Sigma Software Labs and SPEKA created the series of articles on the development of a startup at various stages of its existence. Leaders of Sigma Software Group share their experience so that every startup finds its place in the digital world.
The authors: Valery Krasovsky, CEO and co-founder of Sigma Software Group, and Andriy Lazorenko, CEO and co-founder of IdeaSoft (member of Sigma Software Group)
Can you start-up alone?
A common mistake made by inexperienced startup founders is that they want to create their startups on their own. Of course, no-one but you, the author of the idea, knows exactly what you want to do and how to do it. However, there are a few “buts”. Firstly, you need to validate your idea, because the product you make is intended for others. Secondly, when you are creating a startup, the main opponent is time. To be successful, you need to be as fast as possible, and not only in product development, but also in sales, in communications with investors and users. Can you do it all on your lonesome? Besides, each of us has strengths and weaknesses. Therefore, having several people on the team enables an effective distribution of tasks in accordance with the talents of each of the founders.
Of course, there are exceptions, when a startup with one founder becomes successful. But these are unique cases. In addition, life speeds up every year, and it becomes increasingly difficult to keep track of everything all at once. The days of one-man shows are over.
By the way, finding investments alone will also be more difficult. It’s so not only because you will lack time for everything, but also because for an investor, a startup with a single founder is an additional risk, as the founder can suffer burnout or get bored, can get sick (we are all human), and has limited resources, etc.
Therefore, the chances of success are much higher with a team, so look for partners, and the sooner, the better.
Who do you invite to a partnership?
They say that in order for a startup team to be successful, it needs to include three partners – a Hipster, a Hacker and a Hustler.
The Hustler is a salesman. His task is not only to sell the startup to investors, the product to customers, and the story about the product to the media, but also to correctly present the mission and values of the company to its employees, so that the necessary people come to the team, and so that everyone in the team is motivated and energized.
The Hacker is a person who can break a complex solution down in such a way that everyone will understand it easily and clearly. This concerns more than just the technical side. In fact, making a technological solution that is scalable, secure and user-friendly is not even half of the job. Such a task can be completed by any competent chief technology officer. Whoever assumes the role of the Hacker in a startup must go further, and make a solution that may be technologically complex, but becomes as simple and understandable as possible when the user interacts with it.
Finally, the Hipster is a leader of operations and processes, a person who will bring all the areas of the startup’s work into a coherent whole.
In fact, of course, there can be more (or fewer) partners, the main thing is that their skills and abilities must “cover” these three main roles, which are crucial for the survival of the startup. However, it is worth remembering that having too few or too many partners can also be harmful sometimes.
Clearly, when there are too few partners, you may find yourself lacking resources. But when you have too many, it’ll impair your ability to negotiate, reduce flexibility and speed in decision-making. Three to five is the ideal number of partners in a startup.
Friends as partners: better or worse?
Having friends among the partners is great, warm relations in the team always attracts good karma. However, there is a difference between friends-turned-partners and partners-turned-friends.
If it is the former, and you want to start your business with friends, you need to learn to separate personal and work relations, as well as to discuss and settle all the primary agreements beforehand. In addition, you shouldn’t invite friends to the team just because they are friends. After all, startup partners, in addition to expertise, should also have a set of skills and abilities important for a startup (see the above point).
Time for a serious conversation
Before moving towards a successful business, you and your partners (whoever they may be) must agree on how to work and distribute roles, so that there are no misunderstandings, complaints or resentment afterwards.
Each partner in the team should have a clear role and area of responsibility, within which each of them has the right to make decisions independently, without distracting other team members to discuss any issues, no matter how small.
It is also important to talk about the involvement of each partner, because sometimes one of the partners is more active and objectively does more for the success of the joint venture. It may also happen that, at some stage, some of the partners may want to reduce the level of their involvement, or even withdraw from the business altogether. All of this should be taken into account in order to divvy up the workload and shares owned in a business correctly.
By the way, making the shareholdings equal, e.g., 50 and 50, is rarely a good idea, because, when disagreements arise, you might be unable to find a common ground and make a decision. Such distribution of shares also scares away investors, because it’s an additional risk. For this reason, boards of directors, for example, should never have an even number of members, so that there’s always a tiebreaker vote on any controversial issue. Thus, it is preferrable to have majority and minority shareholdings in your start-up, even if they are 51% and 49%.
Finally, when everything is said and done, you should
pop the cork record everything in a memorandum of understanding. Unless you do that, in five (or even two) years’ time no-one will remember exactly what you agreed on, and this is a direct path to conflict and misunderstandings.
And then, once you have your dream team and all the agreements in writing, it all depends on you, your perseverance, teamwork, flexibility, creativity and – just a little bit of – luck😊
See the previous article of the StartUp Manual project here
TO MAKE THE UNICORN HAPPEN