Just recently, I witnessed a presenter pitching to potential investors and, when referring to the efforts and ideas of the company, he emphasized the pronoun, “I”. When investors evaluate a company, one of the key profiles to determine the value of that company would be the fabric of the “Team.” And, of course, there is no “I” in Team, and why it is important to emphasize the company’s Team.
In a technical world with so many engineers developing new ideas for new applications and markets, I also read many blogs questioning whether a technical manager can run a company without non-technical “co-founders” as a startup. It is an interesting controversy. In other words, can a technical founder do all of what is expected of a multi-faceted executive. But that is not the point why various co-founders are needed.
A Team is needed for corporate continuity. One CEO from Southern California mentioned during his early phase that established companies were reluctant to purchase his cyber-surveillance tool: since the startup company was so small, the larger company was concerned about long term continuity. And this is a valid concern.
Established companies know that executives leave or, alternatively, pass away. Products need to be supported way past the purchase date, whether through training or maintenance. And what dispels any notion that the early stage company is capable of supporting its products in the long run by the size of its team. Even for publicly traded companies, investors will discount the value of companies with no groomed successors to the executive suite.
The other rationale for the Team is the dedicated expertise distributed within the management. Just like the skills of every player on an American football team, a company’s team must demonstrate the value or asset added by every member. Not every offensive player is a QB. There are other team members with crucial roles that can lead to a winning season.
I know of an East Coast startup telecommunications company that achieved an IPO. At one investment conference, the lead presenter, the CEO founder and engineer, for the company to the investment community was not the CEO, who held both engineering and business school degrees, but by its General Counsel. The attorney, whom I knew well as well, was an excellent speaker. The founder did not present well, maybe since English was not his native tongue. So the consistent speaker for the company to the investment community was the Harvard trained General Counsel. The CEO and Founder knew his limitations. And recognized that an articulate executive served well to present the company’s value in front of investors.
Another need for the Team is to roll out quickly its strategy through distributed tasks and roles. Today’s business world is complex and fast. During the first year of business school, one is introduced to macro/micro economics, accounting, operations management, financial modeling, marketing, and human resources. To be an expert in all of these topics can be daunting. One needs, at an early stage, team members who are fluent virtually for each field. And, if the company’s product or service can serve international markets, one needs local managers, who know the local language and culture.
One has to expand fast and furious to win as many markets possible. Technology has made speed to market critical to success. With the Internet, one can start a company in the U.S. and, if it falls within the radar zone of another country’s management team, it would be relatively easy to replicate the business and technology. A good early stage Team can preempt the hurdles faced when competing internationally.
That is why whenever I develop a new business within the U.S., I quickly identify which international markets would be most receptive to the technology and has the macroeconomic qualities to sustain a profitable operation in that country. Some technology platforms are not that complicated and be easily duplicated. Groupon, with its simple marketing software, needed to be aggressive with its platform, or its market share would be eroded rather quickly both domestically and internationally. That is why it expanded its market fast with a large management team.
And mistakes happen. Uber is spending over $1 billion for the China market, but it has fallen behind against a local company, Didi, offering the same service. In other words, had Uber forged early the China market with local managers and feet on the ground, it would not be struggling today. Uber’s software platform would take less than a week to be replicated anywhere else with a decent software team. And, once a technology company becomes the leading player with a recognizable brand, the new entrant will struggle to compete against the incumbent. Uber has lost the musical chairs competition.
The key to long term, entrepreneurial success is building a quick, intelligent, and nimble team. But, if any founder believes that he/she can achieve sustainable success without a Team in today’s mareketplace and only emphasizes “I”, that would be a recipe for disaster. To win and comfort investors and customers, it pays to have an effective Team.