Dharmesh Shah


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Startup Teams: Why Capability Doesn't Matter Without Trust

By Dharmesh Shah on August 19, 2008

I’ve been thinking a bit this past week about startup teams and what makes them work (or not work).  Most people that are in and around startups will readily agree that recruting the best team possible is critical to success.  This leads to statements from startup pundits that look a lot like “get the best people possible.”  Far be it from me to argue against this kind of sage advice.  You should get the best people possible onto your startup team.  All things being equal, who wouldn’t want to recruit the best people possible?

However, the phrase “best people possible” is a bit too vague for my tastes.  The question is, what makes a given team member the best?  Are they the smartest ones?  The ones with the most experience?  The ones with the greatest skillset for a given role?  The ones with the most domain expertise?  For purposes of this discussion, I’m going to “merge” all the things that makes a given individual really, really good into something I’ll call “Capability”.  You can feel free to make Capability a function of whatever attributes (intelligence, experience, skills, etc.) as suits your taste. 

So,

Capability = How well the person can do the job

Now, this article isn’t really about capability.  It’s about a somewhat orthogonal concept that I’m going to refer to as Confidence (or Trust).  By confidence, I don’t mean how much confidence they (the candidate) have.  I mean the degree to which the rest of the team believes a person has the required capability.

Confidence = How strongly people believe in a person’s Capability

My argument is this:  The best people to recruit into a startup are the ones that have the optimal mix of capability (can get the job done) and confidence (trust from others that they’ll get the job done).  Even with lots and lots of capability, if there is moderate or low confidence, the individual will be second-guessed, undermined, and ultimately just plain ineffective.  Even if they would have a bunch of good decisions, it’s not really going to matter, because they won’t get to make that many, and the ones they do make might not “stick”.  Unfortunately, this kind of team dysfunction does not jump right out at you, it creeps in when you’re not looking.  Everyone has the best intentions.  A quick (totally made-up) example:  “Billy’s a great web design and UX guy…and he’s been lobbying for this simplified design to replace the $25,000 website we created last year.  Sure, he goes to all the conferences and stuff, but does he really get that sorts of people come to our website, not just customers?” 

So, you ask, why would people making the decisions ever hire folks that they didn’t have confidence in anyways?  Isn’t that stupid?  What’s the point talking about that?  I’d respond with two things:  First, confidence is not a binary thing.  It’s an analog thing.  There are degrees of confidence.  Second, confidence may start out being really high, but can be chipped away at as time goes. 

Now that we have some of the baseline behind us, here are some thoughts on capability and confidence when it comes to startup teams:

Capability vs. Confidence

1.  How did we find this person?  Certain sources of referrals engender more confidence than others.  Did your co-founder bring the person in?  Is she your niece, once-removed?

2.  Who has the most confidence in them?  Is it the person that introduced them?  Someone that will be working with them?  One of your investors?  One of your advisors?

3.  How important is confidence for this role?  There are certain areas in your startup where folks need to have a fair degree of discretion.  For example, regardless of how smart and passionate the founders might be, if you hire a professional UX designer, you have to let them do their thing.  Debates are good, but whoever is the best qualified to make the decision should make the decision. 

4.  Who on the team loses the most if they don’t work out?  Yes, I know, everyone loses when you lose a team member.  But, who is impacted the most? 

5.  Is the eroding confidence justified?  Is it possible that a bad hiring decision was made?  Did people expect a degrree of capability that just did not get delivered?

Some though (but important) questions. 

Closing words of advice:  When recruiting team members make sure someone on the team will go to bat for the person when things are shaky.  You need a trusted member (like one of the co-founders) to help objectively assess issues of eroding confidence — and help restore it if needed.  Otherwise, things go into a downward spiral and nobody wins.

Topics: recruiting
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Y Combinator Summer 2008 Demo Day: Best Batch Ever

By Dharmesh Shah on August 15, 2008

 

I just got back from Y Combinator Demo Day, Summer 2008.  For a startup fanatic like me, it’s hard to imagine a more fun use of a few hours.  I got to watch 20 back-to-back, rapid-fire startup demos. 

Here are some of my initial reactions and thoughts on the newest cohort of YC startups.  Note: Like most OnStartups articles, this article focused on the entrepreneurial perspective (not the investor perspective).  The folks that should (hopefully) get the most out of this are the YC startup founders themselves.

Notes From The Y Combinator Summer 2008 Demo Day

1.  Best Cohort Yet:  Overall, in my (highly subjective) opinion, this is the best batch of YC startups yet.  I think I have a bias (which has been tempered over time) for startups that have demonstrated some thinking around things like monetization and revenue, and that might be influencing my thinking.  The current cohort, on average, seemed to have a stronger emphasis on not just making something people want, but something that will yield revenue, and (gasp!) profits.  Good stuff.

2.  Presentations were better than what I’ve seen in the past.  More fluid, more polished, more effective.  My hat’s off to all the YC startup founders that presented today.  You guys did a great job!  Having said that, it’s not a totally fair comparison.  You guys do have the advantage of many more YC founders before you that you can learn from.  I’m guessing that  Paul, Jessica and the rest of the YC crew are also getting better and better at nudging you in the right direction when it comes to Demo Day presentations. 

3.  Tip:  Use your precious minutes:  The Y Combinator team did a great job keeping things moving, and I think the format of Demo Day works well (6 minutes per presentation, no audience questions).  One quick tip for the presenting team:  If you are doing the presenting, you should begin with your message even while your team member is setting up.  Don’t wait for the slide deck to come up on the screen.  Don’t shift the focus to your buddy who is switching out the cabtes and stuff.  Don’t wait.  Just start delivering your messageIn your preparation, come up with introductory remarks that don’t rely on your first slide being up yet.  When you only have a precious few minutes, 30 seconds counts.

4.  Don’t use gender stereotypes:  This one’s going to be a little touchy.  A few of the startups today used examples and screenshots that were um, a little too “gender-stereotypical” (that’s a semi-polite way of saying they were too far down the spectrum towards being sexist).  I can understand and appreciate that most of the YC founders are young males in their 20s.  But, my advice would be to resist the temptation to use scantily clad women in demos.  It’s both inappropriate and sub-optimal.

5.  Answer the question you know people are asking themselves:  Once you start doing presentations a lot, you begin to realize that there’s a “pattern” to the kinds of quesitons people have in their heads.  The same themes recur.  Do what you can to make it as difficult as possible for people to dismiss you because they’ve got that one big “obvious” question/objection/whatever.  For example, I thought the Fliggo team did a smart thing by closing with this nugget:  “I know you’re asking yourself, how are these guys going to make money…I’m glad you asked…”.  You don’t necessarily have to answer the “how do you make money” question (though that’s not a bad thing), and you don’t even have to frame it as a quesiton.  Just try and address the most obvious things people are likely to wonder about.

6.  Tip:  If you’ve got traction, share it earlier in the presentation:  There were several startups that had pretty impressive early traction (like users and revenues).  They didn’t talk about this until later in the presentation.  I’d suggest possibly getting this message out earlier in the presentation, because it will grab people’s attention and cause them to listen more intently to the rest of your story.  Imagine an opening sentence that is something like this:  “Hi, we’re XYZ.  We launched just a few weeks ago and we’re getting some encouraging early evidence that we’ve built something people want…Here’s what we’ve learned from our 14,000 users…”.  I’m not suggesitng you use that exact sentence, just a thought.  When dealing with investor types, remember that folks have short attention spans and you’re best served by grabbing them as early as possible with something they care about. 

7.  Memorable sound-bites are not just for TV:  I’m generally not a big fan of over-preparing for presentations (more often than not, sounding natural is more important than sounding polished).  Having said that, some clever, funny, well-crafted sound-bites thought of in advance and added to the presentation are a good thing.  They’re particularly good for bloggers and media types that might cover you.  For example, the PopCuts folks had this great snippet:  “The only way to get famous on BitTorrent is to get arrested.”  Simply brilliant. 

8.  Audience participation/engagement works:  A couple of the startups were able to work their demo such that the audience was “involved” in the demo itself.  Although this is hard to do, it’s valuable.   It also helps a lot when you get audience members to do something (instead of just sit there and listen). 

That’s all I have for public consumption.  However, I have notes from each of the presentations.  If you were one of the startups that presented today and want my quick thoughts or feedback, feel free to email me. 

I just noticed a great summary write-up of today’s event on Scott Kirsner’s Innovation Economy blog.  If you’re not yet reading Scott’s blog, you should be.

Best wishes to all the Y Combinator startups.  It was great to see you all and chat with many of you at the close of the event.  Knock ‘em dead next week.  In the meantime, some closing advice:  Get some sleep!

Topics: ycombinator
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