People issues…ignore at your peril!

OLYMPUS DIGITAL CAMERAIn preparation to pitch to investors, I started out by looking at many pitch events on YouTube. What struck me was that in almost every case after a pitch, the investors would ask two questions:  “Tell us more about the team” and “how many customers do you have?”  When I eventually got to pitch myself, guess what were the two questions I was asked? If seasoned entrepreneurs and investors think those are the two most important questions, then there should be a clue there for a new entrepreneur like me.  In the next few posts I will be focusing on what I learnt about the importance of having the right partners and team.  In the startup context the shareholders/partners are also mostly the employees or execution team.  This really complicates matters and will be the subject of a future post.

In the beginning of your startup journey, you have this idea that you think is going to change the world.  You share it with your friends and family and very soon you know who is with you and who is not.  Often we choose our startup partners through friendships.  There is nothing wrong with that if you have also had business dealings with those friends and you know their strengths and weaknesses.  I cannot think of anything more rewarding than becoming successful with a group of like-minded and competent friends.

The challenge comes when your friendship is forged around other interests that have nothing to do with business and you don’t really know them in a business context.  These friends often accept you the way you are and don’t give you the tough feedback and guidance you should be getting.  It even gets more difficult when you are asked to take the lead in the partnership and you find out that one or all of your friends don’t really have the competence and strengths to take the business to where it needs to go.  But these loyal people may have given you the money to startup or even worse, although they have asked you to lead, the business, it may be their idea and you are there by invitation. Having a tough conversation with them could harm the friendship and thus you dance around the issues, which does not move the business forward in any significant way. As a matter of fact, it drains all the energy out of the partnership, leaving little else for the other tough emotional battles that need to be fought when starting up.

If you have some experience as a leader you might already at the outset have some intuition around the efficacy of the partnership, but in all the excitement of becoming the next Google or Facebook you simply ignore that and move on.

So what are the signs that your current partners might not be right for taking the idea to a profitable and sustainable business?

  1. Your partners are not teachable and willing to learn? In the startup phase of the business there is a lot of uncertainty.  You might have people on the team with previous business experience; this can be an advantage or hindrance depending on how willing they are to adapt that experience to new realities.  You might have people with no previous business experience, which does not matter if they put in the hard yards to learn from others and most importantly, learn from the customers.   A person’s ability to learn and use their experience in a flexible way affects the other team members’ view of their judgment.  People who say everything is easy and do not do their homework around the challenges at hand, the team find hard to trust to make the critical business decisions needed.
  1. Do all the partners agree to and understand the value contribution of each member?  Often in startups some partners are able to give money and others give time and skill in lieu of money.  The second scenario presumes that the person’s time and skill has a value in the marketplace that equates to money.  If some of the partners do not value ‘time’ as being equal to ‘money’ and you are using this as a value contributor to the business then this will most certainly lead to discontent among the partners.  Of course for a person to use time and skill as a value contributor they need to have some type of track record in the market place.
  1. Is one or all of your partners risk averse?  A startup is all about risk and taking risk.  Understanding the risk profile of the team is very important.  There are going to be times that big leaps of faith are going to have to be taken and if one of the partners are risk averse, then this leads to a lot of arguments and time wasted trying to put controls in place to mitigate risk. This often slows down the startup’s progress.  By no means am I advocating for irresponsible risk taking, but if people are only used to taking a few calculated risks in a stable business, then a startup is going to be intolerable for them.
  1. Do the current partners have all the skills required for a successful business?  In the early days of the startup the critical skills required are firstly, the visionary leader, who can clearly see where the business needs to go and is able to lead and motivate everyone towards this vision for the business.  Next is the technical skill required to put together a robust solution (if your startup includes a technical solution) and finally, the very important marketing & sales skills.  This is the person who loves going out and talking to potential customers, bringing back that information that shapes the solution into something that the customers will be willing to pay for.  Sometimes these skills can be combined in one or two people, but if not and you find you do not have all the necessary skills in the team, decide quickly how you will fill the skills gap as the success of your business depends on it.
  1. Do your partners do what they say they are going to do?  At a time when there are only a few people fulfilling many roles in the startup, you need the partners to commit to disciplined action.  If you find that partners cannot action what they have promised, then they are not the right people for your startup.

In my experience in established and startup businesses, the people issues are the things that make or break the organization.  Recruiting or finding the right partners at the outset will avoid a lot of frustration further on in the journey. It is often also the aspects that we pay the least attention to, especially in a startup as we are in love with the idea and the solution, leaving little place for anything else.  We mostly look at challenges from our own perspective but we should never forget to ask ourselves, are we the right person for the partnership.

My advice: Ignore the people issues at your peril!