I saw this in a newsletter I received the other day from one of the recruiting firms in Seattle. These perspectives are provided by a highly regarded managing director at one of the premier Seattle VCs. I thought these were strong points across the board:
One of the ongoing debates in venture capital is “What matters most, the team or the market opportunity??” For me, the answer is the team. Great teams, even if initially unfocused, are often able to discover the most promising market and establish a leadership position in that market.
So, what are the keys to a great early-stage management team? While the answer is as much subjective as objective, there seem to be a set of common attributes.
Soul of the company: The core of a great team is a person or two who embody the soul of the company. These individuals, usually the founders, combine vision, passion and expertise that function as a magnet for early employees, customers, partners and investors. Sometimes their role transitions to a more strategic (less operational) and culture-shaping role as the company progresses. But, their importance in establishing a vision and a culture early-on set the company?s foundation. For example, Sujal Patel and Paul Mikesell founded Isilon Systems in 2001 and are the soul of the company. Sujal continues to serve as CTO seven years later.
Complimentary fit of core capabilities: No individual or founding team has all the ingredients to succeed alone. A great team requires a complimentary mix of skills, experiences, personalities and business networks. The key here is fit. A visionary, high-energy CEO often needs a detailed, lower-key business partner to help turn the vision in to a reality. We often find with our portfolio companies that the tie-breaker between two equally qualified candidates is personality and culture fit.
Complimentary business networks are also an important yet often overlooked ingredient. Talented executives typically are able to bring an entourage of customers, partners, past work associates and best practices along with them. Hugh Crean, CEO at Farecast, has assembled a team of travel industry executives with past experience at a mix of travel companies (Expedia, Smarter Travel, Priceline). He has also supplemented his board with the former CEO of Expedia (Erik Blachford) and a Managing Director of a travel-focused hedge fund (Brad Gerstner) who have extensive and complimentary industry ties. A management team made up entirely of former employees from one company usually benefits from some team diversity, to leverage the entourage effect. The balancing consideration here is that individuals who have worked together in the past and share a common business vocabulary are often the most productive teams.
Experientially curious and intellectually honest: These two attributes are tightly linked. Genuine curiosity about what may happen and what, in fact, does happen when customers evaluate or purchase a product is critical to management success. This experiential curiosity is often more important than being a strategic superstar. Especially today when so many business inputs are variable, management teams need to be comfortable with experimenting quickly and learning from success and failure.
Intellectual honesty must follow from experiential learning. Empirical data is important to obtain, but an unbiased assessment of that data is essential to maximizing learning. Management teams that are willing to look at the facts and engage in an honest debate about the implications are often first to discover insights and implications. In emerging and rapidly changing markets, early access to market insights is critical to success. Curiosity and an unbiased analysis of data help great teams rapidly identify a winning approach in an emerging market. Glenn Kelman, CEO of Redfin, is an exceptional example of blending experiential curiousity and intellectual honesty.
Balancing conviction with humility: The last attribute to highlight is a cultural one. Business leaders need to have strong convictions about how to grow their companies. Business convictions are typically driven by a core set of values and past professional experiences. Without strong convictions, business executives struggle to constructively contribute their distinct perspective to a team decision making process. However, no one is fully able to see all aspects of a key decision or always have the best answers. Having the humility to recognize that your view may not be the only valid perspective and respecting the different viewpoints within a management team ultimately leads to better decisions.
It can be challenging to assess these attributes when building a management team or hiring a new executive. I believe that taking the time to get to know someone in both formal and informal environments increases the likelihood you get an accurate read on their fit with a specific team. In addition, company needs and the capabilities of the management team required to succeed change over time. Periodically stepping back to assess the attributes and fit of each management team member for the road ahead helps position a company for sustained market leadership.