Lessons learned from the world of start-ups. About one in ten survives the first five years of existence. There are two highly understood reasons. My guess is it’s not what you think.
As many of you know almost 8 years of my career was spent as a partner with one of the largest venture capital firms in the country. I was hired there with an ominous first year assignment. Bring a set of human capital best practices to our portfolio of companies (30+ at the time) or your position will be eliminated. There were 635 venture capital firms in the country at the time – about a dozen had tried this model. The premise was that the partners knew quite a bit about technology and financing and market analysis but they didn’t do one thing very well – hiring or managing people. We set about creating an entire set of tools, processes and procedures for the portfolio companies to use to clear the path of compliance and people challenges and allow each company to concentrate on the disruptive technologies they were creating. Some of those were very successful, others not so much. But we could tell early on which would be successful. They concentrated on one key process. Hiring an exceptional team with great leadership with a unified focus and then commence building their story. In each successful investment this was the common theme. Assembling a great team all focused on the same mission. Today our firm helps our portfolio of companies do the same thing – with a very disciplined and defined selection process that brings the right people together based on their unique defined role.
There’s a great example of this same model on display with the upcoming NHL playoffs. A start-up team decided to implement a very similar model. They were given the opportunity to select the best talent from across the entire league and build a new team. They did it exceptionally well. Today, less than one year in existence, they lead the NHL in wins and are a high odds favorite to go deep into the Stanley Cup playoffs. Who are they? The Las Vegas Golden Knights. Our beloved Marc Andre Fleury is in net there and the owners assembled a group of exceptional talent experts (human capital) and leaders (aka coaches, trainers, nutritionists, equipment experts, etc.). It’s a great model we can all learn from.
This formula of human capital is paramount to success. It is evidenced throughout almost all successes. Develop a great idea, hire an exceptional team to execute it, clear the path of obstacles and noise, and watch what happens. There are a number of great examples here in our region. One that comes to mind is when Glen Meakem was putting together the team to create Free Markets he assembled an all-star team of very smart, highly motivated, individuals who understood the vision and couldn’t wait to implement the plan. Their execution was extraordinary. And those companies that became their clients saved millions of dollars as a result. Eventually they went through an exit cycle and much of what was the original cast has gone on to do an entire host of different things. But they followed the same formula when they were starting – at its core it was about understanding human capital.
Here’s a few to think about. Loyola Chicago and the NCAA tournament. Dante DiVincenzo – a kid off the bench becomes the tournament MVP. A backup quarterback for a team in Philadelphia defeating one of the greatest teams in NFL and playoff history to win the Superbowl. And my favorite – 300 vs. 100,000 in the greatest battle in history. Thermopylae. Some would like to say it was the technology, or the systems, the software, the timing. Some of that is true. But there is one thing that is certain. Smart people with great skills, motivation and belief who execute have changed the world. There are a dozen great ideas already being created today no one has heard about – yet. They’re all destined to success. Why? They understand this universal truth – People, the foundation of any success – are going to make it happen. That’s the Power of People Realized.
I wish you well!