How you assemble your core team will determine most of the success of your startup.
That may at first sound overly simplistic or not applicable to you. But that is my conclusion after a quarter century of working with startups. Let me make my case to you with the following real examples.
- Company A launched with a tiny seed round from Family Friends and Fools. Two founders, each with startup experience but not with any successes with VCs, then went to work with a young engineer. Two years later, and two rounds of venture money from second tier VCs later, there was still no VP of Engineering. One founder was floundering as Senior VP of Business Development. The other was floundering as CEO. They soon were having food fights. Each tried to do the other's job. Then one lead a mutiny against the other. Shortly thereafter the board (venture capitalists) dismissed both founders and hired a CEO experienced with startups. His first VP Engineering had no startup experience and had to be dismissed. The first product launch was by then two years behind the first scheduled launch date. The internal promotion to VP Engineering worked out however. The VP Marketing and VP Sales were soon hired and did work out. The first product got launched and worked well. Sales began. Two years later, the company was half way to cash flow break even. Large orders began for the startup in the third year after the full core team arrived. Investors meanwhile had done three rounds of investing to keep the company going. That cost the employees a lot of the company. By then an older rival had gone IPO.
- Company B launched as a bootstrap with only engineers. The CEO was a world-class techie on the second startup in a row. By the fourth year of existence sales had grown to respectable levels but growth was restricted by missing leadership in sales and marketing. The tense atmosphere was less strained than at first but nonetheless continued. The CEO had to step in to fill missing roles of VP Engineering and VP Marketing. Fortunately the slowly emerging new market allowed the late product launches to not get too far behind the desired schedules. Five years after launch the company still did not have a core team and struggled to grow and remain profitable. IPO remained years in the future.
- Company C launched with an experienced CEO, an inexperienced techie with a great idea, and an old geezer, a startup veteran. VPs of Engineering, Business Development and Marketing were added in the first months following the A Round (seed round) of venture funding from a world-class VC. Product development remained on schedule. First customers neared initial commitments as planned. Company morale was high, including an enthusiastic board of directors. The company was on track for a world-class IPO within five years.
I think it is better to delay launching your new enterprise until you have assembled all of your core team. Even Company C found delays caused in the first months due to missing VPs. Otherwise you regret starting the race without a full crew on board. Picture the issue this way: you decide to enter the big sailing ship race from Los Angeles to Hawaii. Would you start without a full crew? Not if you are sane. So also I suggest you should work to gather your finest core team before you launch.
How do you find your core team? The best way is to start cultivating them years in advance. Ten years of advanced assembly work is common. Working with people is the best way to get to know them, and that includes traveling and socializing with them. You have to be more than casual friends. You are going to march through the gates of hell with them. Do not try that with strangers.
Do not count on VCs to supply you with CEOs and Vice Presidents. They may sound like that is what they do, but bless their souls, they mean well but do other things with their scarce time. It is up to you to find your core team.
BOTTOM LINE: Your core team is a CEO who has run a business, plus a VP engineering who has built successful products and services, and also a VP Marketing who has created successful products and services. You may be number four, the person with the idea, or better yet one of the core team and the person with the idea. That is what world-class VCs are eagerly looking for. A group of people who know each other, get along and have what it takes to convert an idea into a world-class new enterprise that goes IPO on NASDAQ within half a decade. When you can do that, you'll have one of the most significant elements of what it takes to assemble an unfair competitive advantage.