One of the most popular debates in Silicon Valley is “What matters more, the idea or the team?” We can’t answer that question but we can help you recognize a good team when you see one—and a bad one, too.
Wefunder talked to Y Combinator on what they look for in a founding team.
“[They should be] people you want to hang out with. Personality matters a lot so definitely no assholes.” - Kevin Hale
Investors, advisors, reporters, employees: a large part of being a founder is communication. Whether it be in person, over the phone, or via email, the less it feels like a chore to talk to a founder, the better.
“Think of it as like, is this person who would be fun to have dinner with,” Hale says. “Who also just so happens to be able to make a billion dollar company.”
“If I could only pick a single data point after getting to know a team: rate of progress of both the company and the founders...is the #1 thing I would look at.” - Sam Altman
Most startups don't get it right the first time. Mistakes are inevitable and founders need to make those mistakes fast to improve faster. The quicker founders can find that sweet spot, the better.
But don’t mistake fast iterations and pivots with the right iterations and pivots. Equally important to iterating quickly is the founder’s ability to analyze mistakes. Otherwise, startups are likely to hop around randomly, hoping to hit something that works. And sometimes they’re simply heading further down the wrong path. Qasar Younis says founders need “a sense of True North” to find their way to success.
“There’s someone who can build the things you think about, and the one who spreads the message.” - Kevin Hale
Founders come in all shapes, sizes, and numbers. Though there’s no stone-set profile of the perfect group of founders, Kevin Hale says he’s sure of one thing: you need a hacker and you need a hustler.
The hacker is the more technical person, usually an engineer. This is the hands-on person who builds the product. On the other end is the hustler, the people-person who knows why their startup is the next big thing and can convince others to think so, too. If a founding team has someone who can make things happen and then someone who can spread the word that things are happening, Hale says you’re good to go.
“Everyone has strengths and weaknesses, but in the best [teams], someone’s weaknesses are really helped by the other founder’s strengths.” - Qasar Younis
So you want a hacker and hustler, but you don’t want the hacker and hustler to be the same person. A good founding team, usually composed of two to three people, balance each other. It should be clear which founder does what and why they’re essential to the lifeblood of the startup.
A team that gets things done is one where each founder has the ability to hone in and focus on their respective responsibilities rather than a team where they dip in and out of roles. Think of it as like an assembly line. One hammers the nails, another one tightens the bolts.
“Lots of companies don’t work because the founding team falls apart and it’s usually because they don’t know each other very well.” - Dalton Caldwell
This may seem obvious but it’s crucial for a startup’s survival. Caldwell says most startups don’t make it not because the product doesn’t work, but because the founders fall apart. He equates it to “a romantic relationship where [after] the first real fight, a lot of people don’t make it.”
Founders are in it for the long run. They’re making the commitment to spend the next five to ten years with each other in something not unlike a professional marriage. Dalton says he always looks at the founders’ interpersonal dynamics. Do these two or three founders look as if they can handle the 360 degree personality of the other?
“If I want to ensure my partners are going to bleed for the company, there’s no better way of doing that than making everyone equal.” - Michael Seibel
Equity is never an issue unless it’s lopsided. If it is, that’s a red flag and reflective of how the startup runs. Seibel says when there’s a disparity between founders the reasons run along the lines of “Oh, I came up with the idea.” or “I started two months earlier.” This is shortsighted thinking.
Founders will be working on their startup for five to ten years so whoever came up with the idea or started two months earlier, Seibel says, doesn’t matter. If a founder insists on hanging on to a larger portion of the equity, it’s a warning sign on how he or she approaches most issues.
“Personally, I ask is the thing they’re building part of the vision of the future that everybody has?” - Kevin Hale
Y Combinator follows one slogan. Make Something People Want. When Kevin Hale meets founders, he asks himself: do they have more than an idea, do they have a vision? If you differentiate between founders with ideas and founders with visions, Hale says you’ll be better able to weed out ill-fated startups from the those with a higher likelihood of evolving into billion dollar companies.
“Founders think differently when they have the ability to change the world,” Hale says.
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