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Entrepreneurship = Team

July 3, 2011

In the retail industry there is a saying – location, location & location determines your success. Similarly in entrepreneurship it is all about team. If you look at successful companies it is always two or more people are involved in making these ideas successful – Steve Jobs & Steve Wozniak of Apple fame, Bill Gates & Paul Allen of Microsoft, Larry Page & Sergey Brin of Google and so on the list continues. So why do we need more than a person for starting a venture, how should one choose a partner, how to structure the partnership etc. These are the kind of questions that entrepreneurs face right from the time when they come up with an idea and will continue to face even through out the life of the venture.

Do you need partners?

My personal philosophy is that ideas are dime a dozen and it is about execution. If you look at the history of most successful ideas, these are not new ideas but a better variation of existing ones with a precise execution strategy. Given the need for better execution which involves operations, marketing, finance, sales and so on no one person can work on all these aspects – for lack of talent and resources. So either you hire an army of people or depend on others (team members).

Entrepreneurship is a roller coaster ride – ups and more downs in the beginning. You need to have someone to encourage you during the downtimes and keep you grounded when things are moving in the right direction. You should be able to talk to this person(s) freely without any reservations – about business, personal and political. This set of people will become your real partners – in a way more than your spouses as you cannot share business issues with your spouses as they themselves are grappling with household issues.

How to choose a partner?

Some one who you have known for long or have worked with and feel comfortable with and complements your skills. If you are good in development find someone good at marketing/sales, if you are good in ideation find someone who can close on things and so on. Once this criteria is met, would you be comfortable working with him for 18 to 22 hours a day and literally live with that person. Can you work with this person(s) and handle tense situations, make decisions and live with them. All these are some yardstick rules and the proof is in the pudding – once you start working you will get to know more about this person, what clicks and build a better working relationship.

How to structure the partnership?

Initially I had this misgiving that equity is everything and would like to keep control of everything. Yes as a startup equity is the only currency you have but if you cannot develop and execute on your idea your equity is worth nothing. So be prepared to part with your equity – now the big question is how to distribute it. What is fair and how will you make sure that you stick with the rules. So I have this rule of thumb – if you cannot decide on equity partnership within 30 min, then you have a problem. One cannot have complex performance calculations (at least for the founding group), timelines for equity distributions as your primary goal is to build the company and you have to channel all your energies in this direction.

Final conclusion

In conclusion having a team – at least one more person is quintessential for a startup and choosing the right team is like a make or break decision. The above rules are based out of my experiences and there might be others who might have other criteria as well in choosing a team.

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