Starting a business is a risky proposition. As an entrepreneur, you’re investing time, energy and often your own money in something that might not work. As an investor, you’re betting your dollars on a founder, his ideas, and hope. In either case, the aim should be to guarantee success to the greatest degree possible.
As I’ve discussed previously, I’ve had my own share of startup successes and failures. Along the way I’ve learned a number of lessons that I now bring to every new company I’m involved with. And I’ve turned these lessons into a framework of sorts -- a structured way to prioritize what I think are critical pieces to a business’ early success.
That framework is comprised of three main parts: putting together a team, establishing the right structure and establishing a successful culture.
Team: It Starts at the Top
From my perspective, the first part of creating a great team is to find a great leader. I don’t run companies day-to-day, so I look for leaders who fit the model of success. I have found that few people are built to be entrepreneurs and fewer still have what it takes to lead a startup. That said, I always look for two primary qualities:
1. Someone who is willing to take a risk on themselves
The leader of a startup has to have confidence in her own abilities to get the job done, otherwise she can’t ask anyone to follow. That means taking ownership for any failures of the company, giving the team credit for successes, and taking the steps needed to continue to grow with the company. Life at the top carries a great deal of pressure and they need to be able to handle it.
Lastly, life at a startup often means a significant reduction in salary in exchange for significant ownership in the business. If they’re willing to delay potential financial compensation by betting on themselves, they’re also willing to do what it takes to get there.
2. Someone who is hungry with a history of not giving up
Perseverance is the key to grinding through the hard days of startup life. I’ve seen people give up right before things could have turned around, and in doing so, lose everything. Hard work doesn’t guarantee success but it gets you a long way toward the finish line.
Structure: Incentivize Properly
This component has less to do with creating a team structure than it does an ownership structure that rewards key talent. I believe that a proper ownership structure is critical in attracting, incenting, and keeping a team for the long term.
The key here is that the structure has to allow for wealth creation for those taking the initial risk -- be it time, money, or both. A stock option that allows the initial team (typically 1-3 people) to each have 5%-15% of the business, based on their role, is typical for those businesses I am involved with from the beginning.
I’ve found that setting this structure at the onset helps us build the right team during the critical time of the company’s founding.
Culture: Working Well Together
Establishing a winning culture is a challenge for many startups because things move so quickly. That’s why I try to keep it simple: A business should be run in a manner where those involved enjoy their jobs and enjoy going to work every day.
I have found if you build a strong initial core group -- a team that works well together, all on a mission to get things done -- it’s much easier to continue to attract great talent. It’s the belief that Clydesdales want to run with Clydesdales and when a donkey enters the picture, he/she isn’t there for long.
At Built, we’re at a critical time for the company. Our team is growing and culture will become increasingly important as we look to continue to bring the right people on board. The management staff has been working to define what it means to be a Built employee and how everyone can live up to our mission every day when they’re in the office.
The life of a startup founder or investor isn’t easy. Every day comes with new challenges to overcome and opportunities to consider. But I truly believe that can focusing on the pillars of this framework -- team, structure, culture -- at the start can help any business find success.