This past week, I had a reminder of the toughest and maybe most critical challenge a founder has to face. A very composed founder had worked incredibly hard over the summer to get their new startup off the ground and they were succeeding. They had real customers and they had real investor interest. Things looked great but they weren’t. As so many startups have, the executive team was not working well together. All the people involved were good people, very talented and extremely committed but it was clear after three months that despite everyone’s best efforts, there was still a lot of friction. It would have been easy to ignore the situation but we drill into the heads of our founders “good enough never is if you want to build a great company.”
The founding CEO admirably stepped up to the situation and had the difficult conversation to say they would not be going forward together. He was very logical about it and it all made sense but he was an absolute wreck emotionally and just needed someone he could talk to about the situation. He was taking it very hard. Still, he did the right thing and I encourage more founding CEOs to do this as well and let me explain why.
- No Villians: All the people involved are good people but that does not mean it is right to go forward together. Doing a startup is like getting married to your partners – and there is more than one of them so it is really complicated. If they have a bad day it affects you directly and vice versa. You can’t settle when it comes to your partners. If you split up, it does not mean someone has to be a villain, it is just you don’t get married to everyone you like.
- Energy Amplifiers: When you look at your teammates in a startup, they should be energy amplifiers. This means that they should give you energy when you work with them and not take energy away. It is either one or the other. It is not possible that they do not affect you, and vice versa. You know if they are energy accretive or not (overall) and don’t delude yourself that it is neutral.
- Cutting Corners Now Assures You Are Destined for Mediocrity: If you cut corners at the beginning of your core team, it is assured that it will only get worse as future people decisions are made and this assure you that your organization is destined for mediocrity. Make clear that the objective is to continually raise the bar and not lower it as you hire future team members. Great people will sense this either way and make their decision accordingly and as a result, you will not get them and it will get worse and worse.
- The Climb Only Gets Steeper: Rather than have the difficult conversation, founders often believe things will get better. That is delusional. The climb will only get steeper as you go forward and the lack of teamwork will only become more obvious and damaging. Deal with it now and even though it hurts, things will be better in the future.
- Best for Both Sides: The person that you are thinking of parting ways with is a real person too who is talented and driven. If it is clear that their path forward is clouded and they are unlikely to have a clear leadership role going forward, then it is your duty to them to make it clear to them so they can pursue better career opportunities. I have let people go many times who are very good but just not a good fit for my organization. While it is never fun in the short term, afterward I help them and cheer them on in their new organizations and take great pleasure in seeing them do better in another circumstance than they would have in our company. You are in fact helping them by stepping up and making clear there are better options elsewhere.
- There Are More Stakeholders As Well: You have to also look at the bigger picture and realize that this situation is going to affect others to whom you have a responsibility. There is the rest of the team and also, probably most importantly, the customer. Why I say the customer is probably the most important, let me give you a sports example. If a professional sports team never lets a player go because they don’t want to have the difficult conversation, that sports team will clearly eventually become an inferior team. This will result in fewer fans who are willing to pay to see the team play until ultimately there is no team. You must put the best team on the court for your customers or you will cease to exist in time and they you do nobody any good.
- Think of Your Team as a Product That Should Have Newer and Newer Versions: When a startup gets going, they naturally talk about their product as needing continual upgrading. You start with your Minimal Viable Business Product (MVBP) and then add features to create version 1, version 2, version 3. You need to think about this with regard to your team as well. Think of how you are going to continually upgrade your team. Some times that means redesigning a module, rewriting some code or removing a feature completely. The same is true of a team which is a more important determinant of success than the product.
- Entrepreneurship Success Pie – #1 Indicator of Success Is Team: From an earlier article about the most overrated thing in entrepreneurship (the original idea), Marius and I developed the following illustration that has been made into a sticker and I have seen on many slides (which makes me very happy):
This visual says it very well. The team is the most important ultimate component of a new ventures success so it deserves your focus, energy and commitment. Have the hard conversation and don’t settle. Good enough never is when you want to build a great company. Get the best possible team – which means the best cohesive, motivated and effective unit resulting from a singular common vision, shared core values, and complementary skills – to optimize your chances of success. That starts with you making hard choices and having difficult conversations for your core team.
You set the example!
The author
Bill Aulet
A longtime successful entrepreneur, Bill is the Managing Director of the Martin Trust Center for MIT Entrepreneurship and Professor of the Practice at the MIT Sloan School of Management. He is changing the way entrepreneurship is understood, taught, and practiced around the world.
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Yes this is what makes or breaks a venture. My question is: what happens when the team seems to be ideal, and certain tensions or incompatibilities only surface over time? From my own experience, it takes about 2 years for deeply embedded issues (or time bombs) to surface. Can this be preempted, or identified through experience?
Great article about a common issue. But there should be some discussion about founding team members who, while continuing to make valuable contributions, are not ready for a CXO role at a larger firm. Eliminating this as an ego issue early on can enable that person to be a superstar. Ignoring it can create the team problems described in the article.
Great point Dave. I always encourage founders to avoid big titles as they will later likely regret them. Just give all the founders the most wonderful title of all, “co-founder” and go lite on the other stuff. You need a CEO but just call the head of product, “head of product” as opposed to “Chief Product Officer”. Likewise for other functional areas. It seems so tempting because it is easy and does not cost you anything but it will create the problems Dave mentions above.
Rachel,
I missed your comment above before. You are spot on. It is impossible to know for sure BEFORE whether the team you are on will excel under the stress of creating a new venture. You make your best shot and then refine. Just like a product, you continually update and refine your team. I think about how easy it is for people to understand they need version 1, version 2, version 3, etc. of their product. Somehow they don’t realize that they also need constant updates and new versions of their team as well – getting stronger each time and adapting to the market conditions. I believe that success in any dimension has an expiration date on it and that is true for teams too. No team is fantastic forever. You have to continually make changes – which means additions, substitutions, role changes, etc. When the team is no longer optimal, you know and you have to act. Usually people know and don’t act – they avoid having the tough conversations which is why I wrote this article to encourage them to have the tough conversations. It is best for everyone.