Arguably, the greatest technological innovation of our time is the iPhone. Are we going to attribute all of its significance to Steve Jobs or Johnny Ives? Of course not. While Jobs' vision was important, a series of other circumstances and people made the innovation possible (Apple had just bought a multi-touch screen company and then put together a high-calibre engineering team).
"I would say 75 per cent of your focus should be on building a good team and 25 per cent on the good idea," says venture capitalist and CEO of Crowley Carbon, Norman Crowley.
“There’s a myth around the whole ‘good idea’ concept. A good idea is a series of incrementally good ideas. If you look back on the greatest innovations of our time, especially in technology, there was no ‘light- bulb’ moment.”
According to Crowley, innovation comes from a crazy idea, which is bounced off a client then bounced over to the management team then back to the client etc. “Three years later it’s an overnight success,” he says.
"At The Irish Times Innovation Awards this year, I was fascinated how within the online categories there wasn't a big hit, like a Whatsapp or an Instagram, " he says. It reminded me just how hard it is to make a big hit."
It's more sensible and attainable to aim for incremental growth and this is most likely with the right team, regardless of the idea. "Ideas are 10 a penny," says Brian Caulfield, partner at DFJ Esprit.
High-quality team
"It's almost always the case that people think the idea is more important than it is and give it more weight than thinking about execution in the market. Execution is driven by the quality of the team. I have found that a really high-quality team starting with a bad idea can find a way to make it a success."
Crowley and Caulfield have years of experience in venture capitalism, building teams and assessing where success and drive come from. “I meet a lot of entrepreneurs who struggle to find the right partners, or find the people they share a business with turn out not to be who they say they are,” says Crowley.
“It’s the same with hiring a management team. They might have a brilliant CV but it’s only really six months to a year before you know whether that person is the right fit or not.
"In our last business [Inspired Gaming Group] we had four different game companies within the organisation," he says. "We used to meet the gaming teams on a weekly basis and every week one guy would have a huge idea or brilliant success on a project while the others sat there quietly with nothing to offer. The following week, however, the roles would have reversed completely and the other guy would have the bright idea. Our analysts couldn't put their finger on it. It's just the way teams work."
Caulfield admits poor judgment on occasions where he turned down a good team with an idea. "I recently had a chance to invest in the business personal messaging company Intercom, " he says. "When I first met them they were at a very early stage, a bit too early for us. I really liked the quality of the team and am sorry I wasn't able to go with my gut and back them."
Question of integrity
"There are other occasions where I've walked away from deals because I didn't believe in the people," he adds. "That may have been because I had question marks over their integrity or on occasions I felt that while they were strong, they were the wrong team, a bit like good basketball players playing football. Because of the pressures now on the pace of execution, they might be great athletes, but you don't have time to wait for them to learn a new sport."
Many start-ups will be the brainchild of two family members or, perhaps, good friends. The jury is out as to whether this is a good idea. “It really helps to have friends and family around you in an early stage company,” says Crowley. “My wife, brother and two sisters-in-law all work with me now. Certain customers slag us but I make no apology for it. They all work very hard.
“You see companies with names like ‘John Murphy and Sons Engineering’. Well maybe there’s a reason for that. In the past it was standard practice but of course now if you want to hire your cousin, you have to declare it, and people accuse you of nepotism. Bottom line: if you’re professional you have to perform.”
Caulfield wouldn’t necessarily agree. “With friends it’s not so much of a problem,” he says. “Ideally you want co-founders to not be bosom buddies, but like each other enough to live in each other’s pockets for the next 12 months. They’ll be dealing with serous challenges so they need to be tight. Family, however, is quite different and to be honest it causes a lot of problems for professional investors. For example, if you meet three brothers who are CEO, CTO, and VP of Marketing for a new company, your first question will be if the brother who is CTO is the best person for the job or there through circumstance.
“The second issue relates to blood being thicker than water. If it gets to a situation where one family member isn’t cutting it anymore in their role, and investors feel they need to be replaced, will the other family members be able to support that?
“The third issue is when family fall out - for personal reasons unrelated – will the business suffer as it gets caught in the crossfire? From an investor’s perspective, family brings in a whole new set of risk factors, which are difficult to quantify or manage.”
