High-tech startups that have the goal of commercializing a scientific idea can be high-risk due to several factors. These factors include:
Some founders who, tempted by the trend of commercializing scientific findings, self-assuredly set out to commercialize their raw and incomplete ideas and and too many resources of the startup end up going towards completing the idea rather than actually commercializing it – thus keeping the startup stuck;
Owners of scientific ideas who are in most cases people far removed from the business world and yet blindly throw themselves into the churning waves of business by forming a company and then forever try to retain maximum control by greedily clutching the majority of the shares even when it’s no longer appropriate or healthy for the company;
The scientific ideas of high-tech startups are usually unclear and even abstract to most investors and so investors assess such startups by other criteria, such as:
sensible are the founders in their attitude towards the interests of the company and its investors;
how presentable and respectable the founders are;
how accessibly and clearly can they explain their scientific idea and its potential;
the number of specialists and the kinds of people that have assembled around the realization of that project;
whether the company has loyal and competent individuals who, besides understanding the scientific idea itself, are also adept at investment term sheets and can speak the investors’ language, possess acute intuition as to the costs of the project and its future ROI;
the level of the CEO’s or key executives’ competency and autonomy in decision-making to keep the company on its strategic course and efficiently resolve tactical questions at the same time, as the level of the CEO’s competency and autonomy will affect all aspects of the business from finding and securing investments to choosing the right manufacturer, arranging reliable trials and the effective distribution of the end product.
Even after checking all these boxes, there are still many other small routine problems that arise along the startup’s journey that inject the factors of panic and turmoil into the ranks of a startup’s team. And for the realization of a high-tech idea – funding is a constant requirement. So to help them navigate the turbulent waters of modern business and as a way to connect with investors, high-tech startups often turn to supportive platforms such as accelerators.
It is completely understandable that the investors in these accelerators will not be able to fully grasp the essence of a startup’s scientific idea, however they still pay careful attention to up-and-coming young companies and offer their advice for how startup owners can make their company more attractive to investors. Unfortunately, the bulk of this advice is limited to generic phrases and lessons that we have been hearing since childhood such as the one about needing to grow your company’s team and demonstrate appropriate team spirit before you can be considered investable. This can be inadequate and even discouraging advice for most startups because the majority of them simply cannot afford to grow their team in their early stages and, on the other hand, there is not even any necessity for doing so.
"Unfortunately, the bulk of this advice is limited to generic phrases and lessons that we have been hearing since childhood such as the one about needing to grow your company’s team and demonstrate appropriate team spirit before you can be considered investable. This can be inadequate and even discouraging advice for most startups because the majority of them simply cannot afford to grow their team in their early stages and, on the other hand, there is not even any necessity for doing so."
There’s no arguing against the importance of teamwork in meeting ambitious objectives, however it might be time to reassess our attitude towards teams and the ways in which they affect productivity and growth of our companies. Now more than ever we need to come to terms with the fact that our traditional understanding of a team, let alone teamwork, has dramatically evolved and the need to keep up with these changes will be inevitable in order to succeed in business. Several important factors have contributed to this paradigm shift, particularly in the past year:
Factor 1: COVID-19
The COVID-19 pandemic forced companies to test the work-from-home model and for the most part it is a success. Beyond the initial adjustment stage, working from home has proven to have many benefits for both employees and employers. It has been found that over 50% of all people working from home would prefer to continue doing so after the pandemic. Majority expressed that it has been easy to find motivation to complete tasks without interruption (1) and that their work, in essence, can be done from home. The transition has also added flexibility to employees’ workdays, thus no longer confining them to a 9-to-5 and it is saving them hours in the week that would otherwise have been lost in commute to and from work.
From employers’ perspective, there are several apparent advantages as well. Executives of big companies like Chegg, Cisco, Microsoft and Eventbrite amongst others have all commented on an evident spike in employee productivity (2). While it is not clear whether this phenomenon is short-lived, it is a testament to the fact that working solo in the comfort of your own space and time increases productivity, thereby diminishing the need for a collaborative setting to enhance it. Conference meetings have turned into quick email exchanges and Zoom calls, and saving on office lease is an added bonus.
At the level of small-to-medium sized businesses, the pandemic has prompted entrepreneurs to think globally and therefore think bigger. With most, if not all, aspects of business being run virtually, there is no longer a reason to limit the business to any local region. This applies not only to acquiring a new customer base but also to who to partner with and who to hire. As people continue to utilize the myriad of social platforms and collaborative tools that will continue to evolve with our needs and habits, the need for physical proximity will be completely eradicated.
The concept of teamwork has become arbitrary, relying more on clearly communicated expectations and delegation of tasks to people with relevant skills and talents rather than the physical sense of a group of people in a single room. Task management software and customizable sales funnels take the pressure off of management, thus allowing team members to channel all their energy to the task at hand. Through technology and our Covid-induced shift towards working remotely, the group task process has become more organized, linear and productive, thereby allowing people to focus on what matters in areas they are experts in.
"Executives of big companies like Chegg, Cisco, Microsoft and Eventbrite amongst others have all commented on an evident spike in employee productivity. While it is not clear whether this phenomenon is short-lived, it is a testament to the fact that working solo in the comfort of your own space and time increases productivity, thereby diminishing the need for a collaborative setting to enhance it."
Factor 2: Democratization of opportunity
We live in a time of limitless access to information in every format imaginable. Any ranking university provides the bulk of their courses virtually and some even provide entire degrees. But even these online degrees are not the most appealing as the learning landscape is changing drastically. Traditional post-secondary education is losing its appeal as the numbers show — college enrolment has been on the decline since 1997 and saw a serious drop by 4% in the United States in the past year alone (3). This is not surprising as post-secondary education comes with backbreaking debt (4) and 4+ years of invested time, which does not guarantee a job on its own — after all, less than one third of all graduates end up getting a job in a field related to their major (5).
More importantly, beyond post-secondary education, the internet is filled with forums on any subculture imaginable, there are thousands of YouTube videos on every subject and various learning platforms like Skillshare and Coursera, which even provide certificates as proof of successful course completion. The surplus of information organized into digestible pieces of content that have absolutely no gatekeeper is enabling anybody around the world to learn and apply all this information.
People are becoming experts in topics that would otherwise be inaccessible to them decades prior, particularly in matters of business. Now any person in STEM, the arts, or any other background for that matter, can become adept at business skills, which help them commercialize their knowledge, skills, product or service without relying on corporate structures. More people now than ever are either self-employed or do independent freelance work in their specific area of expertise. And with online freelance job posting platforms like Fiverr and Upwork, which together share over 20 million registered freelancers, it is now easier than ever to find independent work. This creates a globally accessible free market economy that transcends the industry standards for costs, which were otherwise dictated by large corporations and governments. And for many business owners – whether they are looking to build a website or an app, improve their SEO, run their social media accounts, or get strategic advice – a freelance worker who is an expert in a specific field and will charge a fraction of the typical costs is a far more attractive option than hiring a local boutique firm or committing to an employee.
This democratization inevitably promotes dispersion of corporate groups and will become a greater commonality than ever, as technology replaces them through diverting the flow of customers towards independent experts. We already see examples of this in consulting work and other industries (particularly those that involve coaching and instructing), as company employees build an individual reputation and begin to capitalize on it outside of their company to cut out the middlemen.
"Now any person in STEM, the arts, or any other background for that matter, can become adept at business skills, which help them commercialize their knowledge, skills, product or service without relying on corporate structures. More people now than ever are either self-employed or do independent freelance work in their specific area of expertise. And with online freelance job posting platforms like Fiverr and Upwork, which together share over 20 million registered freelancers, it is now easier than ever to find independent work."
The Western world is known for praising individuality and originality so the shift makes sense on a cultural level. Ultimately, the concept of working for oneself is appealing. People who excelled in their careers typically don’t want to be bound or be slowed down by others, including their co-workers, because time is way too precious to be giving out free lunch. Combining this with our growing reliance on technology for managing bureaucratic aspects of running a business, the need for congregating a team of talent diminishes or even disappears entirely. In short, teamwork as we know it is expensive, time-consuming and has lost its purpose.
Looking back at the biotech diagnostic startup I worked at: sure, we did not have a conventional team of 5-10 full-time employees that the accelerator mentors were looking for. However, we had a software developer through a studentship, who worked tirelessly on programming our app. In addition, we contracted out a manufacturing company, which in its team had just 5 engineers and we contracted out an expert veterinarian whose job was to run the trials of our device on farms and later help push sales. We also had around-the-clock access to the services of a freelance lawyer who helped us navigate all our business transactions and documentation at a cost proportionate to our financial resources as a small company, which is a relatively fresh concept in and of itself within the traditional legal profession, where law firms charge upwards of $350 per hour – a cost that startups simply cannot sustain when needing continued legal support. Our external, non-hired team also included lab technicians who were contracted as part of the company's affiliation with the University of Calgary and on top of this, we had on-demand advisors provided by the University. By effectively coordinating and utilizing the skills of these external individuals the company was able to grow substantially and more than triple its valuation during my time as its CEO.
"Sure, we did not have a conventional team of 5-10 full-time employees that the accelerator mentors were looking for. However, we had a software developer through a studentship, who worked tirelessly on programming our app. In addition, we contracted out a manufacturing company, which in its team had just 5 engineers and we contracted out an expert veterinarian whose job was to run the trials of our device on farms and later help push sales. We also had around-the-clock access to the services of a freelance lawyer who helped us navigate all our business transactions and documentation at a cost proportionate to our financial resources as a small company, which is a relatively fresh concept in and of itself within the traditional legal profession, where law firms charge upwards of $350 per hour – a cost that startups simply cannot sustain when needing continued legal support."
For a startup operating in a field of high unpredictability and constant change, this was the only feasible option but, most importantly, it was the most correct one. As a startup, our priority laid in solving clearly defined problems surrounding validation and launching of the product and not implementing human resource infrastructure, which should only be considered in the growth stage when the needs of a company are well defined and affordable. This is, in fact, the magic of startups where the key question is “How to use limited resources to solve the problems at hand?” vs. “How do we build the team that will solve the problems?”
The more limited your resources are the more effectively you are forced to use them and the more they lead to innovative outcomes. The “lean approach”, as promoted by Eric Reis in The Lean Startup, describes this idea in greater detail and is a philosophy that is being implemented not only by startups but by large corporations, such as General Electric and Intuit who are trying to stay ahead of the curve and purposely create a startup environment to promote innovation (6). And when even such large corporations admit that their original mammoth infrastructure stands in the way of rapid development and innovation, it is a telling sign that a shift in corporate culture is bound to happen.
Factor 3: Generational shift
The notion of teamwork and the way it is changing is also congruent with the intergenerational changes that we are experiencing as a society. The current generation of Gen Zs is growing up with an understanding that wealth is accessible from the comfort of your own home, whether it’s through growing an e-commerce business, content creation or other modes of passive income – all of which are individualistic pursuits. The idea of having to climb the corporate ladder for decades to reach the top and become successful is out-dated and with it goes the romanticized image of suited businessmen assembled in a conference room to work together on the next big thing. So often we see stories of 20 and 30-something startup founders achieving successful exits (7,8), or young content creators going viral and securing multi-million dollar deals with the leading platforms and large brands (9). In these instances, such rapid success assumes speed and a virality factor on the part of the content creator, which requires an individualistic approach. Working in a team becomes impractical and when it does happen, it’s in the form of a collaboration, which suggests a temporary period in which two or more parties benefit each other by working together.
"The current generation of Gen Zs is growing up with an understanding that wealth is accessible from the comfort of your own home, whether it’s through growing an e-commerce business, content creation or other modes of passive income – all of which are individualistic pursuits. The idea of having to climb the corporate ladder for decades to reach the top and become successful is out-dated and with it goes the romanticized image of suited businessmen assembled in a conference room to work together on the next big thing."
Final thoughts:
“If you want to go fast, go alone. If you want to go far, go together”, is an old African proverb with a great message. In today’s world, where information is so accessible and is transmitted through populations at a lightning speed, going fast is the only option in order to beat competitors, maintain momentum and become truly successful. This doesn’t mean we should abolish teams but only change what it means to have the “team spirit”. A worker who’s efficient, detail-oriented and has high initiative will be picked over a polite and personable team player any day. Every year, thousands of weekend-long hackathons happen that prove this and, as anybody who has ever participated in one will tell you, the perfect team consists of strangers with a mutually shared desire to create and win, not a bunch of nice guys.
So what to make of all this when wanting to grow your team, especially if you are running a startup? If you are an executive or a manager who is thinking of growing your team, proceed with the following questions in mind: "What is my objective? And how can I reach it in the quickest and most optimal way possible?” If the answer to this question calls for a constant team, then actively explore your network to find the talent you require. However, in many instances you might find that assembling a team of full-time employees can be time-consuming and nerve-racking since every added person is firstly a liability for the company before they are an asset. And each new hire carries with him or her the risk of not turning out to be an asset, after all.
Suppose you need to develop a new product, such as an app. Do you hire a team of developers who spend time brainstorming the best way to program it, or do you quickly contract one super-developer for a one-off assignment with the possibility of contracting him or her on an as-needed basis in the future? With the latter, in addition to circumventing lengthy hiring procedures as well saving money on regular salary payments, you also skip complicated employment regulations and HR policies, and can arbitrarily prune or expand your external talent pool in accordance with your business’s needs at any particular time. Another obvious benefit of on-demand contracting of talent vs. formally hiring employees is that you can swap out professionals that are not the right fit for your business as many times as you need to without any of the rigmarole associated with terminating an employee. This type of leeway is essential for optimal use of a startup’s resources.
For these reasons, startups should be comfortable with utilizing freelancers, contractors and on-demand consultants in accordance with their needs. And those investors who question this approach likely have unrealistic and impractical expectations of startups, which is a red flag that is bound to trickle down to their other milestone expectations in the future. The idealized synergy that we seek in teams cannot be artificially manifested as a way to check off a box – it happens organically when talented, skilled people who are just right for the job are assembled on an as-needed basis and can clearly see what they will get out of it. In this way, it naturally makes sense for these people to work together with their own unique and timely contributions.
If you are contemplating on expanding your team or would like to speak more on any of the things mentioned in this article, please feel free to reach us here. You can also view our full list of services here.
References:
https://www.pewresearch.org/social-trends/2020/12/09/how-the-coronavirus-outbreak-has-and-hasnt-changed-the-way-americans-work/
https://www.nytimes.com/2020/06/23/business/working-from-home-productivity.html
https://www.forbes.com/sites/michaeltnietzel/2020/10/15/college-enrollment-update-undergraduate-numbers-now-down-4-nationwide/?sh=2100f360389d
https://www.forbes.com/sites/zackfriedman/2020/02/03/student-loan-debt-statistics/?sh=27c476b0281f
https://www.washingtonpost.com/news/wonk/wp/2013/05/20/only-27-percent-of-college-grads-have-a-job-related-to-their-major/
https://hbr.org/2013/05/why-the-lean-start-up-changes-everything
https://techcrunch.com/2021/02/16/valoreo-raises-50m-to-roll-up-latam-e-commerce-brands/
https://www.forbes.com/sites/douglasyu/2020/10/22/tpg-capital-acquires-low-sugar-candies-maker-smartsweets-for-nearly-400-million-sources/?sh=6b74ed903510
https://www.insider.com/most-liked-influencers-insider-data-mrbeast-markiplier-corpse-2021-2