One of the top 3 reasons why startups fail, according to CBInsights, is hiring the wrong people. The people you choose to work with can either make or break your business. As a result, having “the right” team beside you is as important as having enough funds to run your business. If cash is your fuel, your team is the engine that gets the whole business going.
However, building a good tech startup team can be a challenging venture. There are many problems and pitfalls startup owners should be aware of. To make sure your team won’t wreck your startup, be prepared to handle the following challenges when building a tech startup team.
First of all, you need to understand the difference between “hiring people who will do the job” and “building a strong startup team”. While in the first case you will definitely get the job done, only with choosing the second option will you be able to build and launch a successful product.
What’s more, building a tech team for a startup is a much more delicate mission than hiring staff for an established, large business. Every one of your team members is an important component of the overall success, not just another cog in the machine. As a result, there is practically no room for error when building a team for your startup.
Having worked closely with startups for the last 8 years, we at Eastern Peak know the pains and challenges of growing a startup team from scratch.
Here is a roundup of the most popular pitfalls a startup owner should consider when building a strong startup team.
1. No understanding of the roles and responsibilities within a startup team
The problem: “I have no idea about the positions I need to recruit for or even how to build a full-fledged software development team.”
If you are first-time appreneur, the chances are, you don’t know how to build a startup team.
Usually, a proper tech startup team structure should cover the following aspects:
- business development (Sales/Marketing)
- technology (Product/Development/Design/QA)
- administrative (DevOps/Customer Support)
If we are talking about a tech team (development) specifically, the must-have roles include:
- a project manager
- QA engineers
- software architects (optional, depending on the product)
- business analysts/consultants (optional)
- a product manager (optional)
Read more about the basic roles in a mobile app development team and their duties: How to hire an experienced mobile app development team?
The solution: Get the roles and responsibilities right (preferably with the help of an experienced business partner).
“[…] by far the biggest challenge I’ve had is trying to do everything myself. It’s easy to forget that I can delegate tasks.”
Steph Russell, Vizually
2. A lack of understanding of the development process
The problem: “I don’t have a tech background, or the required skills to understand what’s going on with the development.”
If you lack the tech skills and struggle to understand the specifics of the engineering process, it might be hard for you to manage the product development. To be able to run a startup development team, you need to know how it all works and understand the basics of mobile/web engineering, design, and testing.
You can either learn the basics yourself (which usually takes time) or find a reliable CTO to take care of the tech aspects of building a startup team for you.
Read also: The 5 Most Important Qualities You Must Have in Your CTO: Expert advice from our CEO, Alexey Chalimov.
The solution: Find a reliable tech-savvy co-founder (CTO).
If you are struggling to find a person willing to join your startup as a CTO and accompany you on the road full of uncertainty (and often lower pay), you can choose the “CTO as a service” option with a trusted provider. This means the company you hire will act as your personal tech consultant and CTO.
3. No industry-specific knowledge and business expertise
The problem: “I have a solid idea of the product but don’t know how to build and operate a business.”
Startups are often founded by people who come from different backgrounds, unrelated to business or technology. What’s more, any industry or market has its own specifics.
So, if you are building an IoT product or crowd-economy app, it would be great to have someone with relevant hands-on experience by your side. By utilizing someone’s expertise, you can avoid a number of problems and make a better product.
The solution: Hire experts with relevant hands-on experience in the field.
Find people with relevant experience building similar products and a good understanding of the market. This could be in-house business development managers, marketing experts, or a dedicated COO. Alternatively, you can hire a part-time consultant/advisor to help you out.
Oftentimes, it is more efficient to hire one team that can provide you with all-round support, from design and development to business advice and guidance. For instance, we at Eastern Peak combine Ukrainian tech talent with Israeli business expertise to offer end-to-end services in startup development.
“I hired people because I thought they could do what I could — That was a mistake. I should have been hiring people who could do specifically what I couldn’t do.”
Peter Shankman, Founder of HARO & best-selling author
4. Limited local talent pool
The problem: “I am struggling to recruit the best and the brightest specialists locally.”
Hiring someone who lives in the same city is easy and convenient. You can interview a candidate in person, or reach out to their previous employers and ask for a reference.
However, the local talent pool is usually very limited. Not all candidates are willing to move to another city to get a job at a startup (especially taking into account that 3 out of 4 start-ups fail). Moreover, startups tend to lose the battle for skilled developers to more established, larger companies.
The solution: Go global and hire software developers remotely.
Hiring offshore has proven to be an efficient option for building a strong startup team. The talent pool you can tap into isn’t limited by any location. Basically, you can get any talent you want (and often at a lower cost).
Read more about the benefits of hiring remotely: The Hidden Power of a Multinational Team and How to Capitalize on It
In the long term outlook, you can even relocate the whole team to work on-site if the startup succeeds. However, offshore development teams are much more efficient for early-stage startups and small businesses.
5. Bad hires
The problem: “I think I have hired the wrong people. They don’t seem to be performing well/fit in with our culture.”
If you are inexperienced with candidate screening and hiring, then it can be easy to make a mistake. That is why you need to keep an eye on the new hires. By introducing role-specific KPIs and setting deadlines, you can see if a person capably copes with the job and how well they are performing.
Important: Make sure to be clear about your requirements for every new hire first. It is possible that they simply don’t know what you expect from them.
The solution: Set clear expectations, keep check on the new hires, and don’t hesitate to fire new people if necessary.
First of all, you need to pay close attention to the recruitment and candidate screening processes to avoid hiring the wrong people.
In case of a bad hire, it is important to be able to fire people fast. Otherwise bad hires can pose a real threat to your startup. You simply cannot afford paying people who are not doing their job well enough, or are not a good fit for the position.
The recruitment process and scaling down your team is much easier when you have a dedicated HR department or are engaged with a managed team who can do this for you.
“Don’t ever be understanding to unreliable people. When you’re a small team, one person can ruin even the best efforts.”
Bea Arthur, Founder and CEO of In Your Corner
6. Low team commitment and lack of motivation
The problem: “My team lacks dedication and vision of the product. They simply don’t get the idea.”
Regardless of how brilliant your product concept is, if you fail to translate your idea to the team correctly, the chances are, they won’t be able to get as excited about building it as you are. In this case, you can notice lower levels of commitment and a lack of motivation with your team.
The solution: Make sure to set up clear communication, and to work closely with the team during the early stages of planning and idea validation.
Research finds that miscommunication and employee misunderstanding comes at a high cost. $37 billion every year are lost annually due to the lack of transparency and miscommunication between employees.
Building a tech startup team early in the process will help you create stronger bonds. That is why we recommend engaging your team in the product definition stage. If their ideas and feedback are welcome, the team will feel more motivated and genuinely interested in making your startup succeed. Plus, this will help you make your product better.
Here’s how the product definition stage works at Eastern Peak and why you need it.
7. Fear of failure
The problem: “I’m afraid of failure (and the team feels the same way).”
Fear of failure is inevitable when you first start your business. There is no way to be 100% sure that you will succeed. However, you shouldn’t let this fear keep you from trying.
If you are in doubt, the team will most likely notice it. This might lead to lower productivity and may demotivate your team, further diminishing your chances for success.
The solution: Motivate your team by showing a positive example (and source motivation from your team).
To keep your spirit up, celebrate small successes together with the team: being featured in a reputable resource, signing up your first/tenth customer, or getting positive feedback, etc. These small wins mean more than you think. Never forget about the value of your product and make sure the team clearly sees it too.
“Remember that you are not alone. Everybody (including the ones you’d label as “successful”) goes through this.”
Dharmesh Shah, Founder & CTO at HubSpot
8. Poor management and lack of coordination within the team
Problem: “Managing my team efficiently has been a struggle.”
If there is no established leadership in your team, you will inevitably face some of the problems listed above, including poor commitment and performance (not necessarily due to bad hires). Building a startup team is just half the battle. You need to know how to manage your staff to get the most out of your team.
Solution: Hire a dedicated project manager or choose the managed projects option.
PMs, product managers, and tech team leaders are the people you should rely on when managing your startup team. They know how to set up an efficient process, they communicate with your developers and designers on a daily basis, and can bring professional management skills to the table.
In case you hire software developers offshore, you can choose the managed projects option and have a dedicated project manager take care of the team for you.
9. Lack of a client-oriented approach
The problem: “The team doesn’t care about the customers and doesn’t understand their needs.”
If you have faced this problem, you should first of all ask yourself: “Do you care about the customers yourself?” Don’t build a product for the sake of the product itself. Make sure both you and your team understand that in any business it’s always about the customer, not your ambitions or money.
Solution: Make the client-oriented approach a part of your corporate culture, show a positive example.
As a young startup, you might not have the resources to hire a full-scale customer support team. Yet, you can (and should) make customer support “everyone’s business”. Spend a couple of hours each day talking to customers and processing their queries, make it a habit to think “customer first”.
Some companies also make their developers work on customer support for several hours each week. As a result, the team becomes more customer-centric.
10. Struggling to align internal processes
The problem: “How do I align the development with business processes? Do I need to do it at all?”
Answering the latter question, yes, you need to make sure all of your internal processes are in sync. Be it development, sales, customer support, or testing, you are all in the same boat, so you need to work together toward a common goal.
The solution: Set up regular meetings, organize business trips, and allocate roles and responsibilities clearly.
Even if you are running a multinational, remote team (especially so), regular communication is a must. Video conference tools, corporate messaging services, project management and task tracking systems, as well as collaboration software make the life of remote teams much easier and help them be productive and help you keep all of your startup departments in sync.
You can spend months trying to find the right candidates, interviewing and onboarding them, setting up proper communication and business processes, even before you start building your product. As a result, your market niche might be no longer vacant when you are ready to launch your app.
Otherwise, you can team up with Eastern Peak and rely on our vast tech and business expertise to help you build and launch your product. With us, you receive a professional and well-oiled startup development team, so you can start development right away and focus on growing your business.
Book a free consultation with one of our project managers to find out how we can help you build your own startup development team. Contact us now.