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By: David Kashmer MD MBA (@DavidKashmer)
60% Of Startups Fail Owing To Team Factors
When colleagues and I become involved in a startup, there are certain things for which we look. One of these elements for which we search is a unique vantage point that generates a sustainable revenue stream. That is, there has to be an idea which is somehow unique.
Next, that uniqueness must translate into profit. It is preferable to have an idea that is challenging to imitate for one reason or another.
…but, just as important as those factors is the startup team dynamics and skill set. Did you know it has been estimated that over 60% of startup failure are actually owing to team factors? Some teams can take poor ideas and via strength of execution create a very solid business. Other teams can be given the best idea in the world and yet it falters. Execution is equally important, then, with the initial idea in our opinion. For that reason, the team factors are key for a startup.
The Provider Lifestyle Experts Team
In this series of entries we have been discussing a startup called Provider Lifestyle Experts. In case you haven’t heard, Provider Lifestyle Experts focuses on the provision of administrative resources to improve lifestyle for people in healthcare. Healthcare has a large administrative burden which often is challenging for healthcare providers. It can even lead to burnout. Imagine working all those hours AND being buried under paperwork or unable to get simple life maintenance things done owing to workload issues. Some even attempt to keep up with the burden of paperwork and other issues themselves. This is a real pain point for people who practice in healthcare, and Provider Lifestyle Experts focuses on relieving that pain.
As mentioned in an earlier blog entry, I had an idea to have a business of virtual person assistants who functioned particularly in the healthcare space. Healthcare paperwork and issues require special knowledge which is difficult to imitate. Healthcare-related tasks typically befuddle current virtual assistant groups. For that reason I worked on the creation of a business model around this idea.
However, owing to time constraints and other challenges I had the realization that I would not be the one to execute this idea, and I passed the idea off. I can’t stress enough the importance of knowing ourselves well enough to decide whether we can (and should) execute on a particular idea. So, as mentioned, I passed off the idea.
Team Members Need A Complimentary Skill Set
The team that was interested in executing the idea had some unique skills. First, there was experience. This team is composed of three members who each have complimentary experience and who can work well together. Noam Wasserman, in The Founder’s Dilemmas, describes how important it is to have a team that can be collegial and yet can discuss the elephants in the room. (That’s just one of the reasons why Noam recommends we don’t start businesses with family, as it can be challenging to discuss those elephants.)
When a team of complimentary individuals comes together it can be a truly powerful sight. In the case of Provider Lifestyle Experts, the team is composed of a talented, entrepreneurial virtual personal assistant who has been in the business providing these services for years. Additionally there are two healthcare providers who maintain very different careers in healthcare. These two staffers have business experience and are able to give guidance to the virtual personal assistant team member regarding specific healthcare issues. Interestingly, the virtual personal assistant on the team has functioned previously as a virtual personal assistant for a physician and has gained a great deal of experience with this.
The team has asked me to continue to intermittently advise them as they go along their startup journey. I can’t say often enough how important it is that the team have complimentary skills rather than all sharing the same strength. There are many components to a startup beyond simply design. We will explore some of these in the next blog entries. For now, it suffices to say that sales, customer development, financial acumen, and conscientious follow up are all key at the beginning of a startup.
It’s Key For Each Team Member To Thoroughly Check Out The Others
For these reasons, the team members vetted of each other over a period of weeks to months to learn whether they can and would be able to function effectively in the new endeavor. It was important for everyone to go into the new venture with their eyes open and having a sense of whether they can and would perform. In the case of PLE, the team took 3 months (as it decided to use Lean Startup methodology) to learn how it worked together and whether things would seem to work well.
So, to this day, Provider Lifestyle Experts is growing its client base, and already has passed its break-even point with customers. The excellent team dynamics have translated into a flexible adaptable team that executes well and has really capitalised on different opportunities. In our next blog entry we will follow these team dynamics and start to focus on exactly what the team did in terms of steps they used to create their unique business model and begin acquiring customers.