What criteria influence the success or failure of a startup? I always ask this question during workshops about entrepreneurship. It will probably not surprise you but the answer I most often get is “Cash!”. This is always the first criteria that comes to mind, followed by excellent products and services, and competition.
My opinion is that this of course it true. Money is certainly a crucial element which will influence the success or failure of a startups. Besides this you will also definitely need an excellent product to outshine your competition. However, there is one important criteria which is greatly overlooked well-worth mentioning and what I will be focusing on in this article.
When looking at what the main reasons are that startups fail, a staggering 23% fail because they do not have the right team. In the figure below you can see what the top 3 main reasons are.
Why is your team so important?
Your starting team is in fact more important than that your starting idea is. An idea remains just an idea if there is a lack of proper execution, motivation and cohesion in the team. In the early phases of starting up let me tell you, it is all about execution. First with all the focus on achieving a problem/solution fit and later on achieving a product/market fit. People will make the difference. That is, people with the right mindset, skills and capabilities with the right experience and knowledge.
How do you build a successful team and what is needed? The number of people that comprise a team should be taken into account beside the fact that a diverse team with clear roles, skills and therefore activities will strengthen the team. Besides this there is also a proven framework you can use to build a successful team.
According to methodologies such as mentioned in Lean Startup (book by Eric Ries) & Growth Hacking more and more startups build their teams based on the following 3 areas.
- Feasibility: This is all about the question: can we do this? You need someone in your team who has a focus on feasibility of your (future) solution. Common job titles for this role are: CTO, CSO and Product Manager.
- Desirability: Do they want this? Who in your team focusses on the customer or user perspective? What problems do they have and how do they react to this problem? Continuously validating and translating customer needs into added value. Common job titles for this role are CCO, Head of Design and Account Manager.
- Viability: The last domain within a startup team should be about viability. Focusing on the question: should we do this? Developing your business model, sales, business development, gaining revenue and costs control. Building a viable startup which can scale up. CEO, CFO, COO and Managing Director are common job titles for this domain.
Ok, your startup team is ready to conquer the world, now what? Execute! and BUILD-MEASURE-LEARN. Everything you do, should be guided by this feedback loop. As a team you will constantly create new possibilities, measure them (e.g. the effect they have on your customer, market or sales) and you will learn continuously. Based on your learnings you decide on what the next build will be and will repeat this process. Again and again.