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Human Capital: Building high performance teams for your start-up's success

Every start-up encounters speed bumps on the highway of growth. It's the people on your team who will enable your company to power through them. Skills and capabilities must evolve as you grow. You'll need to navigate advisory and other boards, recruit well and have effective team communication and a CEO who sets the stage for the company culture – all just to set you up for that early-stage VC funding.

Lance Laking, an experienced successful entrepreneur, talks about how to successfully drive this off-road path.

Part of the CIBC Presents Entrepreneurship 101 lecture series. For more information including video, please visit:

Human Capital: Building high performance teams for your start-up's success

  1. 1. Human Capital: the importance of high performance teams to start-up success.
  2. 2. Outline   Context   Team diversity & dynamics   On hiring   Culture   Communication style   Compensation / incentive programs   Challenges   Closing comments
  3. 3. 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.
  4. 4. 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
  5. 5. 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
  6. 6. Multi-functional teams… Software engineers Product Management Hardware engineers Marketing HR Sales Quality Operations Manufacturing Finance Administration Investors Customer Service Management Directors
  7. 7. Venus & Mars Software + Sales & Marketing Engineers + Research = ???
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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”
  12. 12. 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
  13. 13. Shifting Investment in Human Capital “Make Sufficient & Well-Timed Investments in Sales and Marketing” Source: 2009 OCETA SDTC “Cleantech Growth & Go-to-Market Report”
  14. 14. 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)
  15. 15. 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!!
  16. 16. 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 $$$ - that is how you compete with the big companies…
  17. 17. Compensation & Incentives   Company-wide incentive plan •  10% “at plan” , 20% stretch •  Metrics must be aggressive, but realistic •  Combination of financial / market / product milestones •  Always drive home the capital efficiency message (Cash Flow Positive…)   Stock Options (ESOP) •  Still in vogue, but not Holy Grail   “Fun” and other rewards work •  Create a friendly competition / bragging rights •  Does not require big bags of $$$ •  Examples: IP², a goofy award, employee referral bonus
  18. 18. 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
  19. 19. 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
  20. 20. Lance Laking Entrepreneur-in-Residence, Advisory Services, Venture Group MaRS Discovery District T (613)797-9033 E W pg 21