Tag: founder selection

Avoid These 5 Absolutely Crippling Startup Choices, part 1

Peter Cauton

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Its a shame that most of the talks we find on startups and entrepreneurship center more on the successes. This is perfectly understandable – it is painful to talk about failures.

Yes, we say stuff like “it’s a badge,” and “failing is a necessity,” but you know, if one really poured her heart and soul into a startup and it fails – it can be a real heartache.

It’s a shame because there can be SO much to learn from those who have experienced failure, specifically, how to avoid certain decisions and tendencies.

I just realized I’ve just marked the fifth year anniversary of my startup leap a few weeks ago. It’s mind-boggling to consider that I’ve now been working full-time with startups for five years now (with 3 additional years part-time). In this time, I’ve now been involved directly with close to ten startups now (with varying degrees of success), plus coaching dozens more. I’ve made, seen, and experienced a lot of mistakes.

In particular, here are some pitfalls you drastically need to avoid when building your startup.

1) Selecting The WRONG Partners

square peg

I’ve belabored this point in this blog. It remains the single biggest reason for some of my own startup failures, and why I’ve seen some other startups fail. NEVER take this step for granted. Take the necessary time and effort to get to know potential partners before you get married to them by co-sharing equity. In particular, I’ve experienced two particular forms of erring partner selection:

A) Wrong fit

Remember the rule: get someone with COMPLEMENTARY skills and COMMON values. The first one is easy enough to filter: you have to have a keen idea of the level of the required skill in your mind and search relentlessly until you find someone who meets it. It’s the second one which takes time to decipher in a person. It’s also the second one that’s much harder to recover from.

B) Your startup is a second (or worse) priority

I remember having a killer team in TWO tech-related startups I started before. However, everyone had other things as their first priority (their own startups, full-time jobs), leaving the said startups as veritable orphans. Startups need committed people who will dedicate maximum time and effort in ensuring its viability. No matter how brilliant your startup team is, if ALL of them are working on it on a part-time and unfocused manner, your startup HAS NO CHANCE.

I think this is becoming a real problem in the Philippine startup scene as a number of people are diving headlong into doing simultaneous startups (without the great benefit of a successful FIRST one, read here).

Get someone who will focus SOLELY on your startup.

2) Selecting Too MANY Partners

too many

I remember my friend Ryan, who works in construction, tell me that there is an optimum number of people that can work on a given project.

I found this fascinating.

If you put MORE than the ideal number of workers on a construction project, things actually SLOW down because there is less accountability – people figure they can get away with not working that hard because other people can take up the slack.

I think this is true for startups as well.

I think 2-3 is the ideal number. 4 is a bit of a stretch. At 5 people, you can be sure 1-2 people are already slacking. If these 1-2 people are equal equity owners, then immediately, rifts can be created because the working founders will feel shortchanged (and rightly so).

This can be a temptation to beginner founders who can’t say no to the first talented person who butter them up and says their idea is awesome.

Resist. Stick to 2-3.

(Three more pitfalls to avoid, next!) 

Ignore These 5 Founding Team Principles At Your Own Peril

Ignore These 5 Founding Team Principles At Your Own Peril

Peter Cauton

I think I’ve written more than a few posts on founding teams already. I can’t help it, because it’s just SO FREAKING important. This very first step will make or break your startup.

A huge part of my work now is assembling founding teams. Of course, I’ve had successes and failures. As usual, the failures have taught me much more than the successes. From what I’ve learned, here are more detailed principles I now live by when it comes to founder selection.

Ignore at your peril.

1) DNA=KRA

Founder DNA should match Company KRA’S.

Once you identify the 2-3 main strategic areas your company will be involved in, find founders who can fulfill EACH area. Are you starting up a mobile gaming firm? Then you need someone who designs great games, someone who makes great games, and someone who can sell them. If you are all three, then you can actually put one up on your own. There’s a very good chance that you are not though, so fill the gaps with co-founder or two. (I highly suggest keeping it to 3)

“Why can’t we just hire someone for the gap?”

The answer can be very practical. Because that someone who is hired can leave. If the person leaves, and is occupying a position of strategic importance (say, you hired a person who will develop your games), then your whole company gets stalled. If the founders are selected strategically, then one partner can always fill the gap of whoever employee leaves.

This is one secret why STORM works. The whole soul behind STORM is HR and IT. So over the years we’ve lost IT team leaders to Singapore, or lost internal HR Consultants. Whoever leaves, either Pao (founder, IT guy) or I (founder, HR guy) can take up the slack, so no time is wasted.

This way, you ensure that the DNA of your startup will always be aligned to its core objectives.

2) NEVER Compromise on a Founder

This is corollary to the first one. Sometimes, we get too excited with working with our friends or we get too excited about starting that we end up partnering with the wrong person.

We can delude ourselves into thinking thoughts like:

Hmmmmm…this guy isn’t as impressive as I had hoped, but he’s close enough

or

This person is just okay, but I do think I set my standards too high in the first place anyway. He should be able to do the job.

No, he won’t.

NEVER compromise. Don’t talk yourself in doing so. Keep on digging. Believe me, you’d much much rather get delayed than selecting the wrong person.

QUICK TIP: 3 things to seriously ask yourself: a) CAN he do the job? (capability) b) WILL he do the job (motivation) c) DOES HE HAVE TIME to do the job? (bandwidth)

That guy you selected COULD’VE BEEN this guy instead

3) You can only gauge talent in your own DNA sphere

Scenario: you want to fill a founder post with someone with a programmer background. “I want a great programmer,” you say to yourself. Then some person comes in and shows you some stuff he’s made. It works. You’re impressed. It’s easy to mutter to yourself, “This guy’s great!”

DON’T GIVE HIM THE KEYS TO THE CITY JUST YET.

I liken the above to this scenario: let’s say you’ve never watched football in your life. You could watch some schlub in the local soccer field score some goals (maybe one with a bicycle kick) and say to yourself, “Wow, that guy is an amazing player.” And then, a few days after you get to watch Lionel Messi play. NOW you know what “great” is.

Tip: in situations like this, ASK someone who is knowledgable about an area who can discern “great” from “mediocre.”

4) You have to have someone fulltime

I guess it IS possible for a startup to begin standing on its own two feet with all of its founders doing it part-time. This is just impossibly difficult to do, I’ve found. Without someone in your founding team who can put on the hours your startup sorely needs, it’s very difficult to pull off. The most valuable thing your startup needs is not funding, or a killer strategy – the most valuable thing it needs is great people spending time on it.  

Even if it’s just one founder fulltime. You got to have someone who commits, right from the start. If not, development will be slow as hell, and somewhere down the line, your momentum and/or motivation just wanes.

This happens no matter how utterly magnificent your part-time founders are.

Don’t make equity room for these two

5) Get rid of pure talking heads

Never give substantial shares (or any shares for that matter) to people who will only assume what I call the “talking head” role. Someone who says he’s in it for merely “the strategy part.”

What characterizes the “talking head” is his lack of arms and legs – he won’t do anything. He just presumes he’s worth the equity because of the sheer “knowledge and wisdom” he will impart.

Resist his wily charms. You need DOERS who will contribute. Get DOERS who can multi-task and think as well.

You CAN, however, get these guys as mentors. It’s almost 100% they’ll agree.

Do these right, and it’s literally half the battle.

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