Startups – How to Build Out Your Early Team

Mark Suster

Startup Grind, February 2013

@msuster

Lessons from Both Sides of the Table

Ex software developer (‘91)

BuildOnline (’99)

Koral / Salesforce.com (’05)

VC at GRP Partners (‘07)

Both Sides Of The Table

When You First Start

“Co Founders”

My Priorities When Funding Early-Stage

Team

Product

Market

Why is the Team So Important?

Funding Environment

Funding Environment

Compet

ition

Compet

ition

Customer

ReactionCustomer

Reaction

Ability to

Monetize

Ability to

Monetize

Sta

ff

Dep

artu

res

Sta

ff

Dep

artu

res

Shit happens. Great teams

handle adversity

better

Shit happens. Great teams

handle adversity

betterP

R D

isaste

rsP

R D

isaste

rs

The Co-founder Mantra is a Sacred Cow in Silicon Valley – I Believe It’s Overplayed

http://www.bothsidesofthetable.com/2011/05/09/the-co-founder-mythology/

The Reality is That Over Time Many Founders Fight

Huge Premium for Taking First Leap. Can Hire Cofounders with Large Equity & Keep

Creative Control

But I Know You’re Going to All Want Co-Founders So Just Make Sure You

Understand Prenuptials

http://www.bothsidesofthetable.com/2009/08/18/founders-ownership-and-stock-options/

And Be Careful About Having Too Many Co-Founders: It’s the Largest Dilution You’ll

Ever Face

I Think VCs Care More About Not Having a Single-Point-of-Failure than Exact

Cofounder Founding Situation or Economics

Seed to A

“Building the Early Team”

Configuration of My Ideal Founding Team: CEO Plus 4-5 Engineers

CEOCEO

CTO / Senior

Architect

CTO / Senior

Architect

engeng engeng engeng

Financially numerate Product management Ability to lead / hire

http://www.quora.com/Startups/What-would-the-ideal-web-technology-start-up-team-be-composed-of

Pet Peeves for Me

Don’t outsource your tech development

Don’t have a consulting firm build your core product

Don’t have tons of business people before you have product completed

Don’t overplay your advisory board. (I just care about your investors & management)

http://www.bothsidesofthetable.com/2009/10/12/should-your-startup-have-an-advisory-board/

Don’t Hire People All Like Yourself. Diversity in Startup Teams Matters

Product Management: One of Most Underrated but Important Skills in a

Startup

design / eng

design / eng

Solve functional problems

Architecture

Performance

Which tech stack to use?

Usability / process flows

PMPM customercustomer

Capture requirements

Test value / determine whether customer will pay

Competitor reviews

Prioritizing roadmap

Many Investors Will Tell You to Bring on Experienced Team Early. Don’t.

Hire People Who Punch Above Their Weight Class

http://www.bothsidesofthetable.com/2011/03/17/whom-should-you-hire-at-a-startup-attitude-over-aptitude/

Your First Sales Reps Should Be Evangelical & Consultative (versus

relationship managers)

Not

Not

http://www.bothsidesofthetable.com/2010/10/12/startup-sales-why-hiring-seasoned-reps-may-not-work/http://www.bothsidesofthetable.com/2010/04/08/journeymen-mavericks-superstars-understanding-salespeople-at-startups/

Engineering needs three distinct management skills: people, process, &

technology leadership

http://www.bothsidesofthetable.com/want-to-know-difference-between-a-cto-and-a-vp-of-engineering/

Many Startups Have Too Many C’s. They Are Usually a Fudge For Co-Founders to Feel Good About 1 Founder Becoming CEO

http://www.bothsidesofthetable.com/2011/09/12/why-your-startup-doesnt-need-a-coo/

http://www.bothsidesofthetable.com/2011/09/17/further-thoughts-on-startup-operations/

Functional Responsibilities Help Better Divide Work & Make People

Accountable.

CEOCEO

VPEngineeri

ng

VPEngineeri

ng

VP Product

VP Product

VP SalesVP

SalesVP

MarketingVP

MarketingVP

FinanceVP

FinanceVP

Biz DevVP

Biz Dev

I am reluctant to see “president” or “COO”

A to B Round(when you’re ready to

scale)

Most Founders Get Bogged Down in Minutiae. You Can Get Huge Benefit from

an Office Manager who Doubles as an Admin

http://www.bothsidesofthetable.com/2011/10/28/the-controversial-first-role-to-hire-after-your-a-round/

Hire a VP of Finance – Look for Somebody Who Can Help with Ops, Legal, HR, Office

Space, etc

Board Construction Limit number of VCs on the board

Be very careful about board observers. They are the equivalent of board members.

Limit management officially on the board – makes changes over time too difficult.

You can assign your founder seats to startup ceos if you’re worried about control (you control seat)

Strong industry independents on board – but make them write small checks to be committed.

http://www.bothsidesofthetable.com/2012/08/16/rethinking-board-observers-the-role-of-the-silent-observer/

http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/

http://www.bothsidesofthetable.com/2012/08/15/should-you-really-sit-on-other-boards-when-youre-a-startup-founder/

</Good Luck>

Mark Suster

Startup Grind , February 2013

@msuster ; BothSidesoftheTable.com