Success Is All About the People

It is a known fact that the majority of startups fail, yet most people assume it is external factors of funding or the market that will cause their downfall.  In Noam Wasserman’s study of 10,000 VC-backed startups:

  • 65% of those who shut their doors did so because of “people problems,” irreconcilable frictions between the founding team,
  • Compared to only 35% failing due to anything else – product, functional, market, or funding problems.

Wow, that’s about twice as many that fail based purely on challenges that can’t be overcome within people dynamics.  Relationships are hard, and this is especially true in startups, when you’re investing a lot of time and effort, forgoing other opportunities, and the stakes and therefore tensions can run high.  So what makes it so hard to navigate the interpersonal side of startups versus the business and technical side?  And how can you get ahead of these challenges?

It’s a combination of finding the right co-founders, and making it work with them.  I know, sounds simple, but allow me to explain.  The success of a team can be broken down into three parts:  the design, launch, and process.  And a percentage of the overall success of the team can be attributed to each part:

  • 60% of team success is the design – having the right people.  I’ll address this in further detail in another post, but it essentially comes down to finding co-founders with a similar vision and values, and with complementary personality and skills.
  • 30% is the team launch – how you kick things off.  Most disagreements come down to a misalignment in expectations, so setting these clearly up front, knowing what is important (and not important!) to everyone, how you’ll communicate, when people can make decisions without checking in, whether you’ll work together in the same room or separately, etc. etc. etc…
  • 10% is the process – ensuring you have the right processes in place to track progress and keep things on track.  This includes everything from feedback mechanisms to metrics of the company progress.  It may be the smallest percentage, but can still bring a team and company down if it’s lacking.

Ultimately, it takes both a great team, and the ability to set expectations and communicate, and want to make things work.

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