the key concepts that emerged from those interviews -- focusing on
six key questions of start-up strategy: how to set goals, pick markets, raise capital,
build teams, gain share, and adapt to change.

When it comes to building teams, entrepreneurs make plenty of mistakes. Among

the two most common ones are

*Hiring friends who don't add the skills that the venture needs at each stage
of its development. Founders too often think it will be fun to hire their friends
and just do it before giving much thought to how those friends will affect the
start-up's ability to grow. I have had several conversations with young founders
who do this and wake up fairly early on in the process realizing that those friends
are adding little to the venture and demanding a big cash payment to go away

*Assuming the start-up's culture will take care of itself. Another common
problem is start-ups that do not understand the importance of culture -- since the
founders are often people who excel in developing the product and lack a deep
understanding of how to work with other people. One of the unintended side
effects of technical excellence is the failure to realize that hiring and motivating
top people is a critical element of the entrepreneur's job. And actively managing a
culture is an essential part of that. Failure to do so leads to poor productivity, high
turnover, and increased odds of running out of cash before getting market traction.

*Evaluate founders’ skills and adjust accordingly. Once the founders have
identified the skills required, they should take a hard look at whether the current
founding team has those skills. If so, the start-up should get to work. If not, the
founders should reconstitute the team to add needed skills and shed ones that are
not adding value. Although it is painful, such reconstitution boosts the venture’s
odds of succeeding.
*Agree on roles and goals. Once the founding team has been assembled, each
member should agree on their role and set goals. And if the founding team can build
the company to the point where it can raise expansion capital, it must decide how to
articulate its culture -- particularly if those funds will go to hiring a bigger team.

*Create culture. Many start-up CEOs perceive that they ought to define the
venture's culture in ways that will help them to hire. To that end, entrepreneurs
develop a set of core values—either unilaterally or in collaboration with other
stakeholders. The goal is to agree on shared values to build the team and boost its
effectiveness as the company grows.

*Analyze skills needed to prove start-up concept. The start-up founders should
take an objective look at the skills that the venture will need in order to prove that
the concept can work as a viable business. To do this, it helps to look at successful
competitors in the market the venture is seeking to enter. If there is a common
bundle of skills that the most successful competitors have within their founding
teams, the start-up should consider whether it should follow suit.

*Use culture to hire, promote, and purge. Finally, the start-up should use these
core values to hire people. To that end, it should devise processes to find
candidates and screen them that explicitly incorporate those core values. In that
way, start-ups can limit the number of hiring mistakes they make. Moreover,
entrepreneurs ought to use the core values to decide who to promote and who does
not fit.