Building the Right Team : A Guide to Early Stage Startup Hiring (Pt 1)

Every startup idea lives or dies on the strength of it's execution. And at the core of execution of any human endeavour is a dedicated team. If you don't have a great team, the odds of you building a startup that solves a problem you care about, at the scale you desire, is very low. Every founder who intends to succeed must therefore set out to either find a successful team or build one.

In this June edition, I am going to discuss the key strategies founders can adopt to consistently hire or build great teams. This first part will focus on the co-founder and the second part will focus on the other team members.

Introduction

The first thing I am asked by the startups I advise when I tell them about the role of good teams is; what qualifications should my co-founders have? They automatically assume that it is a combination of experience, evidenced by certain qualifications that leads to a winning team.

Research indicates otherwise. According to Professor Angela Duckworth, the author of "Grit : The Power of Passion and Perseverance";

"A?combination of passion and perseverance for a singularly important?goal—is the hallmark of high achievers in every domain."

Grit therefore, and not talent or qualifications determines success. Many examples are replete in startup history to further justify this position. Steve Jobs who was arguably one of the best product marketers to have lived did not have a marketing degree when he co-founded Apple, nor did Michael Dell , who founded the DELL Computers have an engineering degree when he started.

Paul Graham, YC co-founder in an earlier essay titled "What We Look for in Founders" has described determination as the most important quality they look out for in founders.

If your co-founders have MBAs and lack determination, they will be just that; co-founders with MBAs.

In other to harness the potentials of your team and channel it into the collective vision, it is expedient you take the following steps;

1, Clearly define the vision

Your product is not your vision. Your product is a consequence of your vision. Every successful startup solves a problem which the founders envision diminished as a consequence of their product. The product is your idea of what solves the problem, this can change often and therefore doesn't qualify. A vision by its very nature stays.

According to Startup Hack on Vision;

"Founders who have a massive vision have an unfair advantage because it is this massive vision that's pulling them forward."

Believing in an idea that something that isn't can manifest is irrational but that has defined so many successful startups. Airbnb founders believed in their idea even when no one else did. They even sold cereals at some point to raise money. As a founder, you have to clearly define the vision to your prospective co-founders.

In doing this be as clear as possible. To determine if they understood and are aligned with your shared vision, ask them the following questions?

• What is the problem we are trying to solve?
• Why does this matter?
• Why do we believe we are the ones that can solve it?
• What is the long term benefit of solving the problem?
• What would it take?

By asking the questions, you clarify that they understand the problem, the context, why solving it matters and the potential challenges you might face in solving it. A great founder is a founder who defines the vision so clearly the startup can carry on even in his absence.

A leader of note, worthy of emulation in shared vision is actually an anime character in the popular Anime series "Attack on Titan" known as Erwin Smith who was a commander in the human army in a battle against some giants known as titans. His hand was bit off during battle and without flinching or yielding he screamed to the soldiers watching to advance and continue the attack on the enemy.         

Nothing good is easy. But you can make the process of building your social good more bearable by working with a team that shares your vision.

2, Hire your friends

I have previously written an edition on why you should build with your friends. You can read up here . Every startup is like a marriage. Marriages will work or fail on the strength of the relationship of the partners. If a relationship is not strong enough, if the startup's challenges get in the way, the startup will inevitably fail.

Startups can be run by people who were not friends before they started working but eventually become friends. Founders have to become friends or at least enjoy working together in order for the startup to work.

Friendships make the stress of building easier to bear. Friendship builds trust between founders and smoothens friction that would otherwise exist in work relationships. A friend is more willing to be understanding if a co-founder is feeling demotivated and slacking, than a co-founder who shares solely a working relationship with the slacking founder.

3, Create an Engagement Documentation

One of the mistakes I made in a previous startup was to create a founders agreement that vested our equity upfront. This ultimately didn't improve motivation to build the startup through the good and bad times. A founders agreement is a legal document that contains the obligations of the founders, their equity split, their ownership terms and exit terms. The founders agreement has to be as comprehensive as possible to cover all the potential issues that can come up between founders.

Every founder who works on a startup should ideally do it because they believe in the vision and the problem the team intends to solve, it is also only fair they benefit from their hardworking by owning equity in the business that is built out of the process.`The equity owned by the founders in a startup are usually vested.

Vesting is a process in law in which a person or legal entity assumes full control of an asset, usually intangible, over a period of time.

When the vesting clause if included in a founders agreement, it does 3 things;

• It makes the entire agreed equity of each founder to vest over a period of time (typically 3 years).
• It defines the percentage of the total equity that should vest.
• It defines the vesting conditions for all founders.

YC currently advises founders not to commit to working together upfront and to sign a co-founder trial agreement. The problem with this is that most people smart enough for you to want to build with know the market value of their skills and will be unwilling to work on a project they have no guarantee they can benefit from. If the decision is a mutual one, it can work. What we however advise startups to do at Blackcrest is to include a clause in the vesting schedule of the founders agreement that specifies that the vesting would commence 6 months after incorporation or signing of the agreement, whichever is further. This automatically gives them a six month timeline to work together as co-founders while giving both founders the option to pull out anytime before the six months have lapsed if the fit is not right. Since no equity would have vested under the signed agreement, it makes it easier to resolve.

4, Project positive energy to the team

Negative energy is like a self fulfilling prophecy. According to Murphy's law;

"Anything that can go wrong will go wrong."

The trouble with thinking this way is that we can start to project things to our environment and attract the outcomes we fear. If you fear that your co-founders will betray you, it may likely happen. People are people irrespective of what we think. But we can at least protect ourselves from the harmful effects of negative thinking.

As a founder, you need to believe in the possibility of positive outcomes. You of course have to back it up with action, but it starts from believing. A vision is after all, a belief in the positive outcome of things over a long period of time.

Do your part and trust your partners enough to let them do their part. By projecting negative energy, we sow seeds of distrust and chaos in the team. A team that cannot trust each other is unlikely to succeed.

5, Practice Objectivity Using Data

Founders will not always agree on everything. That is why we are humans, we think differently even though alike some times. One way you can avoid disagreements as founders is to set out a process for measuring progress from the beginning. Immediately the engagement documentation signed this should be the next thing on the agenda. As long as all founders agree on the process, the process will become a guide in having objective conversations in the future about the performance of any of the founders.

A process document can include a task rating sheet or table whichever is easier. This can have a column for the nature of the task; whether technical, product, operations, marketing or sales. Another column can be priority rating which can be; do, must do, should do colour-coded to indicate the priority rating selected. Another column can be founder in charge (FIC) or actor. Then the rows can have the names of the founders. A final column can then have task update. This can have; in progress, not started or completed colour-coded in each of the rows. A final column can contain the date of completion. You can see what this looks like here.

This looks very simple but over a period of 2 weeks can show which founder consistently completed their tasks on time and who worked on what. There are of course other more advanced things a startup will have to do, like; schedule demo meetings, prepare financial statements and share design links to the team. But simplifying the process and ensuring that the criteria for criticism of work is objective and agreed from the start will save every startup weeks in productive time spent on arguments.

Conclusion

Every founder who wants to build something big will have to work with others. Learning how to hire the right co-founders is therefore an invaluable skill to have. In the end, no one knows how the relationship between them and their founders will pan out, but they can always put measure in place to ensure that the relationship is smooth, respectful, goal driven and ultimately fulfilling.

Dear Founder, don't forget why you started this journey in the first place.

I will not promise you it will get easier, but I can promise you if you keep going, you will grow beyond your current challenges.

I am rooting for you.

Keep building.

About the Author

Osita James?is a technology entrepreneur building?an innovative product called?Sureagent enabling safe online shopping in Africa, through physical online order verification. He is also a partner in?BlackcrestLP , a start-up advisory law firm that has successfully advised start-ups across Africa in investment deals worth over $ 1 million. He is studying for an MSc in Innovation Management and Entrepreneurship at the Nottingham Trent Business School and writes love poetry in his free time.

I support African founders with legal and start-up operations advice. You can reach me?here ?for enquiries.