3 Harsh Truths About Building Your Founding Team

Building a cohesive founding team is never as easy as it seems. In this week’s installment of “Founder’s Corner,” Instructure CEO Josh Coates shares three hard truths founders need to accept if they’re focused on putting together the right group for the long haul.

Josh Coates 3 Harsh Truth
In the startup world, early success is often dictated by the first group you assemble to execute your vision and share your passion. If you’re able to hire talented people with the right combination of skills and cultural characteristics, the process of building and growing your company will likely happen more quickly and efficiently. If you hire the wrong people, it can spell disaster.
In the interview below, Instructure CEO Josh Coates reveals three key lessons about building a startup team and urges founders to remember that the handful of people you hire initially may not be the same people who lead the business to the next level down the road.

3 Harsh Truths About Building Your Founding Team

Coates acknowledges that a startup’s founding team is its biggest asset. But that comes with a caveat.
“The fact of the matter is that most people don’t have the dynamic scalability to grow in a business all the way to the end,” Coates says. “As a founder or a CEO, you need to understand that about yourself and the people you’re hiring. The people you start with aren’t often the people you finish with.”
That doesn’t mean that founders should simply build a team of disposable bodies. Instead, Coates says businesses need to focus on three hard truths about the founding teams they assemble.

Key Takeaways

Don’t Jump the Gun on Titles [0:50]

When you first start your company and put together your founding team, Coates says it’s critical not to pigeon-hole those employees into specific roles or titles.

“Don’t just say, ‘Hey, you’re my CFO,'” Coates explains. “Instead, say, ‘Hey, look, you’re my finance guy, and you’re going to handle the finances right now and we’ll see how it goes.’ That way, six months or a year down the road, you’re not saying, ‘I’ve hired an accountant to do a CFO’s job. Now what do I do?'”

Understand Their Motivation [1:45]

Ability and skill is obviously important in the startup phase, but Coates says founders should focus more on potential employees’ motivation for joining the company.

Is it because they want to be wealthy? Is it because they don’t have anything else going on? Or is it because this is the next logical step in their career and it makes perfect sense to join your team?

“A team in a startup is a little bit like a high school rock band,” Coates says. “Why don’t many of those bands work out? Everyone has a different reason for why they’re doing it. One guy is super into the music. Another guy is doing it for the girls. And another guy is doing it because his friends are doing it, so he just learns to play drums. When all the conflict starts happening, it’s because the band’s motivations aren’t in sync. The same can be true in startups.”

Be Prepared to Let People Go [3:45]

The final harsh reality, Coates says, is that many of your early hires won’t survive the journey.

“They’re not going to be able to keep up, they’re not going to be able to perform at the level you’re requiring of the company,” Coates says. “At that point, it’s unfair to keep them on board. If they can’t keep up, you’ve got to let them go. That’s hard, but the more that you can appreciate that that’s the reality ahead of time, the better off you’re going to be.”

More Insights on Building Your Founding Team

Why Founding a Business with Friends is a Bad Idea
Think starting a business with your friends will be fun? Think again. Triberr co-founder Daniel Cristo shares his take on what really makes the best partnerships and why it’s such a crucial decision. Read more.

How Hiring Changes from Employee 5 to 500
After transitioning his business from a small, tight knit unit to a large-scale business, UnboundID CEO Steve Shoaff has learned a thing or two about how that growth can impact a company’s hiring strategy. Read more.

Scott Maxwell on Assembling the Expansion-Stage Management Dream Team
Take a page from the legendary 1992 U.S. Olympic Men’s Basketball team to put together a group of individuals with the right skills and personalities to take your company to the next level of growth. Read more.

Photo by: Tax Credits

Josh Coates
Josh Coates

Josh Coates is the CEO at Instructure , a technology company committed to improving education and disrupting the Learning Management System (LMS) market (disclosure: Instructure is an OpenView investment). After his start in distributed systems research at the University of California, Berkeley, and Microsoft’s Bay Area Research Center, Josh founded Scale Eight, which closed its operations and sold its intellectual property to Intel in 2003. Josh went on to found Berkeley Data Systems (Mozy.com) in 2005, which reshaped the world of data storage with a ubiquitous remote backup solution. Two years later, EMC Corp acquired Mozy for $76 million. Josh became an early investor in Instructure before joining the board and becoming CEO in 2010.
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