Many investors will bet on the team than the product or the market opportunity. So what is the ideal startup team? According to Mark Suster, its 5 software engineers and a CEO.
But edocr.com is now 3 years old, yet it has no full-time employees. What it has is a team, made up of freelancers and contractors. This arrangement has helped us to bootstrap, but we now need a major rethink on how we can grow as a business, in terms of market share, revenues, product and people.
In terms of writing the business plan for edocr.com, I have chosen the team as the starting point. Why you may ask?
My belief is that we have traction, we have market knowledge, we have a commercial application/product and we have sales. What we lack is a solid full-time dedicated team. Therefore, in my mind, this is the most vital aspect we need to fix, and fix quickly.
How does one go about deciding what your team composition should be? This is when you need to think about breaking the next five years into manageable chunks of time. My typical approach is:
- Establish
- Grow
- Dominate
Establish can further be split into:
- Proof of concept
- Launch
- Early traction
Product Development Team
If we are to move away from outsourced product development, what size of team do we need for product development and maintenance? Strangely, I have come up with a figure of 6 as well. And my ideal team for first 12 months would be:
- 1 x CTO
- 1 x Lead Developer
- 2 x Developers
- 1 x Designer
- 1 x QA/QC
Now think about what effort will you need to hire these individuals, when do they need to be hired (not all at the same time) and how would you manage your time during the hiring and induction process. Don’t forget, you still have to run the business, whilst all this is still on-going. Would you hire the CTO first or the Lead Developer? Do you want problems fixed first or getting the strategy right first? End of the day, whilst you take others suggestions, you alone will have to make the decision. Having recently interviewed potential CTOs, I am more inclined to think our first hire ought to be the Lead Developer, unless I am lucky to find a startup hands-on CTO who would not mind getting his/her hands dirty.
Sales and the rest of Team
Next, start thinking about what resources you need for sales? Would 2 sales executives and 1 sales manager suffice for the first year? Or is this an overkill? In our case, we have a commercial application which require sales input. If you are starting up, you would unlikely to focus on sales from day 1
What about marketing? What about conversions? This is the role for the community manager, yes, the chap that help your users and customers get the best out of your product. They should be able to convert users to customers, whilst the field sales team does the customer visits
You may also want to add 1 admin to help you with book-keeping and other mundane activities. If you do take VC or Angel funding, you would have the luxury of having a Non Executive Director.
Now you have an initial team of 14. Then work out what the cost of this team would be. Make sure you stagger their recruitment, say 3 to start with and then slowly build the team to be 14 by the end of month 12.
Validation
How do you know this is the right team size for your tech startup? You could ask others with experience to start with. I would suggest you speak to tech CEOs rather than consultants, especially avoid those without any real startup experience. Quora is a great resource for this type of research. Also check relevant blogs.
Check the profiles of your competitors on their own websites and Linkedin. See how they have built their teams. Speak to as many as possible.
In our case, our biggest competitor has raised over $13 million and seems to be employing about 55 staff. Think about your game plan if you have a bigger competitor. Is the game plan to reduce competitive gap or to go in a complete different direction?
The Past
Its worth revisiting the history of your startup and take stock of how you have evolved. In our case, we had the right team when we started, a great CTO, a great Drupal developer and a network specialist. Unfortunately, this team did not survive beyond the first version, which was launched in Oct 2007, due to number of key reasons:
- They were running their own businesses, which demanded their time
- Whilst they came on board and helped edocr.com soft launched, they did not whole heartily buy into my vision
- They had nothing to loose
The real killer was the dreadful communication skills one team member exhibited which basically resulted in pissing off the others. The eventual result was, no product innovation and eventual slow departure by all three. But all three let me progress without any conditions. The mistake I made then was to try to build the business without taking external capital – basically trying to prove to myself that I can build this business with freelancers and contractors.
Watch out for the time
The biggest problem is, the time can slip whilst you try to keep the business continue as a going-concern. With hindsight, I should have given my best shot at securing external capital at an early stage. If we did not run into performance issues, we had a slim chance of generating sufficient revenues to build our own team. Its never too late until the fat lady sing.
Getting back to team composition
You would need to re-adjust the team taking into consideration of level of revenues your sales staff can generate.
Would be interesting to hear your experiences on what your initial team composition was and how you build the team over the years.