Thursday, 19 February 2009

Team Up Scale Up

As a start up entrepreneur the most important thing you will do once you have hit upon the business idea you would like to pursue, is to put together your team.

Teams are important
As Co-Founder and CEO of my company, it is my lot to be the external face of the organization. I frequently go on stage to take the applause and credit for work that has largely been done by other people. In the last three months I have received three awards for achievements in business or entrepreneurship. While I have been recognized ‘individually’ the truth is that the awards were really for what the organization has achieved.
And the reality is that what the organization has achieved is the cumulative result of the efforts of everyone who is working here or has worked here in the past.
It is a myth that entrepreneurs are supermen who lead and build companies largely on their own. In any entrepreneurial company that has achieved some size and scale you can be sure that there is a large and capable team at work with one or maybe two of the promoters being the public face of the organisation.
In fact one of the most important things that venture capital investors look at when deciding to invest in a company is the quality of the team. Not just at the founder or the CEO.
Great entrepreneurs are people who have the ability to make others want to work with them. They love their people and their people love them. They are the glue that binds the team in the start up phase. They are great people managers – maybe even pied pipers. They are prepared to share the wealth and the credit. They are magnets for talent.

At the start use your personal network
The first team will comprise of you and your partners, should you have any. These will be people you know, trust and respect – friends, classmates, colleagues. You have shared an experience. You are all fired up by the idea. You bond well. You will share ownership substantially.
The next step will be to gain the confidence of people whom you know but perhaps not that well - acquaintances, friends of friends. They will join because they will believe in you, your partners and the idea. They will carry the torch with almost the same passion as you do. They will be missionaries not mercenaries – they will take salary cuts and significant ESOP. Frequently entrepreneurs are not able to attract high quality people at the early stages of a business easily. They tend to make compromises only to realize as the company begins to scale up that they should have hired better at the start. Remember to set the bar high even in the initial stages.
Chances are that you will keep the team small till you are cash positive or you get access to capital. A team that will don varied roles – a team of all rounders who will be doing more than one job in the company. They will burn the midnight oil to make things happen. Yet, dependence on you and your partners will remain high.

Managing the team when scaling up
When you raise external funding the investors would want a broad based team to invest behind. This is the time to attract talent you can depend on in future. People who will man the boat, and make sure it sails in smooth and rough waters. This is the time to invest in future CXOs of the company.
As the business grows the team will get bigger and a whole lot of new dynamics will come into play. Processes, HR Policies, Administrative and Legal formalities and most importantly conflict. You will wonder what happened to the magic of the early days. You might even lose a few of the original team members. It will be up to you to create coherence out of the chaos. You will require specialists for every team and they come at a price. Soon, you will cease to be a startup. This is the stage of managing a transition. You will have to learn the art of sailing in two boats at the same time, for there will be the soul of a large company in the body of a startup.

From Entrepreneur to CEO
Finally when your company grows large, perhaps it does an IPO, you will be even more dependent on other people in your team than you were before. It will gradually dawn on you that you are more of a CEO now and less of an entrepreneur. And perhaps you are presiding over precisely the same kind of system that you left in order to become an entrepreneur.
Maybe it’s time to do your next startup!

8 comments:

Sakshi said...

Sir, I love reading your articles...they give me so much insight and so much of motivation..its just great! Thanks for writing!
Sakshi

Lakshman Srikanth said...

This indeed is a great motivation for me and my team "Einstasoft" - bunch of student entrepreneurs working on a search engine...

www.einstasoft.com

Anaggh A. Desai said...

Well said. And you did that. Good going.

Anonymous said...

I could see infoedge shaping up in this article. As they say wisdom comes from experience.
And as a lot of us have seen this cycle or path, we believe in it.

Asoka Pundit said...

Whats about financial constraints. How to plan for survival.

Ankit Mittal said...

Its interesting to see that a guy who provides jobs to millions in India, writes mostly on entrepreneurship. Sir, your experience is surely helping budding entrepreneurs. Sir, I want to ask you a question - I get wierd ideas from time to time, is there a parameter or a way by which i can decide like ..now this is it, that is the one ill be going with.

sudhir said...

it's great to read your articles and learn how startups actually build up

i will surely use this knowledge in my entrepreneurial venture.

Neha said...

A very Nice writing . Thanx for sharing pearls of wisdom .