Dominique’s Desk: Building your team
People are the most important asset for any entrepreneur. In fact, more than 65 percent of startups fail due to founding team issues. That’s why successfully navigating cofounder issues, building a great team, and handling the players (such as accountants, lawyers, and investors) involved in your company are key challenges. Emotions can run high, so understanding how to best approach these issues will help you – and your business.
When it comes to cofounders, compatibility is key. Do you share the same goals? Are your skill sets complementary? The general theme of your discussions with potential cofounders should center on a shared passion for the work. (Beware if the conversation begins with talk of money. That’s a red flag.)
It’s also important to have potentially uncomfortable discussions upfront. How will you and your potential cofounders deal with exits? How will you issue equity in the company? One entrepreneur, who joined a company only to find infighting among the cofounders, advocates for “dating” your potential cofounders first. This could mean using structures that allow you to work together before making a cofounder commitment. Once you’re ready to make the leap, it’s important to have to a cofounder agreement.
In a piece for the Huffington Post, I outlined some other factors that can help reduce failure rates, such as creating a process to vet disagreements on company direction and determining how to accommodate a founder's departure while keeping remaining team members engaged. You can read the full article here.
But don’t just take my word for it. At the Kauffman Foundation’s Life Sciences Ventures Summit last year, five accomplished entrepreneurs shared their insights on building a team. Resources for many related issues, including which co-founder gets the biggest stake in the company, profit sharing, and hiring a successful leadership team, are available on eMed. Jason Greenberg offered details on social considerations in founding teams. And Noam Wasserman’s The Founder's Dilemmas, part of the Kauffman Foundation Series on Innovation and Entrepreneurship, can help entrepreneurs work through some of these problems.
Director of Innovation and Networks