Crossing T’s and Dotting I’s: Which Should be Done First?

By Mosbah Kahaleh

In the process of learning and practicing entrepreneurship, I have been wrestling with the question on whether entrepreneurs should start with good ideas and then build teams around them, or if they should start building the ‘right’ team that will eventually find the right idea. In the context of lean start-ups methodology, my hypothesis is that the later approach (i.e. starting with teams) is more consistent with the lean startup methodology. 

The rationale behind the hypothesis is the following: when entrepreneurs start with ideas or industries, they tend to build teams with relevant experience or skill set related to an industry or technology that their idea is based on. Their main objective is to find people who are excited about their idea and can contribute value in transforming that idea to reality. In so doing, however, these entrepreneurs are building up higher transaction costs if they choose to pivot to new industry or technology that would require a new set of people. Conversely, when entrepreneurs start with the ‘right’ co-founding team, who has complementary characteristics, they open themselves to be more agile, lean and feedback-driven as they have little attachment to any specific idea, and thus capable of “achieving failure” that will lead them forward. 

An example that comes to mind is Communispace, founded by Diane Hessan, which was recently acquired by Omnicom for about $100M. When starting her company, Diane found the smartest people in her previous employer, motivated them, and said ‘let’s come up with the next idea.’ ”The group then brainstormed ideas tried and failed and pivoted many times along the way until they reached the functionality of Communispace in the shape as we know it today.

Contrast that example with the story of Dropbox. Drew saw a need based on a personal experience during a bus trip, and then he went on to execute on his vision resolving his problem, which turned out to be an important problem for many people. As Drew went on to execute on his idea, there were relatively very few pivots along the way. Drew had created his version of ‘reality distortion’ and delivered a product that “just works.” Not only there were few pivots, but also, as we learned in the case, the team has chosen not to listen to customer demands about additional features. Or in Drew’s words, “We have features that our power users have been requesting from the beginning that we still haven’t added… We need to keep it simple.”

Both of these examples highlighted two successful startups, one started with a team while the other started with an idea. So the hypothesis doesn’t suggest which approach (team or idea first) is better, rather it suggests which approach encourages lean startup methodology. 

However, starting with teams might influence the success outcome especially in a world where most starts fail because of co-founders problems. So if co-founders get along and have the complementary skills they also increase their chances of success. So one way to reduce risks of entrepreneurship is trying to find founder-cofounder fit (FCF) before even starting to find the product-market fit (PMF).