In the last two years I have often been asked by venture capital funds to discover and identify young talents whose projects could be financed or, alternatively, to which propose the inclusion in the team of startups already in portfolio.
While running this business I had the chance to meet hundreds of young people from all over Italy with diverse academic, human and professional backgrounds. Their projects ranged from biotech to web, from agrofood to cleantech.
The necessity of having to focus on aspects of such complex evaluation as entrepreneurial talent and the ability to deliver under extreme stress conditions led me to develop a personal method of evaluation, based essentially on the identification of behavioral patterns. For “personal method” I mean that it is largely the result of reflections that I’ve done observing, in the course of my professional life, who stood beside me: colleagues, partners, customers and competitors.
On this basis, I have identified the attitudes and behaviors typical of some “reference profiles” rather common in those who, in my opinion, should never play a leadership role within a startup (hereinafter, for brevity, I will refer to this position as CEO, figure who has the task of defining corporate strategy, business development, marketing, financials and manage the team itself).
Some of these profiles, when effectively managed by the CEO, can still make a positive contribution to the birth, development and success of a startup both as key team members and as co-founders (in the following, for simplicity, I will refer to both possibilities as co-founders).
In this post I will present six reference profiles: the first four are referred to people who can be valuable co-founders, the last two, however, describe people that I would strongly discourage to include in a startup’s team.
The first profile is the one of the ‘researcher’. This profile describes people often brilliant in their field whose main problem is focusing too much on the product and not enough on company, too much on the project itself and not enough on the value that this project should bring to the market.
Their technical contributions, as co-founders, are important, but you must take into account to manage their tendency to move very slowly from the point where they are. In phase of pivoting (ie analysis of small steps that are made lateral to verify the applicability of its solution to market niches adjacent), their approach is to increase the functionality of the product in the sense of making it more vertical, rather than slightly to broaden the application space in an attempt to explore adjacent niches.
The second profile is the one of the ‘enthusiast’: people with strong technical expertise, often less specific but wider than that the one of the researcher.
The problem with the ‘enthusiast’ is that once the exciting phase of construction of the initial solution is over, he/she finds incomprehensible and boring the pivoting phase. Therefore people with this profile may have an attitude of resistance to any serious attempt of evolution of the product, preferring to push forward the development through “quantum jumps”, both of a technical nature (for example, continuously revolutionizing the product design), and of commercial nature (pushing for a positioning that is far from the current, without taking into account the consequent financial problems, sales and marketing, as well as team management). For the enthusiast, the eventual failure of the product on the marketplace is due to the fact that new and exciting things are happening elsewhere.
The main problem of the third profile, the one of the ‘pretentious’, lies in their unwillingness to recognize the contributions of others, rejecting it or, if they recognize the value, appropriating the credit. Such attitude translates into the chronic inability to build harmonic teams. On the other hand, the presumptuous are often characterized by a strong determination to achieve results. If they are able to learn from their mistakes (even though they’ll never admit to have made them!) and recognize the CEO’s superior leadership skills, they can produce value as co-founders of a startup. In this case, it will be the CEO’s duty to highlight the merit of the employees while taking in consideration the ego of the pretentious co-founder.
The fourth potentially “useful” profile is that of ‘executor’. It is people characterized by a good, if not excellent, ability to execute. The executor usually needs to follow a leader able to exploit its full potential. Left on their own, executors tend to focus too much on the execution of what they’re doing, losing sight of the framework or ‘big picture’ thus resulting unable to dynamically define new strategies. The executors are the most difficult to recognize, as their ability to execute often leads them to cover a leadership position within the startup.
The first of those profiles which are always harmful is the one of the ‘proud’. They are never willing to face reality, blaming their failure on others’ inability to understand their solutions. This type of person rarely has the ability, so crucial for anyone who wants to become an entrepreneur, to learn from his or her mistakes. I do not recommend the inclusion of these people in a startup team, because if things do not go as planned (which is quite common), they can easily become controversial, considering any attempt to change what originally planned and agreed as an unacceptable compromise.
The last profile that I will examine is the one of the ‘buddies’, those who see the market exclusively as an interlacing of relations completely disconnected from the value that you are actually bringing to the table. They find it difficult to be concise and the value proposition of their products is usually unclear. Personally as with the category of the ‘proud’, I do not recommend the inclusion in a startup in any position. There would be a high risk of having a co-founder who theoretically has an important network of relationships, but that does not really have the credibility to leverage on this network, as they are not perceived by the counterparties as interlocutors able to provide value.
In conclusion, the importance given to the team by venture capital funds makes even clearer the importance of having a strong, competent and heterogeneous team. The importance of the team will never be overestimated. In this post, I presented 6 profiles, analysis of which, I hope, will be helpful in the assessment of potential partners in the team building phase of the startup.