How to build the team for your venture

If you are serious about your venture, it means you should commit and bring the team in-house (in the long term). If you don’t do this, the key capabilities & business insights remain external – and you will forever remain ‘locked-in’ with vendors. And, you will be paying 2 or 3 times more for the same headcount.

But once you have decided on a long-term insourcing strategy, several questions arise: when should we start hiring? What roles have priority? Should we hire for industry experience, digital capabilities, or startup mindset? As ventures have a highly uncertain future, how do you hire quality people for such uncertainty?

Let’s break this up into the four phases of venture building. In each phase your resourcing needs will change. In the first two phases, a lot of executional work can be outsourced to agencies or freelancers. Growth hacking, market research, and designing and running first customer validation experiments can all be done by firms that specialize in this. Combining external “hands” with your company’s industry expertise can result in a powerful team that can quickly & cheaply validate your riskiest assumptions.

Once you have found a “problem-solution fit” and want to grow a business, it’s time to move critical resources in-house. External venture builders can co-lead the overall process and help accelerate and set things up in a scalable way, but over those first few years you need to grow towards a team of 5-15 internal FTE to make the venture cost-efficient and scalable.

The venture lead is the most important role you will hire...

Finding a Venture Lead is like finding a needle in a haystack: they need to maintain the support of corporate stakeholders for a likely lossmaking venture, while simultaneously building a company and a team, using smart analytics and experimentation tactics to find the right product-market fit.

The person you are looking for will either already have a well-paid senior role within your company or has the skillset to build its own company (or both). It’s like finding James Bond: someone resourceful and creative, who takes responsibility, takes enough liberties to do what’s needed and always remains calm, even in face of adversity.

But why would this person make the switch and join your team? The perk of becoming a Venture Lead (vs. a corporate job) is that you will learn to work in a different way (uncertainty vs. yearly plan, autonomy vs. convincing others, validation vs. optimization) – the lead will be a ‘founder’ for a funded startup, while still getting paid a decent salary. It’s a unique chance to be an entrepreneur without having to give up everything.

So when and how do you start recruiting? If you do it too early, it will be harder to convince this person to join your team. Do it too late, and the business won’t feel truly theirs. The ideal moment is when the problem-solution fit is proven, and you are willing to start investing significantly in the venture.

.. and the founding team a close second

A successful team combines industry experts and digital natives. For example: you are an FMCG and want to launch a personalized digital D2C venture, you should combine the knowledge of a nutrition specialist with the skills of an outside data specialist to create an online recommendation engine.

In the beginning, you want to leverage on existing capabilities from the corporate. Typically these are people that have already been in the company for around 3 or so years, who fully understand the industry and work in sales or marketing.

It is also important is to ensure the right mindset with these people – meaning they can shift…

• From: Launching a mass product, to: validating the riskiest assumptions fast
• From: Checking with my superior, to: taking decisions proactively
• From:  ‘Not my expertise’, to: I have never done it, so there’s no reason for me to think I couldn’t do it

You will also need ‘outsiders’ that have no direct industry knowledge, but bring digital/data expertise and have worked in a startup environment before, like a growth hacker, data analyst or a product owner. The best way to bring them up to speed is by giving them an industry crash course. Do trade visits, do customer interviews, have corporate team members explain the RTM and business model.

Truthfully, it will be hard to find these people, but in our experience your corporate venture has a competitive advantage against pure startups: you already have the funding in place and a strategic partner to grow the venture with. Also, you can offer a career perspective beyond the venture… if that’s what they want – not all of them will find this appealing.

<div class="insights_cta-component">Your team can only be operational when it gets sufficient freedom and decision power. The absolute no-go’s (yes, this is in contrast with how corporates operate and will require courage) are:• A steering committee of >3 stakeholders that expect to make decisions beyond funding release – a SteerCo should only decide on funding at each stage gate and should consist of a maximum of 3 ‘investors’.• An ‘extended team’ that has functional decision power (e.g., an IT department that blocks the use of Shopify for the MVP as it is not the preferred ecommerce platform). Functional support can of course be beneficial, but not if it holds the team back.• A corporate management team that acts as shared Venture Leads – meaning a group of people who commit only a small part of their time for the Venture, but want to make all the critical decisions. This ruins ownership in the venture team and again takes all the steam out of the process.• Assigning 10 part-timers as the core team. Two fully dedicated team members are much more powerful solution, as the way of working and the required mindset are hard to combine with employees with so called ‘normal jobs’ on the side.</div>

Try not to hire if you can, and when you must hire... be very selective

You shouldn’t shy away from having only a small number of team members for as long as you can. A large number of employees means a high burn rate, high complexity, and slow(er) decision making. Success in this field is all about moving fast. Only hire new team members when not doing so hampers your growth.

Also, the impact of getting an early hire wrong is phenomenal. A hiring mistake amongst your first 5- to 10 employees can easily ruin the whole venture. You can have an awesome product, but no growth because your Head of Sales isn’t performing. AirBnB reportedly took 5 months (!) to select their first employee outside of its 3 founders.

In the early phases, you can use freelancers or venture building agencies to do a lot of the legwork – they are specialists in the early stages of validation and will give you the flexibility to kill your venture if a product-market fit seems unrealistic.

<div class="insights_cta-component">In an early stage venture there are many manual tasks that need to be executed, like manual excel uploads, shipping products, CRM management. Using ‘work students’ (or interns) can be a good way to not shift your core team’s focus away of the real goal: the validation of the proposition. At one of our clients, hiring such type of flexible employees was blocked by the HR department, because the contracts they would need did not fit existing corporate policies, like pension for example. Most venture building agencies offer the possibility to use the pool of working students for such tasks without offering them a contract.</div>

If you are hiring, do it right

When the Venture Lead is onboarded, it’s time to establish the venture team. Start by defining a clear forward-looking vision and ensure your candidate’s determination, perseverance and grit. If your first employees don’t believe in the venture’s mission, then it will be very hard to motivate them in the long run, when you are facing headwinds, or when you need to do another crunch to meet a deadline.

It’s important to note that venture resourcing requires a different approach:

• Don’t use corporate standard contracts – the uncertainty of the venture requires a different set of benefits and even contract duration
• When you do decide to hire, be aware that at least 25% of the Venture Lead’s time will be dedicated to this
• Consciously think about channels from where to hire (you want different people, so you need to look for them in different places than you’re probably used to) – top tip: work with specialist agencies for digital roles
• Take the hiring procedure seriously: try to validate someone’s motivation and ability to adapt quickly. This can often be more important than industry knowledge or experience.
• Make fast decisions as the market is though. But let the employee go fast too, if things don’t work out

Closing thoughts

Building a venture is all about balancing the uncertainty of a venture and hiring a team for longer term. It’s not rocket science, but requires a pragmatic can-do mentality. If you manage to combine champions of your corporate with a motivated newly hired digital native team, you will be able to beat startups at their own game.

Stay tuned for our next article on corporate venturing governance, in which we discuss finding the right balance between giving a venture freedom versus ensuring a strategic match.

THE VENTURE ARTICLE SERIES

We have learned a lot through helping our clients over the years, and we’ll be sharing our key insights with you in a number of publications. The topics we cover are:

Introduction to corporate venturing: This article is the first in our new series of articles on ventures and scale-ups in a corporate setting.

When to build (and when not to): Exploring further that ventures aren’t for everyone, as strategy dictates approach

How to build a venture: Drawing the journey of venture building with activities, deliverables, and team set-up for each phase

How to scale: Taking the right steps from start-up to a successfully scaled organization

Common pitfalls: What can go wrong and how to make sure to avoid it

Governance – set-up: How to govern ventures correctly with the right targets, reporting lines, financing, etc.

Team: Solving key questions on venture teams and the importance of a great venture lead

Governance – freedom balance: Finding the right balance between giving a venture freedom versus ensuring a strategic match

Manage (KPIs): Looking at the right KPIs based on the de-risking funnel, performance analytics, and reporting to corporate

Venture tooling: How to make the key choices and available options for MVP landscape tools, growth hacking tools, and collaboration tools

Customer validation best reads: Sharing our top picks in the literature on customer validation

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Stay tuned!

We hope you’re as excited as we are and please let us know if you have specific topics or questions you would like us to share with you.