In your opinion, how important is the founding team to a company’s success?
If you said it’s the most important factor, and you believe your choice of co-founders is the biggest predictor of your company’s success, you’re not alone. The top early-stage investors agree. Ron Conway said “We start with the people first.” Paul Graham wrote “The most important ingredient is formidable founders.” When Dorm Room Fund first launched in New York, First Round Capital partners Josh Kopelman, Howard Morgan, and Phin Barnes each told us that the quality of the founding team is the most important factor in their investment decisions. Team is paramount. It’s what makes companies successful and it’s the first thing investors evaluate in a pitch.
Given how widespread this view is, it can be surprising how little preparation some companies seem to devote to pitching themselves as a team. Discussing their market and product, they are thoughtful, polished, and equipped with killer slides and compelling research. When it comes to talking about their team, though, they often speed through a plain-vanilla slide (usually at the back of the deck) as though it’s an obstacle in the way of the interesting stuff.
It’s not an obstacle, it’s the entire race.
It’s evident when founders haven’t put time into figuring out how to talk about themselves and one another. The problem is not merely that this part of your pitch lacks polish. Rather, the lack of polish is signaling something much more fundamental – and negative – about you and your company. If you don’t invest enough effort developing the way you talk about team in a pitch, it calls into question whether you invest enough effort developing the team itself.
Try answering these questions:
- How many hours have you devoted to learning about your customers?
- How much do you know about your competitors?
- What’s the hardest problem for your company to overcome?
- How many hours have you devoted to learning about your co-founder?
- How much do you know about your co-founder’s family?
- What was the hardest problem your co-founder ever had to overcome?
If you had difficulty answering the second set of questions, and many founders do, then have you really dedicated enough time to understanding your co-founders at a deep and personal level? Are you really treating your ‘team’ like it’s the most important factor in your company’s success? I would argue not. (If you didn’t have trouble, good job, but keep going; those were easy.)
To value your co-founders appropriately – not to mention to manage your team well – you need to understand them beyond their skills and accomplishments. Learn about their motivations, their experience with conflict and hardship, their family, their philosophical views, and whatever else has been important to them in their lives outside of your company. These things shape how they will work with you, your investors, your employees, and your customers. They shape how a future argument will go down (it will happen) and how well your team will endure the hard-slog of bootstrapping.
It’s not just the state of knowing these things that is important, it’s dedication to the process of learning. Your relationship with your co-founder needs to scale as quickly as your company or else it will become a constraint. Like any feature, it needs to be developed deliberately. Conversations about personal history and goals, feedback sessions, and bonding activities; these should be as planned and frequent as feature pipelines, sprints, and releases. Even if your co-founder is your childhood friend, it is important to take an intentional approach to continuously developing your relationship. These conversations will feel forced at first. Over time, they will become natural. If nothing else you’ll get to know your partner better.
Turning back to the pitch, I want to make clear that I’m not suggesting you tell every founder’s life story – that’s probably too much. Then again, there’s no formula. Just spend time learning about your team, and once you know them better, spend time preparing how you talk about them. Find what resonates for you as people. It doesn’t take much for investors to notice that you’ve put work into getting to know each other as well as you know your market. If you actually have, you’ll appear genuine, and your team will seem stronger. More importantly, you actually will be stronger.