How to Build and Manage High Performance Startup Teams

I’ve spent a lot of time talking to entrepreneurs and CEOs about team building, but it had been a long time since I was at Netscape (‘94-’98) building teams of my own. When I started Costanoa Venture Capital in 2012, I had to test my principles once again. They held up pretty well, but with a few modifications I was able to distill it down to these three:

1. Team first

Start ups are a team sport. Especially in business-facing companies, the product development environment, go to market infrastructure and overall business system are complicated enough that alignment matters as much as brute force or sheer brilliance. There is an old saying that “there is no I in team.” More recently, we’ve learned that there is an “I” in team, it is just hidden. You need to make sure you root out the ***holes– those that destroy chemistry, ruin alignment, and pursue their own agendas.

One of the best parts of being at Netscape in its founding days was that we really lived “All for one and one for all.” It really felt like we were on a mission together. Anyone’s victories were victories for the team. Any failure was a challenge to all. Unfortunately, that changed in early 1998 when the business stalled and we had a Reduction in Force of 12%. The change in culture was palpable as some people began to think their interests and the company’s might not be the same. It became less fun — and the company never was the same.

Products are complicated enough that they are produced by teams, not by one great engineer. Building a great product doesn’t matter if it targets the wrong market, so alignment with product management and marketing matters. Some companies are lucky enough that they build a great product and the world comes to them credit card in hand. However, most often there are actual human beings (salespeople) who talk to customers, explain the benefits, and try to close business. If these pieces aren’t working together, the business fails. As a result, finding people with the communications skills, emotional maturity and self-awareness and ability to put the team’s needs ahead of their own desire for professional advancement or empire-building is absolutely essential.

Besides, you’re going to be working long hours on a project whose material rewards come from team success, so you might as well like them (no ***hole rule) and you better think they are working for the team too.

2. Get A players in every job

Most start ups are lean by definition. Raise a chunk of capital, target a couple of key milestones, hit targets, and get to raise another chunk of capital at higher prices. Constraints on capital mean constraints on headcount, so each person needs to hyper-productive. There isn’t room for mediocrity. In fact, mediocrity reduces team morale (when it is needed most) and is poison in terms of people being able to put the Team First. Besides, when someone isn’t pulling their weight, everyone on the team knows it.

In the early days of Netscape when I was a Product Manager, there was a Director-level person in another department who wasn’t pulling his weight. It was a source of frustration to many who wondered (sometimes outloud) whether the organization was as meritocratic as we all wanted it to be. Management eventually took care of it but not before it had festered for too long. This is one of the ways Me First gets introduced into the organization.

An A Player refers to someone’s ability to do the job at hand, what Andy Grove called Task Relevant Maturity in his book High Output Management. Everybody doesn’t need to be a future CEO. You can have people who are great individual contributors and will always be great individual contributors, and you can mix in a couple of super star talents that are inexperienced but capable of high output and are willing to learn if you have some people they can learn from. BUT you cannot tolerate mediocrity in a startup or have people that are bottlenecks. Time and teamwork is too precious.

3. Everybody goes to their highest and best use

One could call this a corollary of Team First but I think it is important enough to draw it out separately. Team members absolutely need to spend most of their time and energy recognizing how they can contribute the most to the team at that moment. Typically, this means working on the things they are best at, but sometimes that means taking on an unglamorous task that no one wants to do. People with “utility player” skills — and attitudes — are extremely valuable.

Over and over again, I see people who screw up their jobs — and sometimes their careers — by wanting to be something they are not. At one of our portfolio companies, we had a terrific executive who was great at his job, highly valued and well-compensated. But he wanted more- particularly, he wanted a General Management responsibility to meet his own career objectives. In a fast growing company, he endeavored to grow and defend his “empire” rather than partnering with new executives who had joined the thriving company. In the end, it was destructive for him and for the executive team. Avoiding such a situation requires a combination of self-awareness and humility, and it isn’t easy.

There is room for professional development in start ups, but it needs to be built on the foundation of achievement in areas of strength that are important to the company. Executing on the things that a team member is great at “earns” the right to take on new roles/capacities and learn new skills.

Further, the areas of development ought to be adjacent to areas of strength, all of which requires a real understanding of both strengths and weaknesses. Some of that can be obtained by introspection, but eventually any team member needs external feedback — and s/he might need to solicit it since most companies do it poorly.

Nothing in start ups is easy. By following these general principles, one can build high performance teams while trying to achieve crazily ambitious things with limited resources — and that goes a long way towards success.