Human Capital: the importance of
high performance teams to start-up success.

Outline
 Context
 Team diversity & dynamics
 On hiring
 Culture
 Communication style
 Compensation / incentive programs
 Challenges
 Closing comments

Definitions
 Human capital refers to the stock of skills and
knowledge embodied in the ability to perform
labour so as to produce economic value.
 High Performance Teams: Teams that are
highly focused on their goals.

Context: my background
 U of Waterloo, Chartered Accountant, Queens U
& UWO Executive Development
 20+ years in tech companies
 Co-founded DCI
 Grew team of ~60, RTO on TSE
 Country manager HUBER+SUHNER
 Swiss multi-national, “blue chip”
 Team of 125 inside 2,300 globally
 CEO BTI Systems
 Raised ~$60M VC over 4 rounds
 From 12 to 225 employees
 Revenue from $0 to $40M
 Currently freelancing: Singletrack
 Teams of 8 to 88, from IT to Cleantech

Context
my typical playing field:
 A (very) technical product
 A technical sales process
 A long, complex, B2B sales cycle
 High growth market dynamics
 Very much a David & Goliath landscape

Multi-functional teams…
Software engineers Product Management
Hardware engineers
Marketing
HR Sales
Quality
Operations
Manufacturing
Finance
Administration
Investors Customer Service
Management
Directors

Venus & Mars
Software
+ Sales & Marketing
Engineers
+
Research
= ???

Motivation & drive:
different strokes for different folks
• Peer recognition
• “coin operated”
• Papers published, patent
applications • “show me the money”
• Speaking at industry forums
• Technical challenge

But wait a minute:
we’re not that different
1. Everyone needs recognition - the “feeling” that you are important, that
you are contributing to the success of the business, and that your efforts
are respected and appreciated by fellow employees
 On budget / On time
 Cracking a new customer
 Selling on value
 Customer testimonials – helping solve real problems
2. Technical teams want to work on a successful products. Sales teams want
to sell winning products.
The common metric is real customers /market share

Fostering teamwork
 Trade notes
• Technical teams are starved for customer feedback
• Sales teams are starved to technical innovation / uniqueness
 Push decisions to where the expertise resides
 The key linkage between Development, Operations and Sales is
Product marketing / product line management
 On occasion…take a ‘software geek’ to a customer, and bring a
‘sales puke’ into the lab

Great (Management) teams have:
1. Diversity to accommodate wide range of variables
2. High “AQ” (Adversity Quotient = measure of human resiliency)
3. Psychological safety (to call out decisions)
4. Prior interaction (know each member’s SWOT)
5. Clarity of purpose and direction
6. A Plan “B”

On hiring
 Hire the best talent available – don’t compromise
 Attitude over Academic credentials
 Be careful with big company experience (no job too small attitude)
 Use
 Director and investor referrals are great but…
 You can compete with high paying companies…
 For tech plays: hire product management early

Shifting Investment in Human Capital
“Make
Sufficient &
Well-Timed
Investments in
Sales and
Marketing”
Source: 2009 OCETA SDTC “Cleantech Growth & Go-to-Market Report”

Culture
Every company has a culture, every company has politics
 Perception is reality
 Work with it
My observations:
1. Culture changes with company lifecycle:
• The $1M, 5M, 10M, 25M, 50M barriers
2. In Canada, we’re trés multinational: use it to your advantage
3. As the leader: be candid
• Candid = Integrity
• A culture of candour is a source of sustainable competitive advantage
4. Celebrate wins, De-brief Setbacks, encourage mistakes (but not
repeat mistakes)

Communication style
 Not your `typical` Tech CEO
 Be OPEN, honest, straightforward
 Have the tough conversation
 Stop management “happy talk”
 Soft on the people, HARD on the problem
 Be inclusive: tie in the remote teams
 Set 3, clear over-arching objectives, & repeat
 Share the numbers, the good, the bad & the ugly
 Regular informal updates
 Semi-annual formal update
 Have fun!!

Compensation & Incentives
 Fair, transparent and equitable
• People talk, especially engineers
 Salaries (the “start-up” factor)
• You have to be competitive – but not the highest
• You have to pay a premium for “A” players – but it’s worth it
• Challenge, responsibility, recognition and reward trump pure $$$ - that is
how you compete with the big companies…

Compensation & Incentives
 Company-wide incentive plan
• 10% “at plan” , 20% stretch
• Metrics must be aggressive, but realistic
• Combination of financial / market / product milestones
• Always drive home the capital efficiency message (Cash Flow Positive…)
 Stock Options (ESOP)
• Still in vogue, but not Holy Grail
 “Fun” and other rewards work
• Create a friendly competition / bragging rights
• Does not require big bags of $$$
• Examples: IP², a goofy award, employee referral bonus

Challenges
1. The Investor / VC influence
• The same vested interest or ??
• An exit and minimum 20% IRR is natural
2. As the company grows up…
• Start-up excuses go away
• Employment / HR expectations expand
• Balancing formal (e.g. employee handbook) with
informal (“just do it”) gets harder
• “Act BIG, be small” gets harder

Closing comments:
leveraging human capital for success
1. A high AQ team will handle the inevitable speed bumps
2. Set a tone that is open, based on mutual respect, and interactive
3. Bring in Organizational Development / HR expertise as early as you can
4. Communicate frequently – informally and formally
5. Tie in customer and market touch wherever and whenever you can
6. Structure rewards and incentives to reinforce the behaviour and culture
that you are looking for

Lance Laking
Entrepreneur-in-Residence,
Advisory Services, Venture Group
MaRS Discovery District
T (613)797-9033
E llaking@marsdd.com
W www.marsdd.com
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