The New Entrepreneur reflects the new requirements for success in the new environment in which companies are being created and grown. First of all, there is no such thing as a lone entrepreneur in a successful high-tech startup. Although individuals become the icons for companies and entrepreneurship, the real story is that every successful company is truly built by a team. This has always been true: Packard had his Hewlett, Gates had his Allen, Jobs had his Wozniak, Yang had his Filo. Today, it is even more true and more necessary.
The entrepreneurial team has expanded along with the core competencies required to launch a company. Just as designing an advanced circuit or developing commercial software has become more complex over the past 20 years, so has starting a high-tech company. In today's environment, it's not enough to have a core technology and a target customer. You have to have the engineering management talent, the product marketing talent, the business development talent, and increasingly the global talent. Hardly a team comes through our doors these days that does not already have a development activity in place overseas—in Israel, in China, in India, or even in Bulgaria. And at the other end, they have initial customer development under way internationally, not just in the United States.
From his Silicon Valley perch at Garage Technology Ventures, Bill Reichert has seen a lot of changes over the last 6 years. He is an articulate and insightful publisher of thoughts, expectations and reflections on the VC scene and entrepreneurial landscape. His writings and live presentations are always high quality. This brief article from alwaysonnetwork.com is an excellent précis on the current state of entrepreneurship and VC activity: The New Entrepreneur and coincides with Drake Associates recent observations in and around southern California.
The wild exuberance of the late 90s has been replaced by a more sober approach to investing and startups. And Bill is essentially correct about the formation of teams rather than individuals leading most emerging organizations today. This is as much a function of startups needing to be more effective at operations than fund raising. The VC community during the boom years were seemingly more interested in who was running the company and whether the sizzle could be sold than what the company was doing. And while VCs claim they've learned their lesson, we've not seen many successful raises among startups that don't have a least one seasoned fund-raiser as part of the team. That is, the VCs are still much more comfortable dealing with someone who has raised money through them before than any operational or technology talent that a startup management group might have - a perverse hold-over from the boom times.
Don't misunderstand - having a previous fund raiser as part of the team is valuable (and anecdotal evidence suggests essential) if you need to raise funds. Just recognize the trade-off where many of these funding magnets were not the most talented in terms of operations, leadership or cross-functional skills. Their Rolodex and presentation skills were the primary considerations with their hiring and at the time was more important than their ability to implement financial controls or strategy formation or get projects done on time for launch.
Startups are special environments and team members must be selected and assembled carefully. One of the biggest mistakes we've observed in startups is the dedication and loyalty founders have to friends and family members - compatible personalities but lacking in the skills and talent needed to get a company started and seldom able to take a company forward. Within the unique environment of a startup you are not so much filling roles as trying to find passionate people that buy into the vision and then can perform a variety of tasks. Role definition and titles are the least important factors within a startup's organizational design.
The quality of the team has always mattered more than the quantity of players involved but now is an imperative since most startups will begin as bootstrapped operations. Startups survive and grow on the ability of people to perform multiple tasks without even considering their job-title or role within the organization. Previous startup experience is exceptionally valuable in your leadership as they will understand and appreciate what it means to commit to a startup enterprise. Asking executive candidates whether they've "been there, done that and have several t-shirts" is not a bad way to screen for senior members of a startup team.
Comments