This article gives you a glimpse of what you can learn with Shortform. Shortform has the world’s best guides to 1000+ nonfiction books, plus other resources to help you accelerate your learning.
Want to learn faster and get smarter? Sign up for a free trial here .
Are you managing a startup company? How can you make your startup team successful?
Startups have a lot of pressure on them to make it to the top while also coming from almost nothing. While finances and marketing are core factors to consider, the true backbone of a startup is its team. Without a cohesive team, your new business will likely crack.
Let’s look at how you can encourage your startup team and lead them to success.
1. Establish Structure
The structure of your company provides a framework to support and constrain how your startup team interacts with each other. As Peter Thiel notes in Zero to One, some people advise against imposing structure on an organization, saying that this will stimulate creativity by giving your team members greater latitude to implement their own innovative ideas. Thiel concedes that in a perfect world, full of perfect people, that would be true, but argues that in the real world, real people need some amount of structure to work together constructively.
He explains that to establish a structure that will promote alignment and progress, you must make three decisions:
- Equity: Who will legally own the company? It’s not unusual for founders, investors, and employees all to have a share of ownership in a startup.
- Direction: Who will make the high-level decisions about what the company will do? In many startups, a board of directors consisting of the founders and investors fulfills this function.
- Operation: Who will figure out how to accomplish the company’s high-level objectives and take responsibility for getting the work done? Sometimes a founder assumes this responsibility, sometimes the company hires a CEO to do it, and sometimes this function is distributed among employees.
An effective structure helps reduce conflict between different people with different interests, but doesn’t necessarily preclude it. In his experience, conflict in startups most often occurs between founders and investors on the board of directors. He advises keeping the size of the board small—preferably just three to five members—to make conflict easier to resolve by simplifying the logistics of communication
2. Promote the Company’s Mission Statement
A group of people isn’t a team if they’re not on the same page. If they aren’t, Gino Wickman says in Traction that your company will never move past the startup phase. To ensure your team is heading in the right direction, you need to establish a company mission statement. This is what the company is mainly focused on accomplishing, and everyone needs to be on board with it.
When talking about their main focus, businesses use different terms for it, including mission, core business, and “sweet spot.” Your core focus is the job your company excels at. It should get your time and resources.
It’s the responsibility of your startup team to establish your company’s core focus and make sure nothing distracts from it. When you clarify your focus, you may discover that you need to streamline the business, eliminating unrelated product lines, positions, or even divisions that don’t fit. While this is painful, it strengthens the company in the long run.
Determine Your Company’s Core Focus
To determine your core focus, you need to know two things: your company’s reason for being and its niche. Here are some ways to think about these components.
1. Why does your company exist? What’s its purpose or mission? The answer doesn’t have to be unique to your business. When you answer the niche question, you’ll be looking for what’s unique or differentiates your business from others.
To define your purpose or mission, strive for an answer that:
- Is no more than seven words
- Is simple
- Is bold
- Resonates emotionally
- Involves everyone in the company
- Doesn’t involve money
- Is broader than a goal
An example of a purpose or mission would be “to improve the quality of life in our town.”
2. What’s Your Niche? What specifically do you do that fulfills your mission? The answer should be simple and useful in making decisions about how to spend time and resources. Examples of niches include: popcorn (Orville Redenbacher) and solving complex real estate problems (a real estate company).
Here are some examples of both mission and niche, which together define a company’s core focus:
- A paving company: being the best (mission), quality asphalt paving (niche)
- A construction firm: exceeding expectations (mission), completing every aspect of a project (niche)
- A laser printer company: building a great company, with great people and results (mission), simplifying companies’ printing environments (niche)
As you concentrate your company’s efforts on its core focus (purpose and niche), you’ll see increased success and profits as a result of building on what you do best. It’s like playing golf: a golf club has a “sweet spot” that, if lined up with the ball, sends the ball farther and straighter, improving your score. Your company’s core focus is its sweet spot—if you stick with it, your business will get the best results.
Motivating Your Team
In The Hard Thing About Hard Things, Ben Horowitz emphasizes that your company’s unique mission should serve to unify and motivate your team. He prefers to call this mission your “vision,” and describes it as the story of what your company is capable of doing, why it matters, both to you and to the world, and how it sets you apart from every other company out there.
When it comes to hiring employees, Horowitz echoes Peter Thiel’s admonition to find people who see the success of the company as their route to personal success, not people whose personal ambitions run contrary to the company’s best interests. Additionally, he explains the importance of hiring for the particular strengths that will allow the new hire to excel in her role, rather than weeding out all the candidates who have weaknesses of any kind and hiring whoever is left.
Of course, to do this you need to understand each role that you’re hiring for. This, in turn, requires clearly-defined roles and responsibilities, reinforcing that everyone on the team should have a unique role.
When it comes to dividing up equity, high-level direction, and day-to-day operation of the company, Horowitz argues that the founders must take an active role in directing and operating the company. In his experience, the founders are the ones who really understand the company’s unique mission. They are the ones who can best articulate the mission to new hires and best translate it into tangible actions for people to work on. Without them, a startup will stumble off track.
3. Set a 10-Year Goal
According to Traction, the third step in creating a unified startup team is to determine a 10-year goal for your company. A startup team should want to feel encouraged to make the company bigger and more successful. What better way to do so than to already have a vision for the company 10 years down the line?
Companies need long-term goals so they know where they’re heading and whether they’re on or off course. In Built to Last, Jim Collins and Jerry Porras write that successful companies stand out in setting big, bold, long-term goals, which the authors referred to as BHAGs: “big, hairy, audacious goals.” When you have a big, attention-grabbing goal, you start doing things differently in the present to get there.
To make such a mental leap, focus on ends rather than means. Think of your long-term target as the “end.” Like an athlete making a long jump, focus on where you will land. When you orient your thinking this way, solutions come to you that wouldn’t otherwise.
Examples of big, bold goals include: “$10 million in revenue with 15% net income,” “5 billion gallons moved” (an oil company), and “25% of the target market.”
Identifying a 10-year target may take some time. Discuss with your team where you want to take your company. The goal should be specific, measurable, and clear (with no gray areas). Start by asking what the company’s revenue goal could be in 10 years. Once people start talking, firm up a target that everyone agrees on. The right target generates energy throughout the company.
4. Encourage Innovation
If growth is your goal and you manage to achieve it, you’ll keep expanding your startup with more employees every year. How do you keep innovating to grow new lines of business while keeping existing products competitive? How do you prevent your team from being bogged down by process?
The solution is to encourage your startup team to be innovative. Let them pitch new ideas. Give them autonomy so their ideas feel welcomed. Your team should feel inspired to grow your startup.
In The Lean Startup, Eric Ries suggests that an innovative startup team requires three structural attributes:
- Limited but secure resources: By their nature, startups are high risk and thus deserve fewer resources than surefire investments. This is a good thing since it forces startup teams to focus on the right questions or perish. But because a sudden change in resources can be catastrophic, internal startups need their funding secured and immune from tampering by other managers.
- Independent decision-making authority: To move faster, startups need to be able to run and execute experiments without passing each one by a review board. Building cross-functional startup teams allows representatives from each stakeholder department to partake in the innovation and sign off quickly on decisions. Of course, this independence needs to be balanced with safeguards—internal startups shouldn’t do anything that can damage the entire brand or hurt customers, for example.
- Incentive in success: Entrepreneurs, internal or independent, are motivated by tying their personal success to their startup’s success. Typically this means equity or ownership, and in an internal startup, this might be bonuses or profit sharing. But the stake doesn’t have to be financial—it can be public recognition and career advantages. The rewards must be given fairly, or other internal entrepreneurs will lose trust in the system.
Innovation Strategies
It’s not easy to get every team member to become as innovative as you want them to be. But Inspired by Marty Cagan has some strategies that can help employees get interested in the discovery process, which in turn will lead to an improvement in a company’s ability to innovate.
Discovery Sprints
Discovery sprints are a way to get more people involved in discovery. Teams are asked to pause their work for a week and all focus on solving a problem, such as why users are spending very little time on their website.
During the week, the team should consider all kinds of product ideas to help solve the chosen problem. By the end of the week, the team should be able to present prototypes for a few chosen ideas to customers. This may seem ambitious, but if the whole team is working together on only this, it’s possible.
The sprints are most useful in two situations:
- The team has a big problem that needs solving quickly.
- The team hasn’t done much product discovery thus far and needs to focus their energy on learning this new process.
Some companies hire discovery coaches, or former successful product managers, to help shepherd them through the discovery sprint.
Pilot Teams
Another way to get people involved in discovery and thus change the culture is by introducing pilot teams. Pilot teams are subgroups that work on an early rollout before the rest of the startup team. If one group is working on a rollout and siloed from the rest of the team, the rest of the team can serve in a similar role as test subjects.
Pilot teams work by the same logic that an early or limited rollout works. Have one product team try new strategies like the discovery techniques outlined earlier and observe how the team does. Look to see if the chosen team is doing better with the new strategies than the other teams are with the old strategies. If the whole company sees that the new strategies work better, even the people who are resistant to change will be easier to bring along. Sometimes, the new strategies aren’t successful, but give these experiments time before abandoning them altogether.
5. Assess Current Employees
As your company grows, you’ll need to assess your team to determine if you need to fire or hire people—or possibly even promote them. It’s important to continuously assess your employees to keep them motivated and on track so your company can become more than just a startup.
Many assume the startup phase is the easiest time to make mistakes because employees might feel as though there’s little risk. You have to affirm that this isn’t the case.
According to The Ideal Team Player by Patrick M. Lencioni, the possible results of assessing current employees are:
- You confirm an employee has the qualities of a team player.
- You identify employees who lack essential qualities and help them develop into team players.
- You determine that an employee can’t or won’t become a team player and you part company.
Assessing humble, hungry, and smart qualities also can help a manager identify the problem when struggling with an employee. The employee may be creating or having problems due to a major shortcoming in one of the three areas. You’ll either solve the problem with an employee improvement program or terminate the employee.
If you can’t decide whether an employee has what it takes to improve, keep working with them until you know for sure. That way you won’t make the mistake of writing off someone who could become a valuable contributor in time. More often, managers know when an employee isn’t a good fit, but don’t do anything about it.
You can evaluate people for the team player attributes by assessing them yourself or asking them to assess themselves.
Manager Assessment
Managers or team leaders can assess an employee by answering questions like the following:
Humble
- Is he quick to praise coworkers for accomplishments?
- Does he readily admit mistakes?
- Is he willing to do the grunt work for the benefit of the team?
- Does he share credit with others?
- Does he readily apologize and accept others’ apologies?
Hungry
- Does he go beyond what’s expected in his job?
- Is he excited about the team’s mission?
- Is he willing to work beyond regular hours?
- Is he eager to take on challenges?
- Does he contribute in areas beyond his responsibility?
Smart
- Does he pick up on others’ feelings during meetings?
- Does he show empathy toward team members and interest in their lives?
- Does he listen attentively?
- Is he aware of how his words and actions affect others?
- Does he adjust his behavior and style to the circumstances?
For an ideal team player, the answer to every question would be yes. Answering questions like these can add clarity even when a manager or team leader already knows an employee’s strengths and weaknesses.
Employee Self-Assessment
Asking employees to evaluate themselves may be an even more effective way to assess whether they’re team players or have the potential to become team players. Most employees will do self-assessments if the purpose is to improve, and shortcomings won’t be held against them. It’s also a chance for them to take ownership of their development.
Use the questions in the manager assessment above, but rephrase them to ask how coworkers would rate the employee—for instance, “Would a coworker say … I’m quick to praise teammates for accomplishments?” or “Would a coworker say … I readily admit it when I make mistakes?” and so on.
A simple, alternative self-evaluation method is to ask employees to rank how strong they are in the three virtues from best to worst.
Wrapping Up
Now that your startup team is on the right track, you can trust them to take your company to the next level. After all, a manager always needs a team to back them up. Keep encouraging your employees to be the best that they can be, and they’ll give you what you need.
Did you follow these tips to build the ultimate startup team? Let us know how it went below!
Want to fast-track your learning? With Shortform, you’ll gain insights you won't find anywhere else .
Here's what you’ll get when you sign up for Shortform :
- Complicated ideas explained in simple and concise ways
- Smart analysis that connects what you’re reading to other key concepts
- Writing with zero fluff because we know how important your time is
