Great Startups Start With Great Teams — Here’s How to Build One | Entrepreneur

Startup ecosystem success hinges on execution rather than ideas. And to execute well, you need a great team on board. Research demonstrates that 23% of startup failures stem directly from team issues.

For startup founders, building the right team goes beyond standard recruitment. It’s arguably your most important responsibility and remains your top priority as your company scales.

Strategic importance of your first hires

Early teams, including co-founders, shape the company’s trajectory, culture and future hiring capabilities. Teams with more than one founder outperform solo founders by an astounding 163%, with 25% higher startup valuations. These initial employees establish operational foundations that either propel the business forward or create friction hampering growth.

Strategic team development requires careful financial planning. Before you think about hiring, ensure that you have:

1. Adequate funding
2. Strategic hiring roadmap aligned with growth milestones
3. Prioritized roles and addressed operational bottlenecks
4. Scale considerations for the role as the company evolves

Experts recommend giving yourself a specific timeline for each hire, recognizing that on average, startup hiring processes take six months to complete. Keeping vacancies open for too long carries significant opportunity costs, especially during the critical early stages.

Optimal first hires depend on the type of company you want to build and what skill sets you need from your team.

Complement founder strengths

Startup teams perform strongest when building around founder expertise while filling critical gaps.

McKinsey research indicates companies in the top quartile for ethnic diversity on executive teams are 27% more likely to outperform competitors financially, while companies in the top quartile for gender diversity see 15% higher returns.

Fill in the core competencies

Regardless of industry, four fundamental areas typically require strong talent from the outset:

1. Product Development: Individuals translating vision into tangible offerings
2. Engineering: Technical talent building robust solutions
3. Marketing/Sales: Team members effectively communicate the value proposition
4. Operations: Systems-oriented people establishing scalable processes

The “family stage” (Under 10 employees)

Early stages demand versatility over specialization. For early-stage startups, experience alone cannot predict team success. You want people with soft skills like “entrepreneurial passion” and “shared strategic vision.”

When hiring the first 10 employees, look for:

• Systems People: Those establishing operational frameworks supporting scalability
• Product Specialists: Individuals inheriting vision while evolving based on customer feedback
• Builders: Engineers, designers and product managers creating solutions
• Growth Specialists: Those identifying and exploiting market opportunities

Studies indicate diverse teams deliver 60% better results and make better decisions in 87% of cases compared to homogeneous groups.

What qualities to prioritize in early hires

Startup environments demand specific traits beyond technical qualifications. One HBR study shows that cognitively diverse teams solve problems up to three times faster than homogeneous groups, highlighting the importance of diverse thinking styles.

1. Adaptability and Growth Mindset. Data shows successful startups often feature teams combining relevant qualifications with adaptability. First-time founders have approximately an 18% success rate, while those previously failing achieve a 20% success rate, which suggests that a failed founder is more likely to bring more experience than a passionate first-time founder.
2. Execution-Focused Mentality. Teams combining diverse perspectives with implementation focus deliver substantially higher performance results.
3. Cultural Alignment. Companies with strong cultural alignment see 2.5 times greater cash flow per employee compared to competitors. Beyond technical skills, finding team members aligned with company values creates foundational strength.
4. Collaborative Disposition. Ethnically diverse startup teams raised significantly more investment capital. Teams featuring complementary thinking styles and collaborative approaches demonstrate markedly stronger problem-solving capabilities due to their ability to adapt.

Related: How to Know When to Hire Your First Employee

Strategic approaches to finding talent

You can reach out or pull people in. The strategy you pick depends on how much time you have at hand. But the easiest way to begin with finding talent is to start with your existing network.

Leverage your network – Word-of-mouth recommendations represent the most reliable method for finding initial team members. Connect with:

• Former colleagues
• Alumni networks
• Industry connections
• Advisor and investor networks

See if there’s anyone already in your network who has the right set of skills you need for your next hire.

Create a Compelling Employer Brand — If you’d rather work towards attracting the right talent, you need to spend time on building a strong brand.

Even pre-launch startups can establish attractive brands through:

• Clear mission and vision articulation
• Social media culture showcasing (particularly LinkedIn)
• Industry thought leadership demonstration

The idea is to reach people who connect with your vision through social media.

Consider Offering Equity — Everyone in your founding team is building the company. And offering equity is an excellent way to attract the kind of people who want to be invested in the company through their efforts over the long term.

Related: Ready to Hire Your First Employee? Prep With These 6 Steps

Common pitfalls to avoid

Despite careful planning, certain hiring mistakes plague startups:

• Hiring Prematurely: Premature hiring without sufficient runway creates organizational confusion and accelerates cash depletion.
• Prioritizing Technical Skills Over Values: While technical deficiencies can be addressed through training, fundamental value misalignment creates lasting organizational problems.
• Overlooking Diversity: Homogeneous teams limit perspective and innovation potential, making diversity strategically advantageous.
• Hiring Based on Price Alone: Hiring suboptimal talent based solely on cost considerations can result in decreased productivity and eventual replacement needs.

No matter the time and effort you put into hiring, there will always be something left to desire.

And for that, you need to create an environment that eliminates as many failure points for the new hire as possible, setting them up for success right from day one.