What was my biggest business lesson of the week? That's a question serial entrepreneurs ask every week. So here is what came to my mind as I reflected on my past week.
Great startups are made great because of their great picks of great people. Period.
It is not the technology. Nor the clever strategy. Or first mover advantage (that's death).
It is the people picks.
During the week I met and communicated with startup leaders around the globe, from Silicon Valley to Asia to Europe. Each founder, CEO and vice president asked something important about people decisions. That told me I was talking to the best of the best. I found that very encouraging.
Here is what I am driving at: Newco startup finally got its top management team together after years of hiring mistakes (3) and are now only months away from cash flow breakeven, taking share of market away from the largest company that beat them to IPO. If the core team had been in place earlier, without compromises, the result could have been that Newco got to IPO before the arch rival.
AnotherCo has suddenly realized it is missing three core management members at the time their first product is about to launch as a huge hit. Now they are scrambling, rushing to everyone they know to get help filling the missing positions. They have realized that world-class startup people are rare. Recruiting the best is not like going to the grocery store to buy a carton of apple juice.
I asked VCs how a hot sounding startup of theirs was doing and I got the response "They are making progress." At first I was surprised, after all, this company was doing exceptionally well, but after reflecting a bit, I realized the months old core management team has yet to demonstrate it can work together well through the tough decisions that are sure to pop up. Veteran VCs have scars to prove that management teams have to execute, deliver, and produce gorillas of new market categories before receiving great praise.
I admire how hard the job is to be a startup CEO. Central to those responsibilities is the choice of the people to join the startup. Most likely the CEO will have to recruit more strangers than friends. Wisdom in making the decision to hire A or B is what the heavy lifting is all about for the CEO. I have known them to agonize over two or three outstanding choices for days. They know the consequences are great, good or bad.
Long ago I was privileged to interview with Sam Johnson, whose father created Johnson Wax Company. Sam had lead the company through years of modern product marketing creations to become one of hte world's most successful private corporations. It produced and manages brands we use in homes world-wide (Pledge, OFF!, Ziplock). I distinctly remember this distinguished gentleman telling me "There are two kinds of company leaders out there: Heros and bums." He saw business success as black or white and the same went for people success. He went on to explain that people picks were so important he did them personally his entire career for the whole company, from young guys (like myself way back then) to executives.
And John Morgridge, as Cisco president, told me the same thing about how he chose people. He was reading resumes the day I first came into his office to interview him.
Never compromise on people. It is like paying blackmail: Once you do it, you'll regret it the rest of your life.
BOTTOM LINE: Great startup leaders pick only great people. That is how startups get to be great. It is not luck or technology, not first to market or great VC. Instead it is about who is doing the startup with you. Learning that lesson will add one of the most powerful elements to building your unfair competitive advantage. Startups are a people game. Period.