Phases of Team Building for a Startup
Nubank is the most recent Latin American startup success story with a simple premise, to be a digital bank offering credit cards, transfers, and payments. Founded in 2013 in Brazil, Nubank has raised a total of USD$2.3bn in funding in 12 rounds of capitalization. In December 2021 it completed its IPO on the NYSE and today has a market cap of USD$31bn. The company has grown exponentially across borders and now operates in Brazil, Argentina, Mexico, and Colombia.
This has undoubtedly been a great journey for Nubank, going through multiple stages of development that have required not only capital but also changes in structures, different strategies and above all human talent. The process of developing and acquiring human talent is not unique to the case of Nubank, it is vital for all startups that hope to have a scalable and high impact business.
Team building usually happens as the startup progresses through its capital raising process, with very different needs and structures having to be developed in the seed, early stage, late stage, and growth stage.
In the seed stage the startup is during a creative process, identifying a problem and a potential solution through technology. The team consists of the founder(s) and probably a couple of additional people who believe in the mission of the founding team and who support them with the execution in the hope of receiving capital from the company at some point in the future.
At this stage the team is multitask, on the one hand defining the business strategy, objectives, organizational structure and on the other hand executing all product building, market research, marketing, and commercial activities. The founding team requires an open mind and a lot of flexibility to be able to listen to feedback from potential customers and thus successfully iterate the product.
In the early stage the startup already has an MVP (minimum viable product) and is in the process of launching to market. Probably at this stage the startup has already raised capital from various investors such as family and friends, angel investors or a seed fund. In addition, the startup might be in or have gone through an accelerator program.
Usually at this stage the founders can no longer cope by themselves to solve all the situations around the company, so they hire key people to lead the most important positions (colloquially known as “early employees”, who in addition to believing in the founders’ mission expect to receive compensation in the form of equity participation in the startup). Among the most important positions to fill at this stage are a CTO primarily to develop the product, a CRO to provide the commercial capability the startup needs to meet its next challenge, and a CFO to develop financial planning and support in raising equity capital and investor relations.
Founders often look for this talent in other startups or professionals in the corporate world. When talent comes from a startup, they are looking for someone who has already gone through the same development process, has experience working at an ultra-accelerated pace, understands the needs of a startup and is likely to have relationships with investors having raised capital previously. When talent comes from the corporate world it is because prior experience in the industry sector in which the person has developed, business relationships and knowledge of robust administrative processes are favored.
In the advanced stage, startups have already achieved a product-market fit and are in the process of capturing market share. They therefore need to continue to expand the team at the next level of support. The CTO needs additional resources to continue to develop all the features the product requires, as well as dedicated talent; usually a Head of Product, software developers and UX/UI experts. The CRO needs people to help with lead generation, growth, and customer service; key positions include a Head of Sales, and leaders in the areas of customer success and marketing.
In the growth stage of a startup, exponential growth is sought by reaching different customers, new market niches and multiple geographies. Organizational growth is therefore also exponential, and the organization seeks to strengthen each of its platforms. For example, the technology area focuses solely on technological development and a complete product department is created. The sales area is strengthened with people in growth hacking, customer support, pricing, and revenue management. There are now multiple levels within the organizational structure in charge of business execution, and the founding team focuses much more on strategy, growth, and development of strategic alliances.
Growth in a startup occurs in cycles, which may be repeated multiple times over time. Once the growth stage is reached, it is essential that the product goes through a process of innovation to meet the needs of the market. During new product development it is imperative to dedicate a dedicated team to this activity, which must go through all the stages of team building until it can be integrated back into the core business operation.
The growth of a startup is something that every entrepreneur dreams of, however when the time comes it can be exhausting and influence the culture that the founding team wants to permeate all levels of the organization. Despite seeking accelerated growth in a startup, there must always be a plan that allows the startup to develop the product properly and build the organizational structure wisely so that the culture that is being sought prevails.
“The best people know that they should join a rocketship.” — Sam Altman, former president Y-Combinator
Hector Shibata. Director of Investments & Portfolio at ACV a global Corporate Venture Capital (CVC) fund and Adjunct Professor for Entrepreneurial Finance.
Gonzalo Soriano. VC Investor at ACV.
ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.
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