1. Startup Team Dynamics Attracting Talent & Assembling Startup Teams
Naeem Zafar
IEOR191
Class 2
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Agenda
Last class:
Reflections & Questions
Today: Startup Teams
Deliverable: Refined idea with team formed for green light
Guest speaker:
Mike Hodges, ATA Ventures
Next week: Opp Identification [read Veridicom Case]
What problem is Veridicom trying to solve?
Who are Veridicom’s customers & who needs them more?
If you were Tom Rowley, how will you set the strategic direction?
How are the team dynamics here as a startup team?
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Teams & Projects
Selecting ideas
Do preliminary market research to validate ideas
Finalize teams
Select a CEO
Request a mentor
Seek green/yellow light
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Market Size
Startups should approach large & growing markets
How do you size the market?
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5. Sizing the Opportunity
BizEducationWorkshops.com & ConcordiaVentures.com
Sizing the Opportunity
Will this be worth your time?
Will this idea be easy to raise money for?
Big idea attract investors
What is wrong with smaller markets?
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Market Sizing
Total Available Market (TAM)
Range of right answers
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7. BizEducationWorkshops.com & ConcordiaVentures.com
Size The Opportunity
Market size = # of people who can buy
X price
X # of times they will buy per year
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Apple’s Core
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Imagine you are Wozniak and you just found out about Break-Out What would you do?
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What's your assessment of Apple's founding team? Take account of what each founder brings to the venture, including their goals, values, skills
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What qualifies a person as a "founder"? Who is the true founder, Jobs or Wozniak?
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12. Framework for Co-founders
Rewards
Relationships
Roles
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Take-Aways
Finding right set of co-founders is not easy
Better to have explicit conversations at the start than face crises later
Values alignment matters
Roles clarity is important
Who will make what decision?
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14. Remote Teams: Issues to Consider
Geographic locations Agile development Role of culture
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15. BizEducationWorkshops.com & ConcordiaVentures.com
Building a Team
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Team
Small number of people
with complementary skills
who are committed to a
common purpose
set of performance goals
approach for which they hold themselves mutually accountable
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Team Recruiting
The hardest & most exciting part of a startup
Look for:
Shared vision
Can they do what you need – test them!
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Hiring
“A” players attract “A” players, but “B” players attract “C” players
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Team Composition
Cofounders
Specialists
Advisors
Professionals
Board of Directors
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Lessons Learnt
Hire people for skills or skills potential - not personality
Set early goals, forced deadlines
Establish performance & quality standards
Clear rules of behavior
Fresh data to refocus team – drive common purpose
Use positive feedback to include all
Communicate & celebrate often
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21. What Do You Look For in Team
Passion
Hunger
Alignment of vision
Technical competence
Leadership ability (earn other’s respect)
Prior experience matters less
How do you test for these qualities?
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Board of Advisors
Domain experts
Market experts
Channel expertise
Technology experts
Personal coach & mentor
Celebrity
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Board of Directors
Fiduciary responsibility
Come with money
Unless their name will generate extreme credibility
Limit size & be very choosy
No family or relations
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Hiring Philosophies
Hire people who have major strength?
Hire people who lack major weakness?
Newsflash: People with major strengths tend to have major weaknesses as well
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Issues
Founders not getting along
Hiring process
Board management
Advisors
IP Ownership
Culture
Decision making process
Running meetings & setting objectives
Role of the CEO
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26. Demystifying Equity Dilution
How does dilution works
Who gets what on a startup team?
IEOR191
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27. Issue Puzzling Founders
What if one founder fizzle out?
What happens to her equity?
What about death or disability?
IEOR191
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How To Protect Equity
Vesting
It is your stock/shares but you have to be here working hard to “get” them
Typically 2% per month vesting  48 months to get it all
Biz Model 191
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Cliff Vesting
Year 1
Year 2
Year 3
Year 4
100%
25%
2% per month
Biz Model 191
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30. Vesting Ownership established over time Exceptions?
One has to stay & work hard to get all her shares
If people don’t work out within a year you are not out with too many small shareholders
Exceptions?
Biz Model 191

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Equity Distribution
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Take-Aways
Find people who share your vision
Network & keep a secret “A” list
Team issues are complicated, be prepared & seek mentors
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33. Mike Hodges Joined ATA Ventures in 2006 Managing Director in 2008
Reputation successful CEO with several successful turn–around efforts, including Tellium (that completed a public offering of $1.5B in 2001).
Division president at Spectra-Physics during which time the company grew to a $300M, division President Barcode Laser Scanning
Telephony Magazine named him as “The Best CEO You’ve Never Heard Of.”
“Mike is money. He’s the first guy you should turn to when the game is on the line and the last guy you should ever bet against.”.
Mike graduated from U.C. Berkeley, receiving BSEE ,MSEE