The Right Time + The Right Team + The Right Technology

Team Time Technology

 

I have been working with a number of early stage teams going through various stages of fundraising and using this diagram to help explain my thoughts on some of the questions they will come up against.  This is certainly not all inclusive, but it helps me outline the key points that I think must be overcome by an early stage team to convince an outside party to invest their capital in their company.  Many of the questions and comments I have seen happen in pitches fit into this venn diagram.  The best example I have of this is looking at what happened with YouTube; it came about at the right time, with the right team, and the right technology. However one of the only things they could control was the team – assembling the right people to take advantage of market conditions.

The Right Time
Starting a business at the right time is almost completely outside of someones control.  There are multiple macro/micro economic factors that can contribute to success or failure.  However, I say almost as there are indicators that can be used to see if an idea has a shot at working – either something that has failed in the past, or something completely novel whose time has come.  In the case of YouTube there were countless other examples of online video providers, some during the dot com boom, that didn’t quite make it.  Why not?  Well, for starters I don’t believe there was the ubiquity of broadband that existed in 2004-2005.  If you had a video site in years past with a dial-up service there was no video compression system in place yet that would bring quality and convenience that people needed to actually use and browse a site effectively.  There was also no hardware to make small videos at the same pace as the mid 2000’s.  Think about the explosion of digital video recorders (remember Flip cams?) that happened right around the time of YouTube launch.  Using the Flip example (launched in 2006) there was suddenly a very affordable digital video camera that you could instantly connect via USB.  The next logical progression of this video content explosion was a place to put it – enter YouTube.

The questions associated with this circle for me are;

  1. Why is now the time this Company will succeed? (vs. 5 years ago or 5 years from now)
  2. Is the market ready?
  3. Are customers ready?
  4. Are there enough buyers/sellers today?
  5. Is there some special moment happening that makes this the right time to exist?
  6. What external factors could help/kill/affect what your roadmap looks like for the next 6 months?

The Right Team
I believe that the first 10 people at any startup will make or break the Company.  I know this is a strong statement as people change roles all the time, and I need to get my thoughts fully written down on it, but it has been my experience thus far.  The first set of folks usually set the culture and cadence of the entire operation.  If you look at most early stage companies there are usually a few people that make a 10X difference in the early days and end up leading the teams and departments later on.  This is not always the case but when a core founding team departs an organization it is hard to understand how the heart and soul of a company isn’t gone too.  If this happens years later and there are new leaders in place, this can be the right time for them to leave and its actually a good thing for a Company.

Digressing back to my example, YouTube was founded by 3 early PayPal founders that experienced a real existing pain; there was no place to share and view videos online for recent events.  Whether you believe the dinner party story or the news events story (more here) doesn’t matter – the reality is that there was no place to house and share video online and this team was well poised to find the solution.

The questions associated with this circle are things like;

  1. Why this team?
  2. If someone else got $XXM, could they assemble a better team? Do what you are doing faster/slower? why/why not?
  3. What makes this team well positioned to succeed in this market over competitor X, Y, Z?
  4. Who is missing from this lineup?
  5. Who are the next 5 hires you are going to make if this funding comes through?
  6. How are you going to compete for talent against X, Y, Z?
  7. How are you going to retain this group?

The Right Technology
This is a contentious circle for some as some investors rely on the tenacity and vision of the founders over technical abilities.  In my experience being brought up around a thesis of having strong technical co-founders its hard to get away from.  Aside from the abilities of the people, the real question here is around the state of the technology being used and many external factors.  Coming back to my YouTube example there were again strong external factors that were beyond the founders control that made its success possible.  The first is that there was an explosion browser based video players that were found in almost all computers – Adobe Flash.  Say what you will about the players today (they are on the severe decline), around the time of YouTube it was incredible.  With most systems having the player, YouTube was able ride on the coattails of a ubiquitous player that could handle and stream video on most big platforms.  Previously used for interactive and complicated websites, the Flash player for video was perfect.  People could get video buffering in the background with their broadband connection and see basically “live” video without the previous problems of downloading and dealing with codecs and corrupted files.  The technology used here matters as there are tons of carcasses of online video companies from the dot com boom that didn’t survive as they didn’t have the right technology in place.

The questions associated with this circle are things like;

  1. Is this Company using the right technology to solve this problem?
  2. Is the world well equipped for this technology to be brought to market? (Flash/YouTube example)
  3. Do you have in house technical talent, or is the technology somewhere else?
  4. What is the defensibility of this technology?
  5. What breakthroughs are you waiting for? Holding you back? Are you driving?

This is certainly not meant as an all encompassing series of VC questions, but it helps me wrap my head around where a Company is based on their answers.  The center of this venn diagram defines for me that this is something worth taking a look at.

4 responses to “The Right Time + The Right Team + The Right Technology”

  1. Kamel Lahmadi Avatar

    Hi Eric,
    Thank you very much for this very insightful article.
    You should add to your diagram: the right product.

    The right product has more to do with the vision, the UX and UI.
    There’s so many very skilled developers out there but yet, they ended working for failing startups. For a reason: the product and the vision were not the right ones. Good soccer players trained by a bad trainer have no chance ending being a good team. You know that as well as I do and I tell you that by experience.
    Entrepreneurs are driven by the desire to create something new, see a need that is not fulfilled yet or an opportunity to do better than what already exists.

    While entrepreneur in Paris (now in NYC), I launched many projects that had early traction. But every time, something was missing : the right team, the right tech. I was always right about the timing and product, but because France is France, the system tends to crash you down and copy you rather than helping you.

    It’s a really frustrating situation to know that you are right, that the evolution of the market and the new entrants shows you that you paved the way but are not the one to get the reward for it. Having the right team is crucial because trends always catch you up and with it, new competitors with more money to hire skilled tech teams.

    To prove my point, when I was in Paris, with a single developer, in may 2011, I launched the first street style app in the world with the vision that digital is becoming more visual and that story telling will be key to sell more fashion apparel at the convenience of you smartphone.
    It was the launch of the iPhone 4 and mobile apps were not that trendy as they are today.
    Yet, I saw 300K users spending 14 to 20 min per session and 93% retention rate the first year.
    Despite that, I couldn’t find developers to join my team or any investors to invest (“Nobody has done it before” I was told countless times), while 20 years old kids in the US where raising millions of dollar for crappy applications that don’t even exist anymore.
    I couldn’t have the right team, the funding despite the fact that the product and timing were right.
    I moved in NY in sept 2014. The difference with Paris/France? I work with 5 engineers, the head of digital at Louis Vuitton joined the board of directors, we are in talk with Sun Media Group owned by Yang Lan, the “Oprah of China” whose programs reach 300M viewers every month and we are meeting WME/IM ventures as they showed interest after saw my data.

    All this was possible because :
    – the time is better than ever
    – We have the right team
    – We have the right tech
    – And we have the right product

    We launch this Summer and after that, I’ll be happy to share what I learned as I want to help fellow entrepreneurs too.

    I’ll be happy to offer you a coffee Eric and pick up your brain 10 min.

    Look forward to reading you.
    Best regards.

    Kamel Lahmadi
    http://www.styleandthecity.com

  2. Eric Friedman Avatar

    I think this is the implied circle. You can actually have the right product and the other 3 can be off – hence the post. Looks like great traction and product is definitely a part of the puzzle. It sounds like timing was the biggest issue from 2011

    Look me up when you next come to NYC!

  3. Kamel Lahmadi Avatar

    Yes, the product is crucial but it’s not enough.
    Without a great motivated team that improve the app quickly, the product will die.

    The issue in 2011 was mot the timing: it was the team and the French ecosystem. Had I’d been in Silicon Valley I would had succeeded because different ecosystem.
    Check out what’s currently happening in France.

    I live in NY. I left Paris 18 months ago.

    Coffee?

  4. […] 3/ I think about 3 things when I make an investment: Team, Time, and Technology. I have written about this before but I have developed and honed this thesis over the years – https://www.ericgfriedman.com/2016/02/03/right-time-right-team-right-technology/ […]

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