You may have a great business idea, solid financial backing, and optimistic market research, but if your founding team doesn’t have the right balance of personalities, you could soon be closing up shop, says Bernd Schoner, author of The Tech Entrepreneur’s Survival Guide (McGraw-Hill, May 2014).
"Having the right team determines the path and outcome of a new venture more than any decision in the lifecycle of a company," he says. He speaks from experience—in 2002 Schoner cofounded the radio frequency identification technology company ThingMagic with four fellow Media Lab graduates at the Massachusetts Institute of Technology, and experienced a year of "extreme turmoil."
"We had worked together before and were convinced we knew each other well," he says. "But once you start a company, outside pressure causes people to act differently. That was for me one of the most traumatic experiences in my early years. A fundamentally different environment changes people, and how they react."
The skills and traits of a company’s founders are irreplaceable, making it important to get it right at the onset, says Schoner, who led his startup through its ups and downs, ultimately selling to Trimble Navigation.
"The founding team cannot be changed, and no one can speak to investors or customers with authority like a founder," he says. "It’s a great asset to have at the beginning and hard to add later."
Schoner, who currently is vice president of business development for ThingMagic, says a startup needs six personalities to be successful. While one person might have more than one of these traits, these six need to exist:
Expertise is one skill a founding team can’t do without, says Schoner. "Every startup needs at least one genius to get off the ground," he says.
Often a diva, the genius will challenge the rest of the team and ask for things that the others aren’t sure how to get done. This person is filled with passion and is often considered to be the most high-risk member of the team.
The superstar is the person who gets down to business and accomplishes tasks. From ordering office supplies to keeping the office network running, this person has a combination of eccentricity, nerdiness, and charisma, says Schoner.
"The prima donna and the superstar are often the same person," says Schoner, adding that this personality is nearly impossible to add later.
Running a company with more than one founder is a democratic process, but hard decisions need to be made that affect everybody’s lives. Consensus usually requires compromise, Schoner adds.
"Every startup needs a clear leader," says Schoner. "It doesn’t mean they’re paid more or have more equity, and they’re not necessarily the CEO. It just means that the others look up to this person and are willing to follow them—if there is conflict and controversial decisions need to be made."
While startups are often formed around new ideas, it helps to have someone who knows how things are done in an industry.
"It takes a long immersion in the marketplace to call yourself an insider, to understand the subtleties of the competitive landscape, to recognize people as true assets, and to look through the propaganda of technical collateral and PR campaigns," says Schoner. "The industry veteran has seen it, and knows how everybody else does it."
The leader and the industry veteran could come in same person, says Schoner. If a startup doesn’t have a standout leader, the company can later hire a CEO. "But don’t do this too early," says Schoner. "The company may benefit but often it ends up as not the same company."
Startups with brilliant ideas often forget that someone needs to sell them, says Schoner. Having a strong salesperson on the founding team helps minimize the risk.
"The combination of technical insight, founder authority, and sales experience is a hard-to-beat advantage in the competitive marketplace," he says.
Startups also need financial talent. While this is the easiest personality to add on later, professional controllers and chief risk officers often have their own agenda, says Schoner.
"Understandably, they are trying to build a career, make money quickly, or own as much stock as possible by the time the founding members of your venture are ready for an exit," he says. "If you can put a skilled cofounder in charge of overseeing the finance function, you may enjoy a little bit of extra peace of mind."
Final note: While skills are important, Schoner says attitude always trumps it.
"Good skills are an insurance policy against hard times on a company," he says. "But when in doubt, pick people who have similar values. How do they define success for startup? Is it money? World contributions? Having similar beliefs about how you run your life can bring longevity as a team."
[Image: Flickr user Eric Gelinas]