Dear SaaStr: What Are Some Signs a StartUp Team is Going to Underperform or Overperform?
Let me take a stab at signs a team will be underperforming. Outperforming is both seemingly obvious (strong team, strong market, proven ability to create products people want to use/buy) and also nebulous.
But here are 5 factors in my experience that clearly demonstrate future underperformance even in seemingly strong teams:
- All “Start-up Folks”. This one may seem counterintuitive, but especially in SaaS/business applications, it’s not. You need start-up folks to do a start-up. But people that only want to do early stage stuff, that don’t really want to be around after that stage — don’t scale. They don’t even manage all that well in the early days. You need the 1-2 people at the top to be able to scale, at a bare minimum. To want to scale and enjoy it. A team that wants to quit as soon as everything gets past 20-50 employees … isn’t going to work out well.
- Lack of Complete, Implicit Trust Across The Team. Start-ups need to make no-look passes all day long. If the team is strong as individuals, but doesn’t have the relationships, the trust, to operate as a single entity — it’s gonna be real tough. Watch the body language, when everyone presents. You’ll see if it’s there — or not.
- Lack of Interest in Learning. I think some hubris is OK, good, so long as the minute they learn something new that can help, that can improve the company and the team — they are able to evolve, change, and incorporate those learnings. It’s an easy test.
- Insufficient Domain Expertise. Smart folks can talk themselves into attacking any problem. But if you are entering a space without sufficient boots-on-the-street experience, at least in SaaS / business apps, you are going to miss the point. Yes, I know Reed Hastings started Netfllix because he hated late fees. But just because you don’t like the UX in Salesforce, doesn’t mean you know what to takes to build CRM. This is a solvable problem, so if it isn’t on the team, that’s a big flag.
- Lack of Patience & Too Many Short-Termers. Founders should be impatient to get going, to scale quickly, to build a great team and a great company. But … it’s going to take time. A bunch of guys who’ve never worked more than 24 months at any company before … probably won’t make it. These guys often can’t really see The Future clearly. In SaaS, they can’t see the $100m+ business 7+ years down the road. Worst, they’ll probably quit when it gets tough.
Of course, very strong market pull can overcome almost anything if it scales you quickly enough. 😉