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Think Big. Move Fast.

As a venture capitalist, I often get the question, ‘Is it people or market?’

My answer is ‘Yes.’

There’s no doubt that great markets facilitate the building of great companies. But as we saw during the bubble, great markets can facilitate the development of some not-so-great companies as well. When talking with aspiring entrepreneurs I try to emphasize that finding the big idea or the big market shouldn’t be their first priority.

Building the right founding team should be.

In a recent Fortune interview with Jim Collins, author of “Built to Last” and “Good to Great,” he commented:

“Our research shows a somewhat negative correlation between pioneering a great idea and building a great company. Many of the greatest [companies] started with either no great idea or even failed ideas. Sony started with a failed rice cooker. Marriott started as a single root beer stand. Bill Hewlett and Dave Packard’s great idea was simply to work together – two best friends who trusted each other – while their first four product failed to get the company out of the garage. They followed the ‘first who’ approach to entrepreneurship: First figure out your partners, then figure out what ideas to pursue. The most important thing isn’t the market you target, the product you develop, or the financing, but the founding team. Starting a company is like scaling an unclimbed face – you don’t know what the mountain will throw at you, so you must pick the right partners, who share your values, on whom you can depend, and who can adapt.”

A great team in a bad market can still build a successful company, perhaps at small scale. More often, like Sony, Marriott and HP, a great team will change course as they learn that their initial market is a difficult one, and they will find their way to a bigger and better opportunity.

A second rate team can also build a successful company in a great market. But they will find themselves facing increasing competition and the company may not stay successful for long.

There’s no substitute for being part of a great team. Resist the temptation to settle for second rate co-founders or employees, or for divergent visions. The extra time to find the right people to work with is always worthwhile. I firmly believe that teams of great people, firmly bound together by shared ethics, vision and values, will always find a way to be successful.

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