Startup success: How to predict it and avoid failure
Entrepreneurs are some of the most driven people on the planet, but they all started from the same point: with a passion for their product and no idea if their big idea would be a huge win or lead them straight back to the drawing board.
- Author
Kat Boogaard
Much has been said about startup success and what the most important elements are. Timing, market, value proposition, access to and amount of capital, and connections are all crucial. But there’s one more aspect that’s often overlooked: the team.
With years of experience in supporting startups, Fingerprint for Success founder, Michelle Duval, knows all about what makes a great team.
In an interview with Anna C. Mallon (of the Amazon Web Services (AWS) startup team,) she shared
- how you can predict the success of your startup based on the people you bring in,
- some of the biggest mistakes founders make and how to avoid them,
- and why personal development is the key to your startup’s longevity.
Watch the video below for an interview between Anna C. Mallon (of the Amazon Web Services (AWS) startup team) and Michelle Duval (Fingerprint for Success (F4S) Founder and CEO) — where Michelle shares her startup success tips gleaned from 20+ years of research.
What should startup founders be looking for when building a successful team?
With over 800,000 new businesses started in the United States alone in 2020, the competition for startups is fierce. So, it’s more important than ever to ensure that the team you’re building is the right one. A solid foundation is crucial and knowing that you share overlapping values with your co-founders is essential.
We’re definitely not saying that you have to share the exact same thought process and vision, but studies have shown a strong correlation between mindset and success, and having those connected touch points will help to prevent ongoing conflict as you scale.
“What you value will determine how much alignment you have and set up longevity with your co-founders,” says Duval. Chemistry between the leadership team will ultimately determine whether you sink or swim.
Looking at the wider team, keeping up with pace of change and being able to rapidly turn ideas into action is not just necessary to ensure success long-term, but crucial for early stage startup survival.
The more hustle you have, the more venture capital you’ll accrue and the faster you can scale. A proactive and scrappy team can adapt and mold to their new environment quickly, but only if the structures put in place allow them to do that. That’s why it’s so important for startup founders to keep these structures flexible and any procedures minimal, especially in early stages when funding is still coming in.
If your team is highly-technical, it’s easy to fall into patterns of advanced structure and planning to fit product development and testing schedules.
While this of course this is still important to work on (particularly in later stages of business,) remember to let your team stay creative and experimental to not only develop their own skill sets, but to stay agile and curious as their roles shift throughout the company’s growth.
How do you determine team values and motivations?
For those functional and technical teams, some structure will be necessary for them to succeed. Their unique skills are important assets to the organization, but it’s also necessary to remember that the needs and roles you’re filling now could look very different in three to six months. This is why hiring for attitude is so crucial in working toward startup success.
When you hire for attitude, your goal should be to look for big-picture thinkers rather than someone who is more detail-oriented. This will be your greatest asset, as details can slow down your pace of change and introduce barriers to scalability that you didn’t previously have. A rapidly-changing environment can also be more challenging for individuals who are used to focusing solely on a practical job role, so ensuring that the team is invested in the mission and vision from the start is one of the best ways to prevent high turnover and team conflict.
Clear company values that are conveyed at every opportunity will set you apart from the competition and inspire your team. As the founder, it’s vital that you use your voice to constantly and consistently share this narrative, both internally and externally. This will be what brings new people to the team and why venture capitalists will want to invest in you over another organization.
Knowing where to break down functional roles versus entrepreneurial leadership positions is crucial, and it should become clear throughout the recruitment process if individuals will fit into your company culture. While each role has its own specific needs and importance, attitude and company fit are just as vital to the success of your startup as the day-to-day work.
Do education and background matter when it comes to startup success?
Of course, functional needs and candidate qualifications should never be completely disregarded when hiring new team members. If you have team positions that need filling that require a specific skill set (e.g. UX designer, graphic designer, communications manager etc.), this should be the primary focus.
However, once a number of candidates that fit those qualifications are in the recruitment pipeline, attitude and motivation can easily become the defining factors that help you to decide between two exceptional options.
Asking questions early in the recruitment process will help you to screen for motivations early on and the Fingerprint for Success motivations can be useful to have on-hand as you identify attitude attributes outside of the needed practical skills.
What factors do the most successful teams have?
There are two key factors that successful startup teams all have–big picture thinking and initiation.
Big picture thinking
Understanding the broader vision of the company, rather than focusing on the detail of the day-to-day, is essential in moving the plan forward. Your goal should be to look for big-picture thinkers to join the team. This will be your greatest asset, as micro-level details can slow down your pace of change and introduce barriers to scalability that you didn’t previously have.
By looking at the entirety, you’ll be in a better position to go after more rounds of venture capital and understand what your team needs are as you grow and bring on new employees. Having global ambition allows you the freedom to be more creative, which often leads to innovation in new and exciting ways. That flexibility and drive toward a larger goal is the difference between sinking or swimming for most startups in their formative years.
Initiation
Keeping the bigger picture in mind is important, but it means nothing if there’s no action. A go-getter attitude is the only way that progress can be achieved across all levels of your team. Being proactive allows you to get things done and move rapidly, which is essential when looking for additional funding or increasing your company’s exit value in competitive startup markets.
In a climate where over 20% of startups fail in their first year, having the resilience and energy to pivot and adjust as challenges come your way is crucial. Initiation is just as much about providing leadership in the tough moments as it is putting the wider plan into action, taking the opportunity to learn and grow through both failure and success.
When both of these factors come together across your team, you have found the perfect balance of dreamers and doers to take your startup forward.
What are the most important dynamics to focus on when building a team?
Bias toward goals
In most technically-focused companies, the vast majority of the team will enjoy a challenge and find problem-solving to be mentally stimulating and enjoyable. But focusing on outcomes, rather than the problem itself, is one of the best ways for a team to collaborate and work toward a shared vision.
Having a goal-oriented outlook often leads to significantly better outcomes, including additional capital and higher employee satisfaction. While it’s helpful for technical team members to be focused on solution-finding and problems, having a collective goal to aim for gives people direction, meaning, and purpose as they go about their daily work.
Bias for tolerance
Tolerance is something that we should all be aiming for, in both our personal and professional lives. But recent studies have found that, when organizations focus on building diverse teams, there are significant improvements in work outcomes and overall motivation.
This is especially crucial in a startup environment, where resources are often scarce and you feel like you never quite have enough of anything. Fostering an atmosphere of tolerance and acceptance for working within your limitations allows for the coexistence of different ideas and motivation to accept others.
Everyone learns to appreciate the differences that their coworkers bring to the team and diversity across gender, race, sexuality, and backgrounds allows for greater collaboration. Yes, it can be incredibly uncomfortable to try to solve problems when everyone thinks differently, but the solutions that the team comes up with are usually better and more innovative as a result.
What are ‘blind spots’ and how can teams overcome them?
Another perk of building a diverse team is that it helps you overcome your company-wide blind spots. When we’re focused on a particular goal or motivation, we don’t always realize and notice our inherent biases. If the whole team holds the same biases, this can lead to your organization overlooking crucial areas that could impact your startup’s success.
Now, it’s completely natural to have biases. We all have them. For most founders, their natural mode of operation is often previous corporate contexts where they were successful, so blindspots can easily arise when the new situation doesn’t quite match up to their prior experience. A diverse team brings in more perspectives to the organization, giving you the best chance of covering any blindspots that leadership or existing team members may not be accounting for.
When it comes to filling those blind spots, look first at your current team makeup. Where are the gaps that need filling? Does anyone on the team cover that need already and can you defer to them to ensure that that blind spot is no longer a problem? Knowing these points ahead of time can save you from recruiting unnecessarily, but also ensure that you waste less time and grow faster.
What are the biggest mistakes and pitfalls that startup teams make?
You may be worrying that blind spots are what’s holding you back from startup success. But knowing that you have biases and acknowledging these is one of the most important first steps you can take!
In fact, we estimate that 40-60% of business failure is due to leadership, management, and team dynamics, so a focus on fixing or improving these areas will put you on a great path moving forward.
Lack of self-awareness in leadership is one of the most common reasons that startups fail. While tenacity and ferocious hunger to be the best are qualities that the world’s best entrepreneurs share, ego and perfectionism are often the drivers on that slippery slope to failure. That’s why personal development and coaching are so important. Ongoing learning should always be encouraged at all levels of your organization, not only in practical skills but in soft skills like effective communication, critical thinking, empathy, emotional intelligence, and adaptability.
Beyond this, failure to listen and embrace the ever-changing journey of entrepreneurship can bring your company’s adventure to an early end. Knowing your motivations and values as a company are key, but you also need to understand that these will likely change as you scale. It might be difficult to identify these on your own, so building a support network of mentors, board members, advisors, and other founders who have been through the process before you can help to alleviate anxiety and possible indecision in these moments.
Is your startup prepared for what comes next?
Taking your organization from idea to successful startup is a scary but exciting process. While there’s no single right way to go about this, learning about yourself as a leader and how you need to change throughout the scaling period will ultimately help you to support your team and see success.
From there, you’ll understand what gaps you need to fill in your existing structure and build a more diverse team to see your startup through its next level of growth.
