Teams vs Ideas: We’re Doing It Wrong

400px-The_Traitorous_EightWhen a group of PhDs left Shockley Semiconductor in 1957 to found Fairchild Semiconductor, they did two things (well, they did many many more things obviously, but for the purposes of this piece I’ll mention two).

The first is they created the template of a startup, which became Silicon Valley, which became the dotcom boom, which presaged the entrepreneurship revolution we are currently experiencing.

Second, they demonstrated the value of teams over ideas.

Start with a Team

When those eight folks left their stable, 1950s-era grey-flannel-suit jobs at Shockley and struck out on their own, they had already worked together for years. They knew each others rhythms, strengths and weaknesses, and they had built up the social capital that comes with succeeding and failing together. Sure they had specific product ideas when they started their own company, but over time their products evolved (at lightning speed, it turns out) as did the companies they spawned and inspired. (Side note for history geeks: for those who don’t know, one of them was Gordon Moore, who lent his name to Moore’s Law which is arguably the most important catalyst for change in human history. But I digress.)

One hears from the investment world all the time that teams are more important than ideas. (Google “I’d rather invest in an A-quality team with a B-quality idea than vice versa” for discussion.) This is wise: not only do quality teams infer broad experience and a diversity of skills, but in theory they also bring a sense of shared social capital that holds them together during rough times. And there are always rough times. (The financial difficulty the Fairchild folks encountered trying to make their company work was bad enough, but the social obstacles they faced were so great they were labeled “The Traitorous Eight“.)

My most successful companies have always been built around teams that worked (I’m looking at you, Steve Sydness) independently of the business challenge du jour. And the least successful ones were always based on teams that didn’t. Or worse, ones I tried to do alone. I said for a long time that the team I worked with during Endurance’s early years would be successful doing anything together – from SMB web hosting to selling used cars.

So why, then, do we structure so many of our early-stage venture institutions around ideas and not teams?

Why Haven’t We Figured This Whole Team Thing Out?

For a long time I’ve been saying that the earliest stage (from concept to “real”) is the least studied and least understood phase of venture creation, and yet in many ways the most critical one. The rise of incubators and accelerators and syndicated angel networks (not to mention institutional investment) all kick in well after a venture has made it through this phase, and yet the seeds of failure are inevitably sown during this time. Mismatched founder expectations, interpersonal chemistry problems, incomplete skillsets, bad legal agreements, lifestyle conflicts – I could go on and on – all can get submerged by the heady enthusiasm of the early days … only to rear their ugly heads later on. In the informal inquiries I’ve undertaken to determine why startups fail, team issues are far and away the biggest problem. And just as interestingly, well-bonded teams that fail together can stick together for their next company, which inevitably has a higher likelihood of success. Jo Tango of Kepha Ventures is fond of saying that investing in entrepreneurs who will succeed on their second or third try is part of his long-term strategy. I’m sure he believes the same thing about teams.

That’s not even counting the huge number of concept-level ideas that never make it out of this stage. People quit their jobs and invest their time and money into concepts all the time, and the vast majority go nowhere. (By the way, if anyone has statistics about how many startup concepts succeed or fail before they become “real,” please point them out to me. I’ve been researching this for at least five years and have yet to see any good data on the subject.)

Why founder dating sucks

I can’t tell you how many people approach me – on their own – with an idea they “need help with.” They pitch the idea and hope it will get me intrigued enough to get involved. Founder dating and networking events are a dime a dozen and do little other than generate smalltalk and reams of business cards that no one follows up on. Hackathons and startup weekends and pitch contests – which are better at engaging people – all put ideas first and put no emphasis on teambuilding. Granted the business ideas is the catalyst that gets the team to the table and gets people interacting in the first place. Entrepreneurs like nothing more than to talk about ideas (most of us have long lists we compile in our sleep), and when you get us together to think about them the excitement can be overwhelming.

But when people get down to the business of actually building companies on top of those initial euphoric sessions, we’ve got nothing to offer. We leave the “team stuff” up for grabs. We just assume that “all those details” will just work themselves out … and we’ll see the result during the application process for your local incubator. And when team issues get in the way of progress in this early stage, we just shrug our shoulders. I hear rationalizations about this all the time: “the idea wasn’t meant to be. … good companies/entrepreneurs will always find a way,” et cetera.

A mission to do better?

To me, successful startups are not just vehicles for personal or institutional enrichment. They’re a societally necessary human institution that is the only way we’re going to cope with the onrushing Singularity. As a society, we should be working as hard as we can to make as many successful as we can. This collective shrug about what gets a company through its earliest stages baffles me. Just the amount of wasted human and financial capital that happens as we bumble around in our ignorance is heartbreaking. The otherwise great entrepreneurs and great ideas that burn out along the way – and the products and solutions they would otherwise have created to improve the world and our lives – makes it a tragedy.

TeamUp Weekends instead of Startup Weekends?

So here’s my modest proposal: let’s start teams, not companies. Let’s concentrate on building institutions and events and frameworks where potential teammates can get to know each other at a professional and personal level, find out how to complement each others skillsets, learn to work with each other under pressure, compensate for each others strengths and weaknesses, and – yes – develop ideas together. We want teams with “foxhole mentalities,” shared memories, and the trust that comes from working alongside one another. Let’s put what we know about the intellectual and human side of what makes a great startup team and then find ways to accelerate that.  THEN let’s get those teams to come up with ideas.

Given the shockingly bad investor returns on early stage startups, there’s an acute need for solutions that help create successful concept-stage teams. If there are already ideas out there that are designed to solve this problem I’d love to hear about them. Until then let me know if you want to join a team to start working on the solution.

Michael Sattler

With a career spent in founding and technical leadership roles with new and enterprise-level organizations, Michael Sattler is a veteran in technology strategy, operations, and product management. He’s spent decades in B2B and B2C SaaS product development, software and application design, engineering operations, new venture creation, and innovation practices.

He has scaled and managed technical teams from 2-50+ across three continents, led large-scale cross-functional program management, and founded or co-founded six companies.