Every start-up encounters speed bumps on the highway of growth. It's the people on your team who will enable your company to power through them. Skills and capabilities must evolve as you grow. You'll need to navigate advisory and other boards, recruit well and have effective team communication and a CEO who sets the stage for the company culture – all just to set you up for that early-stage VC funding.
Lance Laking, an experienced successful entrepreneur, talks about how to successfully drive this off-road path.
Part of the CIBC Presents Entrepreneurship 101 lecture series. For more information including video, please visit: http://www.marsdd.com/Events/Event-Calendar/Ent101/2009/building-teams-04012009.html
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Human Capital: Building high performance teams for your start-up's success
1.
2. Human Capital: the importance of
high performance teams to start-up success.
3. Outline
Context
Team diversity & dynamics
On hiring
Culture
Communication style
Compensation / incentive programs
Challenges
Closing comments
4. Definitions
Human capital refers to the stock of skills and
knowledge embodied in the ability to perform
labour so as to produce economic value.
High Performance Teams: Teams that are
highly focused on their goals.
5. Context: my background
U of Waterloo, Chartered Accountant, Queens U
& UWO Executive Development
20+ years in tech companies
Co-founded DCI
Grew team of ~60, RTO on TSE
Country manager HUBER+SUHNER
Swiss multi-national, “blue chip”
Team of 125 inside 2,300 globally
CEO BTI Systems
Raised ~$60M VC over 4 rounds
From 12 to 225 employees
Revenue from $0 to $40M
Currently freelancing: Singletrack
Teams of 8 to 88, from IT to Cleantech
6. Context
my typical playing field:
A (very) technical product
A technical sales process
A long, complex, B2B sales cycle
High growth market dynamics
Very much a David & Goliath landscape
9. Motivation & drive:
different strokes for different folks
• Peer recognition
• “coin operated”
• Papers published, patent
applications • “show me the money”
• Speaking at industry forums
• Technical challenge
10. But wait a minute:
we’re not that different
1. Everyone needs recognition - the “feeling” that you are important, that
you are contributing to the success of the business, and that your efforts
are respected and appreciated by fellow employees
On budget / On time
Cracking a new customer
Selling on value
Customer testimonials – helping solve real problems
2. Technical teams want to work on a successful products. Sales teams want
to sell winning products.
The common metric is real customers /market share
11. Fostering teamwork
Trade notes
• Technical teams are starved for customer feedback
• Sales teams are starved to technical innovation / uniqueness
Push decisions to where the expertise resides
The key linkage between Development, Operations and Sales is
Product marketing / product line management
On occasion…take a ‘software geek’ to a customer, and bring a
‘sales puke’ into the lab
12. Great (Management) teams have:
1. Diversity to accommodate wide range of variables
2. High “AQ” (Adversity Quotient = measure of human resiliency)
3. Psychological safety (to call out decisions)
4. Prior interaction (know each member’s SWOT)
5. Clarity of purpose and direction
6. A Plan “B”
13. On hiring
Hire the best talent available – don’t compromise
Attitude over Academic credentials
Be careful with big company experience (no job too small attitude)
Use
Director and investor referrals are great but…
You can compete with high paying companies…
For tech plays: hire product management early
14. Shifting Investment in Human Capital
“Make
Sufficient &
Well-Timed
Investments in
Sales and
Marketing”
Source: 2009 OCETA SDTC “Cleantech Growth & Go-to-Market Report”
15. Culture
Every company has a culture, every company has politics
Perception is reality
Work with it
My observations:
1. Culture changes with company lifecycle:
• The $1M, 5M, 10M, 25M, 50M barriers
2. In Canada, we’re trés multinational: use it to your advantage
3. As the leader: be candid
• Candid = Integrity
• A culture of candour is a source of sustainable competitive advantage
4. Celebrate wins, De-brief Setbacks, encourage mistakes (but not
repeat mistakes)
16. Communication style
Not your `typical` Tech CEO
Be OPEN, honest, straightforward
Have the tough conversation
Stop management “happy talk”
Soft on the people, HARD on the problem
Be inclusive: tie in the remote teams
Set 3, clear over-arching objectives, & repeat
Share the numbers, the good, the bad & the ugly
Regular informal updates
Semi-annual formal update
Have fun!!
17. Compensation & Incentives
Fair, transparent and equitable
• People talk, especially engineers
Salaries (the “start-up” factor)
• You have to be competitive – but not the highest
• You have to pay a premium for “A” players – but it’s worth it
• Challenge, responsibility, recognition and reward trump pure $$$ - that is
how you compete with the big companies…
18. Compensation & Incentives
Company-wide incentive plan
• 10% “at plan” , 20% stretch
• Metrics must be aggressive, but realistic
• Combination of financial / market / product milestones
• Always drive home the capital efficiency message (Cash Flow Positive…)
Stock Options (ESOP)
• Still in vogue, but not Holy Grail
“Fun” and other rewards work
• Create a friendly competition / bragging rights
• Does not require big bags of $$$
• Examples: IP², a goofy award, employee referral bonus
19. Challenges
1. The Investor / VC influence
• The same vested interest or ??
• An exit and minimum 20% IRR is natural
2. As the company grows up…
• Start-up excuses go away
• Employment / HR expectations expand
• Balancing formal (e.g. employee handbook) with
informal (“just do it”) gets harder
• “Act BIG, be small” gets harder
20. Closing comments:
leveraging human capital for success
1. A high AQ team will handle the inevitable speed bumps
2. Set a tone that is open, based on mutual respect, and interactive
3. Bring in Organizational Development / HR expertise as early as you can
4. Communicate frequently – informally and formally
5. Tie in customer and market touch wherever and whenever you can
6. Structure rewards and incentives to reinforce the behaviour and culture
that you are looking for