There is an often-heard adage in the investment world that, when placing capital into a startup, you're investing in the founder(s) much more than the idea. The reason such a blanket statement exists is because it's absolutely true -- a great team with a mediocre idea will nearly always outperform a mediocre team with a great idea.
So as a founder, what's one key area that your investors are going to pay particular attention to in the earlier stages? No, it’s not your ability to sell -- although that’s important too -- but instead your ability to hire and build an effective team. This is a core competency that is paramount to you and your company’s success. It is why investors have a much more difficult time investing in first-time CEOs and many just flat out won’t -- there’s a lot more risk in betting on someone that doesn’t have a proven track record of building a functional team.
With that being said, a monkey with a Craigslist account can hire and build a team, so let’s dig a bit deeper to understand why it’s important that you do it correctly.
1. Sales are great, but scale is better.
It’s really easy as a founder to fall in love with the adrenaline you get from closing sales, and in reality, that’s super important early on. This, however, becomes a problem as you grow your business if you’re structured in such a way that, for sales to be closed, you must be involved.
The only way for your company to experience that beautiful hockey-stick-growth curve is to create a situation where sales are growing via multiple channels, which means that you can’t possibly be involved in all of them.
2. When the entirety of the operation is built around you, you'll fail.
It’s difficult to appreciate the number of people that usually need to be involved in the support functions of a growing business until you’ve been through it -- this, unfortunately, often happens reactively instead of proactively, which makes it a lot more difficult. With that said, you’ll be setting yourself up for failure if you’re out on the road, selling your pants off, and not paying close attention to the necessary back-end roles that will be required to support the growth.
You can’t do it all. Besides, what happens if you get mercilessly attacked by a swarm of killer koalas and are hospitalized for a month? Does the business come to a screeching halt or completely shut down? It can’t.
3. Collaboration is key.
You may not be in a position to begin hiring early on because you don’t likely have the funds to support it. But once you start generating revenue or raise a bit of capital, you’ll need to use the additional cash to begin building your team -- not just to fill the support seats that you have open and available. Instead, you need to increase the amount of brainpower you have sitting around the table.
The fact is, the more smart people that you surround yourself and fill your company with, the more thought out the solutions to ideas and problems will be -- which will undoubtedly result in better short- and long-term outcomes for everyone involved.