By Andy Gordon On May 9, 2014 Dear Early Investor,
I don't know many Gary Johnsons.
Gary and I go way back. He was global marketing director for a medium sized company in Baltimore. About 20 years ago, the city government decided to build a football stadium as part of a master plan to steal the Browns from Cleveland.
They took over a square mile of land by imminent domain. The property had factories, warehouses and houses. They all had to go. Gary's company was also located there. The city must have offered it a sweet deal. Because instead of relocating, the company decided to call it quits.
All of a sudden, my friend was out of a job.
It Takes a Team
So Gary started his own company. Hired just one guy, Mike, from his old company. Gary took care of the rest: the marketing, the company literature, the website, the contract negotiations, site inspections, project scheduling and so on.
Gary's company did very well, by the way. It's still around and flourishing.
Like I said, there aren't many Garys. In getting my new trade and finance company going at about the same time, I took a different tack...
Right off the bat, I grabbed a partner. I had already chosen the site of the company's first overseas office. It would be Jakarta. Our targeted region - Asia.
As a pretty good marketing guy, I settled on an engineer with a Ph.D. as my No. 2. I grew up in Boston. Ronald grew up in Taipei. We complemented each other pretty well.
I also needed someone to head the Jakarta office. Instead of choosing an expat, I hired an Indonesian with an MBA from the U.S.
And that was our core group. I eventually grew the company to 11 people, and expanded our coverage beyond Southeast Asia to Japan, China, Korea, Russia and a few other countries.
It turned out well. But I'm not sure I would do it the same way today. I bootstrapped my business and got away with it because Jakarta was so cheap back then and international air travel didn't cost nearly as much as it does today.
The current startup scene represents a different mix of opportunities and challenges. There are more options now for raising money. If you don't want to ask private angel investors, you can now raise money online from the general public.
The First Five Hires Are Key
I'm not saying it's easy to do. Knowing what I know now, I'd put together a bigger and more impressive team serving two purposes. One: Increase your chances of success. And two: Win the trust of potential investors.
I'd select five people, a core team for all seasons and challenges. Here's how I'd do it... - The Experienced Salesman. My partner would be an experienced networker with a sparkling track record. My long-time colleague Gary Johnson would have been the perfect hire. He was only nine years older than me, but he had done more business in more out-of-the-way global places than I had. He was a talker and a charmer, a born salesman in other words, who could sell sand to the Berbers if you asked him to.
- An A-List Engineer. If I had to go with my original choice of Ronald Chen again, I'd be fine with it. He was soft-spoken but confident. However, he lacked wide-ranging field experience and it showed. He sometimes brought in the wrong mix of equipment on-site, not good. If I were heading a high-tech startup, the engineer would be my most important hire. She would be my superstar, a technology genius and an A-list techie known to all in her field.
- The CEO Whisperer. You don't notice her because she operates behind the scenes as an unofficial member of the team. She can be on your board or simply listed as an advisor. She is usually compensated via stock options tied to the startup's success. She would be wise and experienced, able to offer an outsider's perspective that is informed and dispassionate.
- The Sarge. You know, the one in charge of day-to-day operations. In theory, startups don't need a sergeant because, supposedly, weak links are quickly exposed. Well, yes and no. A hard-working and dedicated corps still has to mercilessly prioritize, not just by the day but by the hour. Startup execs know what I mean. If somebody is making sure the entire staff is pulling in the same direction at all times, that's extremely valuable. But because startups are lean and flat, this responsibility usually falls on a founder. Problem is, they're awfully busy. Hiring a Sarge, or developing one from within your staff, should be a priority.
- The Accountant. Here's an amusing conversation I recently overheard between two founders. The first founder: "Who's taking care of your books?" The second founder: "My mother." The first founder: "Is she any good?" The second founder: "She sends me an update of my financials every week." The first founder: "Can I have her number?"
You need to keep track of costs. If you can't afford to hire one, contract one out. Or do it yourself if you really think you have the time and discipline.
Who's missing here? Oh, yes, the CEO. Every startup needs a commander in chief, the one person willing and able to make the hard decisions. I've commented on what kind of startup leader I value the most, so I won't go into the details here.
Poor execution kills more startups than anything else. On the other hand, a good team is worth its weight in gold. Shahab Kaviani says founders are becoming more thoughtful about how they build their teams. Shahab founded a local Maryland startup called CoFoundersLab, which helps entrepreneurs build effective teams through a matching service and "meet-ups" taking place in the U.S. and a dozen other countries.
Shahab told me he has more than 30,000 founder profiles on his company's database. "It was very popular to start companies with friends and co-workers," he says, "but we're now seeing startups assemble teams in a more systematic and objective way." A big reason why, he says, is startups are following the money... VC money. "Institutional investors are shying away from single-founder companies. And they're measuring the bench strength of startups with a more critical eye."
You should take a page out of their playbook. It pays to talk to all the members of a team, not just the founders. Who knows? Maybe you'll end up liking the founder but hating everybody else. In such cases, investing would not be such a good idea.
A great team can overcome mediocre technology or products. Not all the time, but it can be done. A mediocre team will doom great technology or products, every time.    
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