Revealing How Epic Teams Overcome First Ideas

As a young founder, I was convinced that once I discovered an excellent idea, then success was guaranteed.

When speaking with founders today, I sense a similar vibe when they discuss their idea in detail for several minutes and then brush over the team as an almost afterthought.

This makes sense as the idea is where the passion is—that is the fun part. However, reality is much more boring.

Your probability of success is nearly 100% based on the founding team, which has little to do with the idea. Stellar teams mold the idea into something the market wants, while mediocre teams seldom get past the first year.

Apple

As an example, Apple Computer began with an incredible product—the first mainstream personal computer. Their network of hardware enthusiasts provided the Steves with an initial customer base. However, without Wozniak to build the machine and Jobs to frame it as a “must-have,” it would have died the moment something new came along. Shortly after its founding, new personal computers were launched rapidly, including by incumbent IBM.

PayPal

A mediocre online bank and a PalmPilot app were merged to form PayPal. Eventually, the founding team became Elon Musk, Peter Thiel, Max Levchin, Ken Howery, Luke Nosek, and Yu Pan, with Reid Hoffman on the board of directors. While both original ideas failed, the new focus on being a payment processor for eBay proved successful, but only with a lot of strategic execution. Without this dream team, PayPal would have never been more than a blurb on a few resumes.

YouTube

Three former PayPal employees started a dating site called YouTube. Jawed Karim, Steve Chen, and Chad Hurley realized that sharing videos was working while the dating part was failing. Revamping the idea to focus on video sharing allowed the team to sell the company in 2006 for $1.65 billion. Thus, the original idea was mediocre, but the stellar team altered the product to fit market demand.

Finalysis

My own company began with a stellar team on paper: a Harvard-educated sales consultant to Microsoft, Oracle, and IBM, a PhD economist from Berkeley, and myself, a founder with a previous exit who spent the last two years designing trading strategies for hedge funds. While the idea was incredible and eventually sold, the team was unable to reach its goal of replacing the VIX. The reason is that we did not have good strategy or communication.

History is full of solid teams outgrowing their peers regardless of the founding idea. It is also full of great ideas that never reached their five-year anniversary. 

For this reason, I spend more time measuring the team than the idea when evaluating companies for early investment. You should, too.