5 ms·

G&G: A hotly debated question in the tech investor community is, “What is the single most important factor for startup success?” Some say it’s the team. Some sa

G&G: A hotly debated question in the tech investor community is, “What is the single most important factor for startup success?” Some say it’s the team. Some say it’s the product/market fit. Others say it’s timing. Obviously, all three are important, but if picked one single factor, which would it be? Chris: I’d say opportunity is the most important. I often meet talented entrepreneurs who put an incredible amount of time and effort into solving problems that ultimately lack real market opportunity. It’s a waste of their talents. I’d roll back on the team that’s doing something unproductive because it’s an awesome team. I will bet on an exceptional team if they’re doing something productive. By that hierarchy, the opportunity is first, people the second. I've heard this from quite a few VCs. The difference between a good and great engineer is 10x. The difference between a good and bad market is 100x.

rdlecler1 9y ago
This is the line used my Andreessen, but I don’t buy it. A good idea in the hands of the wrong entrepreneurs is no different than a bad market. Traction trumps everything, but when you don’t have traction you need to look at the idea good ideas often only look good in retrospect so all you’re left to evaluate is the quality of the team. Great markets are tightly bound to the quality of the idea. In fact, even though he explocitly emphasizes market the rest of the interview his focus was on the quality of the team.
- mathattack 9y ago
  Yes. If one looks in the extreme at Google or Facebook, it took both the founder and the market. I think VCs view it easier to replace a C+ founder in an A+ market then figure out what to do with an A+ founder stuck in a C+ market. I'm not arguing the morality of this, just following on their thought process. He does backtrack on this later. The key lesson for me was to always invest in exceptional founders — you can always find the money to make subsequent investments in their companies. Money is more abundant than opportunities. I really kick myself for not having written Jeff a check when I met him. He’s a fantastic entrepreneur and I knew it – I blew it.
  - AndrewKemendo 9y ago
    Easier to replace a C+ founder in an A+ market then figure out what to do with an A+ founder stuck in a C+ market That's a great way to put it and encapsulates a general frustration I've had.
rimliu 9y ago
In "Creativity Inc." (the book I'd recommend to anyone interested in managing people and teams, alongside "Peopleware") Ed Catmull argues that people are more important than ideals. His logic is this: if you give a good idea to the bad team they will screw it up. If you give a bad idea to the good team, they will either improve it, or come up with something better.
- danieltillett 9y ago
  Yes a bad team will screw up a bad idea, but if it was as simple as just backing good people then VCs would just give a bunch of cash to a good team and tell them to go out and find something. YC tried this and it was a failure.
  - rimliu 9y ago
    Bad team can easily screw an good idea too.
    - danieltillett 9y ago
      Actually that is what I meant to say, but yes you are right :)
  - ashraymalhotra 9y ago
    Interested to read more on the YC experiment where they gave money to just good teams and how was it a failure? Any references, please?
    - hyperpallium 9y ago
      Not who you're replying to, but have a search on pg's essays on his site. What I took from it: if a team can't come up with an idea themselves and rally round it, there's something wrong with the team. It needn't be a very good idea. e.g. the reddit guys were excited about a delivery service idea (pet food? muffins? IDR). pg said no, and suggested the reddit/HN idea. But note that they had come up with an idea and rallied around it on their own. (Who knows, perhaps they would have made it work anyway?) Maybe it's a touch of mad passion/enthusiasm/optimism - not entirely rational - that is a key ingredient of an entrepreneurial team. Indicated by inventing and rallying round "some idea".
zby 9y ago
What does it mean that a factor is the most important if all of them are necessary?
danieltillett 9y ago
There are a lot more great teams than billion dollar ideas. I wrote an essay on this topic a few years ago [0]. 0. https://www.tillett.info/2015/12/18/execution-is-just-the-multiplier-of-ideas/ https://www.tillett.info/2015/12/18/execution-is-just-the-mu...
- scardine 9y ago
  Ideas are always priced in hindsight - you can't say it is a billion dollar idea until a business is built around it. For all practical purposes there are no billion dollar ideas, just billion dollar business.
  - danieltillett 9y ago
    Yes, of course an idea is only a billion dollar idea once it is built out, but a good team is also only determined in hindsight too. More importantly, while some ideas have the potential to be billion dollar ideas, most don't. The ideas that have a reasonable chance of being billion dollar ideas are very rare, much rarer than teams that have the same potential.
- ikeboy 9y ago
  There are roughly 2000 existing companies with over a billion in sales. That should mean, within an order of magnitude, there are thousands of billion dollar ideas/potential businesses. Are there more than a thousand teams capable of executing on a billion dollar idea? Is this the wrong way to evaluate the space of ideas?
  - danieltillett 9y ago
    Well most of those 2000 companies are not doing exactly what they set out to do and/or are doing a lot more than one idea. Yes there are far more than a few thousand good teams out there in the whole world.
    - ikeboy 9y ago
ksec 9y ago
I've heard this from quite a few VCs. The difference between a good and great engineer is 10x. The difference between a good and bad market is 100x. I would say a good and a great engineer is at best 10x, but a good and a bad market could be 100x to 1000x or more. That is why they invest in entrepreneur, not solely because of their current idea, market fit or opportunities. If it does not fit, you buy into this person will eventually find one.
- snarf21 9y ago
  Right, they are not separable. They feed on each other. The only one that is fungible is timing/luck since being in SV gives you the ability to make luck with the VCs all invested in the (largely) the same bets.
wellboy 9y ago
It's neither no? Sometimes the market is 1000x more important than anything else, e.g. craigslist, just a listing of stuff with no design that become successful because no one else was doing it. Sometimes the founders are everything when a lot of players are already in the market, e.g. Google vs. Yahoo. Google had to invent a completely new kind of algorithm to win the market.
pascalxus 9y ago
A x10 Engineer is worth x0 nothing if there's no opportunity. I've seen this playout in the indie-gaming bubble bust. so many highly competent engineers producing countless games, the vast majority of which will never see an audience. Quite sad actually, such a large waste of talent.

rdlecler1 9y ago

This is the line used my Andreessen, but I don’t buy it. A good idea in the hands of the wrong entrepreneurs is no different than a bad market. Traction trumps everything, but when you don’t have traction you need to look at the idea good ideas often only look good in retrospect so all you’re left to evaluate is the quality of the team. Great markets are tightly bound to the quality of the idea. In fact, even though he explocitly emphasizes market the rest of the interview his focus was on the quality of the team.

mathattack 9y ago
Yes. If one looks in the extreme at Google or Facebook, it took both the founder and the market. I think VCs view it easier to replace a C+ founder in an A+ market then figure out what to do with an A+ founder stuck in a C+ market. I'm not arguing the morality of this, just following on their thought process. He does backtrack on this later. The key lesson for me was to always invest in exceptional founders — you can always find the money to make subsequent investments in their companies. Money is more abundant than opportunities. I really kick myself for not having written Jeff a check when I met him. He’s a fantastic entrepreneur and I knew it – I blew it.
- AndrewKemendo 9y ago
  Easier to replace a C+ founder in an A+ market then figure out what to do with an A+ founder stuck in a C+ market That's a great way to put it and encapsulates a general frustration I've had.

rimliu 9y ago

In "Creativity Inc." (the book I'd recommend to anyone interested in managing people and teams, alongside "Peopleware") Ed Catmull argues that people are more important than ideals. His logic is this: if you give a good idea to the bad team they will screw it up. If you give a bad idea to the good team, they will either improve it, or come up with something better.

danieltillett 9y ago
Yes a bad team will screw up a bad idea, but if it was as simple as just backing good people then VCs would just give a bunch of cash to a good team and tell them to go out and find something. YC tried this and it was a failure.
- rimliu 9y ago
  Bad team can easily screw an good idea too.
  - danieltillett 9y ago
    Actually that is what I meant to say, but yes you are right :)
- ashraymalhotra 9y ago
  Interested to read more on the YC experiment where they gave money to just good teams and how was it a failure? Any references, please?
  - hyperpallium 9y ago
    Not who you're replying to, but have a search on pg's essays on his site. What I took from it: if a team can't come up with an idea themselves and rally round it, there's something wrong with the team. It needn't be a very good idea. e.g. the reddit guys were excited about a delivery service idea (pet food? muffins? IDR). pg said no, and suggested the reddit/HN idea. But note that they had come up with an idea and rallied around it on their own. (Who knows, perhaps they would have made it work anyway?) Maybe it's a touch of mad passion/enthusiasm/optimism - not entirely rational - that is a key ingredient of an entrepreneurial team. Indicated by inventing and rallying round "some idea".

zby 9y ago

What does it mean that a factor is the most important if all of them are necessary?

danieltillett 9y ago

There are a lot more great teams than billion dollar ideas. I wrote an essay on this topic a few years ago [0]. 0. https://www.tillett.info/2015/12/18/execution-is-just-the-multiplier-of-ideas/ https://www.tillett.info/2015/12/18/execution-is-just-the-mu...

scardine 9y ago
Ideas are always priced in hindsight - you can't say it is a billion dollar idea until a business is built around it. For all practical purposes there are no billion dollar ideas, just billion dollar business.
- danieltillett 9y ago
  Yes, of course an idea is only a billion dollar idea once it is built out, but a good team is also only determined in hindsight too. More importantly, while some ideas have the potential to be billion dollar ideas, most don't. The ideas that have a reasonable chance of being billion dollar ideas are very rare, much rarer than teams that have the same potential.
ikeboy 9y ago
There are roughly 2000 existing companies with over a billion in sales. That should mean, within an order of magnitude, there are thousands of billion dollar ideas/potential businesses. Are there more than a thousand teams capable of executing on a billion dollar idea? Is this the wrong way to evaluate the space of ideas?
- danieltillett 9y ago
  Well most of those 2000 companies are not doing exactly what they set out to do and/or are doing a lot more than one idea. Yes there are far more than a few thousand good teams out there in the whole world.
  - ikeboy 9y ago

ksec 9y ago

I've heard this from quite a few VCs. The difference between a good and great engineer is 10x. The difference between a good and bad market is 100x. I would say a good and a great engineer is at best 10x, but a good and a bad market could be 100x to 1000x or more. That is why they invest in entrepreneur, not solely because of their current idea, market fit or opportunities. If it does not fit, you buy into this person will eventually find one.

snarf21 9y ago
Right, they are not separable. They feed on each other. The only one that is fungible is timing/luck since being in SV gives you the ability to make luck with the VCs all invested in the (largely) the same bets.

wellboy 9y ago

It's neither no? Sometimes the market is 1000x more important than anything else, e.g. craigslist, just a listing of stuff with no design that become successful because no one else was doing it. Sometimes the founders are everything when a lot of players are already in the market, e.g. Google vs. Yahoo. Google had to invent a completely new kind of algorithm to win the market.

pascalxus 9y ago

A x10 Engineer is worth x0 nothing if there's no opportunity. I've seen this playout in the indie-gaming bubble bust. so many highly competent engineers producing countless games, the vast majority of which will never see an audience. Quite sad actually, such a large waste of talent.