This article was published in October 2012 issue of SiliconIndia.
Date: Monday , October 01, 2012
Most startups begin with one or two founders – an idea, shared dream, a plan sketch and determination to make it happen. Now to succeed and build a scalable business, the founders need to complement them with a much broader skill sets and experience. If you plan to get professional money, then you need to build a world-class team that will not only get the job done but also, attract the money man. Now the question is what is the right team and when is the right time. If you build the team earlier than you should, you may end up burning a lot of cash with no real results and drive the company into a dire situation. Here are the four key take away (4KTA) points on this topic.
1. Ideation and Product Building - This is the starting point when you have an idea. You and your co-founder are getting some early feedback, validating it and continue to refine it. There are number of theories on how companies with two co-founders or more succeed using examples of Microsoft, Yahoo, Google, Cisco, Oracle and others. The key benefits of having two co-founders are that you get to brainstorm and discuss your assumptions and findings from early research into the market, technology and customer feedback. Secondly, the other person can complement your skill sets. My preference is to have a technical and a business co-founder. The technical co-founder focuses on the technology aspects, architecture, design and initial prototyping of the idea. The business cofounder focuses on how the revenue could be generated. This person needs to have extensive contacts in the industry, VC community and prospective partners. Both the product companies Ukiah Software and Nayna Networks, I founded had one or more technical co-founders. I focus on who my customer is. How I will get to that customer. What problem that we are solving. How big this customer base could be and hence, the overall market opportunity. Is this market opportunity huge enough for a venture investment or is it a life style business? During the ideation and product building phase, the team needs to be small and focused – mostly technical and one business person. The business person is essentially doing the functions of both product management and business development.
2. Product Launch and Building Sales Team - Many startups make the mistake of building up a sales team as soon as the product is ready to launch in its first version release. For launching your product, you need a startup savvy marketing person. Someone who has done it and is ideally from your industry. This person knows how to launch a startup, create tons of buzz with a well-crafted message and communicates articulately to the analyst, blogger, partner and customer communities. When do you start building a sales team for scaling? Startups need more time than founders expect before it can be scaled systematically to accelerate growth with confidence that team and resources put in place will yield awesome and measurable results. My view is that in the first year after the product is launched, lots of evangelical work and business development work is required in selling the benefits of the product to the customers about the pain point that you are solving for them. Your key sales team during this period is CEO and VP of Marketing. This can help you really understand what the real use case is. It may turn out that customers are using the product for solving some problem different than you had anticipated. This can help you in fine tuning the sales strategy for scaling at the right time. Do not make the mistake of hiring full-fledged sales teams from get go. You may want to bring a VP of Sales first, who is hands on, has extensive contacts in the industry and has been successful in selling startup products. Build your team slowly one geography or one vertical at a time or any other criteria until you get the complete confidence to scale. Be wary of hiring professionals from large companies with no startup experience as they may end up being a failure in a startup environment since there is no established and well known brand, no support infrastructure and resources available for them. Spend a lot of time in recruiting the right team members and setting up the right expectations.
3. Management Processes - How do you figure out when the right time is to put processes in place. My suggestion is to have bare minimum processes in early stages, more in the form of guidelines than pages of documents as no one will read them. You must protect your intellectual property and assets, so file for patents, trademarks and copyrights. Apply keep it simple strategy (KISS) in forming guidelines and processes. As the company grows and as you expand your management team to scale the business, you will need to define your processes clearly in various areas. Most of the companies these days advocate flat layer of management as new generation of employees expect that, so make sure to create a respectful and fun environment. Since this topic in itself can be filled in books, you can find tons of useful resources and books on it if you would like to delve deeper into it.
4. Lean Start up Mentality - The idea is to follow a lean startup mentality. Add to your team slowly by ensuring the right people for real need. Scale only after you have figured out the customer segment, use case, person in the company you will be selling to and can replicate it systematically and accelerate the growth across a number of customers. If you want to delve more in this methodology, there is an excellent book, “The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Business,” by Eric Ries that you may want to refer.
In summary, the four key take away (4KTA) points – ideation and product building, product launch and building Sales Team, management processes and a lean startup mentality can be useful in determining the right team at the right time for your startup.
Naveen Bisht is a serial entrepreneur and Board Member, Chair- Programs, The Indus Entrepreneur (TiE) and member of TiE Angels Steering Committee, based in Silicon Valley, California.