The secret to creating a 'dream team'

Introduction

I have started a lot of companies and many of them have been successful. Some may say too many. I often get asked what is the “secret sauce” behind a successful start-up company, and after uumming and aaahing a while, I inevitably say that it’s the team. We win awards – we thank the team. We succeed in doing impossible things – thanks to the team. We recover from a seemingly impossible downturn – once again it’s the team.

So what makes a great start-up team ?

In this series of articles, I thought that rather than giving my personal thoughts on the subject, I would share some of the academic theories and research. If you can plough your way through this, you may be better equipped to start your own team – or even to identify problems and issues within your existing team. And maybe not ….. but at least it will make you think. As ever, I wish you “good luck” in your entrepreneurial quest.

As they say in Hamilton “see you on the other side”.

Part 3 - The Dream Team

In the same unsubstantiated way that Southon & West (2002) justify the core team as comprising five members, they claim that the dream team consists of the five original members plus another 15. They state that 20 is a “magic number”, with no attempt to justify it. Although this extended team is not part of this study, some of the true power in a start-up may emanate from members of the dream team instead of or as well as from the Cornerstones. Southon describes just such a case when running the Instruction Set, where there was a gap in the Cornerstone structure – members of the dream team added some of the missing ingredients to the mix. Despite adopting a casual approach, Southon states that a hierarchy is inevitable.

This contrasts with Weinshall, as quoted by Handy (1993) who proposed that a more Entrepreneurial organisation could have a meshed structure due to the inherent interdependencies caused by the concept of mutual responsibility. Weinshall’s proposal for a VC backed start-up may look thus : 

However, anecdotal reports suggest that presenting this type of structure to the VC community will elicit a negative response as it is non-conformist and unusual. It is therefore unlikely that an explicit acceptance of this structure will be found in VC backed UK start-ups. The language Southon & West (2002) use to describe dream team members – tribal culture, personal relationships, great fun, informality, trips to the pub - as well as earnest, quiet, dully perfect, romance – suggest a very friendly grouping of individuals with a variety of personality types, but clearly sharing the vision as set out by the lead Entrepreneur. It is beyond the scope of this work to investigate the personality types of these dream team players, but it is noted that this could be a very valuable area for future research – especially as hiring mistakes at this stage in a small company’s life as shown by Baron & Hannan (2002) below, are often more expensive and relatively damaging than in a larger organisation.

A detailed study of start-up teams : The Stanford Project

Although it has already been mentioned that there is relatively little in the academic literature to explicitly examine the nature of start-up teams, and thus even less on VC backed start-ups, there is one significant work which stands out. Despite being based on teams located on the West Coast of the United States, the Stanford Project is a substantive medium term analysis of real high growth VC backed start-ups. The fundamental importance of the start-up team in a venture capital investment decision is anecdotally quoted by Fried & Hisrich (1994), Amit et al (1990) , Southon & West (2002) , and Mainprize et al (2003) and is the central focus for the Stanford Project which looked into what “styles” of teams were most successful in Silicon Valley High-Tech start-ups.

In Spring 2002, Baron & Hannan (2002) published the results of an eight year project studying nearly 200 high technology (hi-tech) start-ups in Silicon Valley, California. They titled their work “the Stanford Project on Emerging Companies” (SPEC) , and their conclusions have been frequently cited in other research.

Over the eight year study, Baron & Hannan (2002) conducted multiple interviews with “founders, chief executives, and HR directors” and added other more quantitative data from public and private sources, such as financing and financial results. They found certain trends of organisational type and categorized them into what they termed “blueprints”. They reported that there were five main blueprints, which all differed in significant ways. They epitomize these blueprints with quotes from some of the founders: 

Star : “we recruit only top talent, pay them top wages, and give them the resources and autonomy they need to do the job”

Commitment : “I want to build the kind of company where people only leave when they retire”

Bureaucracy : “We make sure things are documented, have job descriptions for people, project descriptions, and pretty rigorous project management techniques”

Engineering : “We were very committed. It was a skunk-works mentality and the binding energy was very high”

Autocracy : “You work, you get paid”

One of their most interesting findings was that founders “embraced very different mental models of the ideal organisational form for a technology start-up” and this may support the earlier assertions of Kilmann & Mitroff (1976), that ideal organisation descriptions are strongly correlated to the Jungian type of the subject. Unfortunately, Baron & Hannan (2002) did not collect or publish any Jungian type data for their subjects, preferring to provide detailed descriptions of the ideal organisational types.