Rick Webb recently reblogged a piece from Quotidian Ventures:
In today’s startup marketplace, we tend to overvalue founding teams with experience building technology products and undervalue teams with domain expertise.
I read this quote with interest because startup teams usually discount domain expertise. Not every startup needs someone intimately familiar in an industry, and quite a few startups have been successful despite a lack of expertise on the team. However, in many situations, having depth of experience and know-how can be critical. Domain expertise is the ultimate unfair advantage, as Mark Suster succinctly put it.
What I enjoyed about Pedro’s article is the recognition of the value of domain experts to startups. I agree, particularly given the fact that picking up the nuances of an industry and building up credibility is something that can’t be simply fast tracked. You have to spend some time in the trenches. If you were creating a trading app, you would be hard pressed to build one that would work for traders unless you had worked on a trading desk. And if you wanted to build an onsite mobile app for construction workers, how would you know what to build without understanding how construction sites operate? Sure you could ask users, but without the background of experience, you would miss the details, the exceptions and the things that most users themselves fail to notice or mention. Why? Because it’s innate to how users work and it becomes second nature.
The problem is that the domain expert alone is usually not equipped to launch a startup. They lack the experience in building tech companies from the ground up. People in the technology industry building a startup to serve the tech industry generally have a built-in advantage, as they have the industry know-how and the technology skills. However, even those in the tech industry lack one important skill set.
The killer startup team is one that combines tech skills with domain expertise and operational gumption. Sometimes, people with those operational skills are referred to as “hustlers” or a “jack-of-all-trades.” In many ways, these are the prototypical entrepreneurial profiles — folks that may not possess the know-how per se, but can identify an opportunity and quickly find ways to make something happen. In essence, they have the attitude and skills to turn an idea into a startup and into a real business. Even if that person isn’t the one that seizes the idea, he or she is able to contribute in measurable ways during the formative stages of a startup. Combine this disposition with either technology skills or domain expertise, and you have the makings of a formidable entrepreneur.
Startup specific skills are not to be discounted. That is partly the appeal of accelerator programs, which attempt to instill those skills in entrepreneurs in order to mold them into efficient operators. Business building is not only about the product. There’s also the basics of business formation, recruitment and hiring, managing outsourced arrangements and contractors, customer acquisition and retention, cash flow management, capital raising, contracts and legal and even leadership. Some of these skills are nuts and bolts and some are more intangible, yet just as critical when you begin to scale up the startup. It is difficult to keep all these balls moving however when you are also designing and coding the product. This is one reason why most people discourage entrepreneurs from launching a single founder startup. It is simply too hard to do everything well and execute at a high level under such stress.
Most think of the ideal startup founding team as one with two people: a technical founder and a business founder. There are certainly teams where the tech, operational and domain are rolled up in two people. But oftentimes, that is not the case. The tech and business founders could benefit from that third individual to compliment and complete their team. Sometimes it’s a domain expert, and sometimes it’s an operator. When you have all those skills working together on a team that is tightly focused on a single vision, that’s the makings of a killer startup team.
This article was originally published on Strong Opinions, a blog by Birch Ventures for the NYC tech startup community.
Image credit: CC by L.Burchfield