What does it take for a start-up to be successful? What do investors look for when they survey and grade business models? One of the most important parameters is the team. “It’s the team, stupid,” we might say, borrowing freely from Bill Clinton’s former campaign slogan.
Most investors invest into the team of founders that developed the idea and the business plan and presented it to them. Sure, there’s the old saying that a close attachment to one’s own business preclude rational and economic decision-making. But I disagree. Science increasingly casts doubt on the idea that our actions are primarily driven by reason, anyway. The anthropologist David Graeber reminds us that many forms of commerce borrow explicitly from patterns of human behavior that are related to courtship and war – two areas of human action that aren’t marked by high degrees of rationality either. And, finally: entrepreneurs must love their business to be good at their job.
The former German President Gustav Heinemann allegedly once said that he loved his wife and not the state. Sure, love of one’s business should not replace love for one’s spouse or partner. There’s more to life than work. But at the same time, the enthusiastic and energetic espousal of an idea often makes the difference between success and failure of a business idea. Enthusiasm is key if you want to persuade investors to support you. And love for one’s business also extends to the larger team.
A good team will give it all to ensure that changes and modifications (which become inevitable if one wants to remain competitive and successful) are recognized as necessary and implemented. This might mean that start-up entrepreneurs are sometimes less likely to try to save costs (for example, by letting go of an employee) – but this emotional surplus can be an advantage in discussions with investors and share-holders, when the founder is often called upon to act as the voice of the company. Sometimes it’s necessary to fight – and it’s often easier to fight for something that one cares about.
When a team approaches investors or incubators, it is usually comprised of different people. Among them, they will have the necessary character traits and skills to put an idea into practice. Someone might like numbers and Excel spreadsheets, someone else might have marketing expertise, someone might focus on product development. Different forms of emotionality arise from different characters.
Team spirit isn’t only important in sports, but also in the world of start-ups. Required are concentration, persistence, discipline. Those who invest in a good team will doubtlessly win. Even if the first idea fails, a good team can regroup and attempt a second try (with the added benefit of having gained expertise from their first entrepreneurial attempts). Quick cash isn’t necessarily a good measure of one’s ability to thrive.
Newconomy is the new weekly column for the start-up industry. It focuses on the intersection of classical and new economies and of politics and entrepreneurialism. Newconomy is sponsored by Factory, the new start-up hub in Berlin.