30 West 3rd

Very Early Stage Technology Investing

What “great team” really means (Part III – Intangibles)

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The book Island of the Lost describes the trials of different groups shipwrecked on Auckland Island in 1864.  Auckland Island lies in the Southern Ocean, more than 250 miles south of New Zealand.  The first stranded group of five men were led by Captain Thomas Musgrave, who rallied them to face the relenting hardships of survival on the uninhabited island.  They survived and eventually were rescued, but only after improving the wreck’s dinghy to take three members to Stewart Island, an inhabited island much closer to New Zealand.  From there Musgrave was taken to Invercargill on New Zealand’s South Island.  Once there he raised funds to hire a boat that eventually rescued the two crewmen left behind because of space constraints in the dinghy.

The second ship to wreck, four months after Musgrave’s Grafton, was the Invercauld.  While the crew was larger, they were able to salvage little of value from the remnants of their vessel.  Moreover, they lacked a competent leader and a team of versatile, committed seconds who could apply their varying skills to the tasks of survival.  There were adequate resources, but only three survivors were rescued when a Portuguese ship stopped at the island a little more than a year after the initial wreck.  These included the Captain and the First Mate.  Others may have survived elsewhere on the island, there were hints of cannibalism, and the outcome was entirely different than the Grafton.

The book is filled with fascinating details of what befell each group.  The account confirms that leadership and team performance were the key factors in the outcome.  Musgrave was a demanding, willful leader who expected much of each surviving crew member and kept them fully engaged.  He even organized classes to keep them occupied.  Captain Dalgarno of the Invercauld is overwhelmed by events, fails to keep his team together, and cares little for the well-being of others.  Musgrave knew that under duress, when everything was at stake, leadership requires incredible will.  His refusal to accept failure drove a common resourcefulness from all of his crew.  These are the intangible qualities of a great leader that drive the performance of a talented team.

Reading these and similar accounts provides context for us all.  Little in our coddled, modern existence compares to the deprivations faced by the Grafton or Invercauld crews on Auckland Island.  Their day-to-day 19th century lives before the wrecks would have been unbearable for most of us.  But the examples are instructive nonetheless.  The most successful early stage companies include leaders and key contributors who are deny failure.  They expect to succeed against the odds, and they expect to do something meaningful and compelling.  Yet their willfulness and competitive spirit is rarely coupled with arrogance or conceit.  The great leadership teams understand that working at an early stage company requires a common commitment to the task, not a command environment.  Successful founders will not be outworked, and they recognize the importance diverse skills and perspectives.  They also understand that the end goal requires continuous adaptive learning and adjusting by everyone.

There are some other almost contrarian traits that define a great leadership team.  First, good teams don’t seek too much time in the spotlight.  The product is what matters first, and success will provide ample opportunity for exposure, even gloating if you wish.  Good teams know this and see their customers and partners as the stars.  Second, they represent orthogonal skills that create valuable tension in the early stages of growth.  Having a great sales leader will make the engineering and marketing leaders stronger, as each pulls on the other to excel and meet commonly held high expectations.  A great founder will thrive in an environment of competing seconds, learning from their experience and exploiting their talents to build a successful company.  Finally, good teams have a shelf life.  They naturally break-up and move on when the company no longer feels like a fit.  One of the reasons many fast growing companies plateau after an exit is the natural pause to recalibrate the management team.  The energetic group that drove growth is not only flush with liquidity, but also knows that the fun is probably over.  Often the founder stays around and continues to succeed, but growing in the single digits is a different challenge than growing at 50% per year.

Founders should think about the journey they have started in this context.  I find the most compelling entrepreneurs are those that think big, crave scrutiny and knowledge, seek to surround themselves with talent, and have a realistic expectation of how difficult the journey will be, whether it leads to success or failure.  In fact, I think that was the secret of Musgrave’s success.  Unlike the other Captain, he knew that whatever remained of his crew’s lives, surviving and striving to escape Auckland was in its own right a form of success.

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Written by Mike Venerable

February 27, 2012 at 9:18 am

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