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The Founder Institute is the world's largest pre-seed startup accelerator. It has launched over 5,000 companies across 200 cities and boasts the largest mentor network in the world (of about 21,000 mentors).
For the fourth installment of their "Mastering Startup Operations" series, Ryan Micheletti, the Head of Operations at the Founder Institute — sat down with AbstractOps' COO Adam Spector and company systems designer Nick Hofmeister to talk about how to hire right and build great teams.
Why the focus on hiring and team-building?
Because, firstly, knowing how to hire right and build quality teams has always been integral to the growth of successful startups — in many ways, the "secret sauce" which helped them achieve escape velocity. Furthermore, having a solid team in place has also been known to boost the likelihood of securing coveted venture capital funding deals.
This interview was an incredibly insightful continuation of the other sessions that Adam has done with the Founder Institute (like this one) and helped an international audience of founders get an invaluable understanding of the various aspects that go into building the kind of team that VCs can trust, a team which can ably steer the boat of the business through the choppy waters which are part and parcel of the quixotic voyage of building a company.
Let's dive right in.
Note: Following are excerpts from the interview linked above.
Adam and Nick, we’re lucky to have you both here. So, Adam, do we want to start with the presentation?
Adam: Yeah. So, we will talk about many vital areas here that are critical to building your company and team. Hopefully, this will be a quality learning experience for you as you develop your company and team.
First and foremost, sometimes people think that there's this sort of "founder v/s everyone else in the team" type of situation. As in, you're this founder, this exalted person who's up on the hill and who had this fantastic idea. As someone who's built three companies, I will tell you that that is a complete myth. And if you think that way, you should get that out of your head right now. Because, in the end, your job is actually to build a team of great people - and not be this mythical founder on a hill. If you are, then you're mostly rigged for failure. There are a few extreme examples where maybe that's not the case, but even in those examples — let's say someone like Steve Jobs or Elon Musk — even then, they're incredible recruiters and what they were able to do is create that culture, create that idea: the idea of the company that they're building, who they are, what that company meant, and the values that they brought to it. And, by creating that, they were able to recruit the best folks, have people who embody that culture, and then spread that culture out as they continue to grow.
We very much believe that, frankly, you should never treat your teammates like "employees." They should be teammates, not employees. So, it's a very critical sort of difference, and that shows a mind shift, right? These aren't people who work for me; these are people I work with. And that's such a different mindset because you're in this battle to build something that no one's ever created before and figuring out a way to do that with a team who is just as passionate as you are — even if they don't have the same amount of equity — is critical to you being successful. So, respect the risks they take because that's so important — people are taking this considerable risk on your idea and in your vision. The more obvious way in which you differ from the rest of your team is that you generally have a few special powers: for example, your ability to explain what you're doing and why; in other words, your ability to set the culture and vision. But beyond that, frankly, as a founder, the only significant difference between you and the rest of your teammates is one: you really can't walk away from this. Your teammates can leave and can switch jobs. You, as a founder, are in it basically until you go public or until you fail. So, there is a difference there internally that makes you work harder sometimes. But, beyond that, your team's there with you — and you should respect that.
Nick: I think there's something about a set of good startup leaders and some qualities that Adam and I have seen over time. We've tried to codify this at AbstractOps as much as we can. This is not a complete list, but we feel like there are some do's and don'ts when being a good leader. There's this quote by Anthony Hopkins that goes, "When I was a young guy, I knew everything. Now I know very little. I know less and less as time goes on." Even though Adam and I have been around the block many times, we don't feel like we know many things profoundly and truly. And if you bring awareness to that — that there are very few things you can learn — it makes your job a lot easier.
I know that sounds a bit counterintuitive, but the idea is that when you get rid of this false sense of certainty that cannot be true [laughs], you can be OK and accept that most things are entirely different uncertain. And, in startups, that's even more true. Uncertainty is a norm. There are very few things that you truly know — but finding out those things that you know, glomming onto those things that you know, holding onto them, and then using that as a core to build out the company and culture that you want ends up being a really core foundation to build on. If you instead build a shaky foundation, insisting that you know many, many, many things, but I don't think you're right about 90% of that, then that will crumble on you. And it crumbles because when transparency finally comes to that foundation — that crumbly foundation — and people realize that you're lying [laughs] or that you don't know the things that you know. Faith starts to erode, that journey they're on with you starts to rust, and they don't believe you anymore. That belief and risk they're taking don't offset each other. And that belief begins to crumble further.
One other focus that we see in good leaders — and I learned this from the first CEO I've ever worked with in startups — was essential to focus on the three things that only you can do. So, wake up in the morning, write down a list of three things. These should be three essential and that only you can do. And as the CEO, as the founder, there are some things that no one else can do in the company. To find out what those are and focus on those things, push as much responsibility down into the team as you can and recognize what only you can do.
And, lastly, create a mission and a culture that can sustain a team. Many, many things will go wrong in your startup. More items will go wrong than go right. It is because you're experimenting and you're learning that you're going to fail — because you don't know and you're trying something new. But your mission and culture is to create a team that will sustain you through that.
Let's talk about bad leaders for a bit. I've been, unfortunately, an employee and a direct report in the past. I've been told what to do by people who, firstly, manage by the crisis-and-fire drill. Secondly, they become dictators and egomaniacs. Thirdly, they tend to talk too much and listen too little. I think those are the three biggest killers that founders and CEOs fall into in particular. And it comes hand in hand with some of the other excellent qualities that a CEO and founder needs to have. So, keep these three top of mind as you go through your daily interactions with your teammates — not your employees but your teammates — and watch out for these killers because they're straightforward traps to fall into as a CEO and founder. Yet, they create a culture that breaks down very quickly, loses resilience, and doesn't survive when things go wrong.
Adam: Sometimes, what I've seen with bad leaders — the reason they talk too much, they don't listen, they manage by the crisis — it's actually because they're terrified, it's actually like a fear response. You're worried if you give up things you think you should be doing because you're the founder, you have to talk a lot to prove that you know what you're doing. And that goes to Nick's point of giving up those things that you're not good at because, as the founder, the reason why you started your startup is that, hopefully, you have special knowledge about one thing that you are so good at. You can see over the hill that no one else can see. You know that the next reality is coming. You have that vision but that doesn't mean that you're good at finance, that doesn't mean you're good at sales, that doesn't mean you're good at marketing. You don't have to be that expert and then create this level where you probably have that fear that characterizes terrible leaders. That's what I've experienced, at least.
Nick: I think you're exactly right. It's either fear-driven or ego-driven. I've seen both out of bad leaders. But I think it's more often fear-driven because we're told as CEO and founders that we must be good at everything. We must be excellent. We must be superstars. But I think you hit the nail on the head, which is to say that "No, we're good at one thing. We need to know what that one thing is. We need to capitalize on that one thing and use that to drive the mission, the culture, the values, and the direction of the company we're creating. That's our superpower. We should admit everything else, and we can acknowledge that we are not experts. I am not an expert at HR. Even after 13 years, I am not an expert at HR. I am not the person who should be in charge of it all the time. Other people are far better at it than I am. And I can say that for probably six out of the seven essential topics with startups.
Those are really good points. At the end of the day, your job as a startup founder is to be that leader who can motivate people, lay down the vision, and drive home what the team is trying to build. Then you have to recruit the all-star team that could then elevate what you're doing to the next level.
Nick: Exactly. So, a few thoughts on team-building. We're going to start by breaking this down by the stage. There is a difference as you build out a company about how you think about a team by stage, and there are things that are easier and harder, depending on how many people you have involved with the company and what you're trying to accomplish.
So, at the beginning of the company, when you're a garage startup, or there are just a few people, the "shared values" component seems particularly easy because there are three of you or four of you, and you all come in with a shared set of values. Unfortunately, this is usually implicit. And when the early team gets founder issues, which is a source of friction among many early groups and is one of the two great killers of startups — the other being shiny object syndrome, which we'll talk about later — it's because they didn't sit down and make their values explicit. They didn't write down what they care about and why and how they're going to organize their company and how they're going to organize themselves and how they're going to make decisions when there is a clear trade-off and no right decision (which is most of the time).
So what I try to encourage in people is to sit down and write out the values that matter, even when it's just three of you or two of you. Why are you doing this? What do you care about in life (and not just your company [laughs])? Then create a set of values for the company that will be the foundation for the culture.
Adam: And, Nick, before you go on, here's a quick question for you. What percentage of companies have you seen where there are major founder issues that crop up and potentially either break the company or at least derail it for a little while?
Nick: Of the 25 that I've worked with, I would say 40% have some significant founder issue where a founder leaves, or there is some crisis moment, or there is some major disconnect between founders. Is your percentage different, out of curiosity?
Adam: No, I've seen it a little bit lower but, also, I think it usually does happen early on where people — one of the founders — leaves, and then it is OK. And one thing I'll add to your point — that I think is a good one — is what my cofounder, Hari, and I did when it was just us. I didn't know Hari from anything else. We got introduced by a mutual friend. One thing that he'd already done before we met was write up a 60-line list of all of his qualities, where he was good, where he was terrible, various issues that he had — all these different parts of himself. It was founder-dating. And, to his credit, he asked me to do the same thing, and we talked through that in-depth. Nick has been a third party that has come in recently and been a good part of what we're doing.
Despite not knowing each other, we worked well together, but we set those norms early on. Norms like what do we care about? What mistakes did we see in previous companies that we didn't want to repeat at AbstractOps? And we've been very explicit about writing those down, and we're on Version 4, as an example, of our value statement. Four versions of our value statement in about 20 months. These values are very explicit. When they join, we tell everybody in the team what the values are and how they work. And then we say that we can update these as a team because the team is working on these together, and they might change over time, but we've been very explicit from day one. And I think that's kept us strong. It has gotten us to where we are today.
Nick: Which ties directly into the transparency point as well. There's transparency between Adam and Hari. I've witnessed this now many, many times. This gives them a chance to provide direct feedback and then return to the shared values they started with. So, it's always grounded in something.
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