Startups: Why What You Build Is Less Important Than Who You Build It With

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Startups: Why What You Build Is Less Important Than Who You Build It With

 


I’m in the middle of reading “Founders At Work” by Jessica Livingston.  The book is basically a collection of interviews with founders of some prominent software startups.  What I like about the book (I’m about half way through) is that the interviews are pretty detailed and Jessica does a great job of giving the founders enough time to get their thoughts out.  They cover issues ranging from the conception of the idea, team dynamics, investor dynamics, etc. All the things that you’d expect to go on within a startup.  In any case, the book is good and I’ recommend it (it is one of the few ones that has made the OnStartups Reading List.

 

But, this article is not about the book (I’ll plan to write a fuller set of thoughts on that in a later article once I’m done reading it).  This article is about the importance of your early founding team to the likelihood of a successful outcome for your startup.

 

The title pretty much says it all:  I think the idea that you are basing your company on is likely less important than the team that you create to pursue that idea.  Here are some thoughts as to why.

 

Why What You Build Is Less Important Than Who You Build It With

 

  1. The Idea Can (And Should) Change:  I’ve read numerous times that most startups that end up being “successful” will change the idea along the way.  I recall from a Clayton Christensen presentation that his studies indicated that on average startups change their basic idea/business about four times before finally landing on the one that makes them successful.  He actually goes further and says that in order for startups to succeed, they need to be flexible and have the ability to change the idea based on market feedback instead of doggedly sticking to their original plan.  So, the point here is, your initial idea for the startup, as brilliant as it might be, is probably going to change anyways – multiple times.  For this reason, it doesn’t seem prudent to get overly attached to the idea or give it too much weight in the early stages.

 

  1. The Team Shouldn’t Change:  Startups are an exercise in trust building with a group of motivated and competent people.  Unless you have worked with these individuals before, it can take a fair amount of time to do this.  As such, changes to the “core” team of a startup can be extremely disruptive.  I’ve seen more startups fail because of founder conflict, high management-team turnover and other “people” issues than issues with the technology or the idea.  So, picking this early team and making sure you are coming together with a clear understanding is critical.

 

From “Founders at Work”, one of my favorite quotes so far has been from an interview with Joe Kraus, the founder of Excite and JotSpot.  I’ve heard Joe speak and he seems a particularly intelligent and insightful guy.  Joe says:  “People make all the difference in the world.  Venture capitalists would tell you that they’d rather fund a great team than a great idea.  The reason is that if they have a bad idea, great teams can figure out a better one.  Mediocre people even with a great idea can screw it up in its execution.”  I’d further add that mediocre teams may also be less likely to detect a bad idea, so may be more likely to stay on the wrong path longer than they should.

 

In my current startup, HubSpot, the words are ringing very true.  My co-founder, Brian Halligan and I met as graduate students at MIT.  We got to spend a fair amount of time together and learning about how each of us “thinks about stuff”.  Though we have very different backgrounds (his in sales and mine in technology), we both have similar approaches to problem solving.  We like to analyze, dissect, discuss and debate.  We love abstractions and we love to seek patterns.  This approach has helped us with HubSpot, because as expected, the underlying idea behind the business has already changed considerably since the company was originally conceived.  The good news is that we’re able to openly talk about things and not hold any punches.  If Brian thinks I’m wrong, he’ll tell me (with pretty good reasons as to why).  

 

How about you?  Have you found that your startup has needed to change ideas, or did you happen to “get it right” the first time?  What about the people?  Are you still with the same core team or did this end up changing for some reason?  What were the lessons learned?  Would love to hear from you.

 

Posted by Dharmesh Shah on Wed, Feb 14, 2007

COMMENTS

Very interesting article. It makes sense that ideas change. As you have analyzed the idea and understand the market, better ideas will come to your mind. Usually this ideas tend to solve in an easier way a more specific pain of a more specific market.

posted on Thursday, February 15, 2007 at 3:59 AM by Lucas Rodriguez Cervera


I agree, the core group is by far the most important key to success. When a group of competent individuals are all on the same page success is bound to develop.

posted on Thursday, February 15, 2007 at 4:16 PM by DanMac


Good insight, as usual, Dharmesh.

Our people have remained the same, but the ideas have changed. There is always a natural progression as you get feedback from users and, surprisingly, find people using products in ways you had not thought of before. Jim Collins calls it "Get the right people on the bus" http://www.jimcollins.com/lab/firstWho/p2.html

posted on Thursday, February 15, 2007 at 7:16 PM by Scott Meade


Great book, isn't it? I couldn't put it down.

It seems the idea almost always changes, and even if it doesn't some aspect of the execution does. A great example of that from the book is TripAdvisor (page 361) - they had a solid concept but it took many tries to find the way to make money with it. The key is they knew they were providing Serious Value.

One of my takeaways was that the best startup ideas aren't those that might be the biggest, but those that are the most certain of providing real value, to either...

a) people who'll pay right now (eg. Fog Creek)

or b) to enough free users that someone else will pay to reach them (eg. Hotmail)

PS: Based on your writing, I think you'd enjoy "Lucky or Smart" by Bo Peabody.

posted on Thursday, February 15, 2007 at 8:23 PM by Aaron Dragushan


Perhaps it is the team that changes an idea into a great business, but isn't it a great initial idea that brings the dream team together in the first place?

posted on Sunday, February 25, 2007 at 12:55 AM by Sergei


Well, I definitely need to get this book for our team. I can tell you that being able to communicate is crucial. Of our core team, not one of us is over the age of 27 (and unfortunately that would be me), however, we do have some older folks in the mix who have had more work experience than us. This means that when it comes to the core team telling the older folks that we are forseeing problems with how they want to execute the idea and that the strategy needs to change, we are met with the usual "You are young and inexperienced." They are not here everyday and have not a clue what has been put into actually building the site. But they have the business contacts and the "experience" so we feel like we have to shut up. In any case, this leads to a fundamental problem: the business model they want to stick to so badly, does not align with the vision (which, as much as they may want to see it HAS changed.) When they decide to see it is up to them.

posted on Thursday, June 21, 2007 at 2:27 PM by ST


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