[Part of a JD Supra series on startup essentials, this article follows our recent popular legal perspective on IP must-haves for entrepeneurs.]
The best attorneys aren't just legal experts who tell you what you can or cannot do according to the laws at hand; often, they're also strategic, analytical business advisors with a valuable perspective that extends beyond the ever-important "legal."
And so, for the next piece in our Startups series, we asked JD Supra contributors (many of whom are leading legal experts in their industries) for a broader view: over the years working with entrepreneurs and inventors, what have you seen as an essential attribute to startup success?
We knew the diversity of responses would make for interesting reading. Here is what we heard back:
Your Team Is Everything
A no-brainer, right? You've read that before and you'll read it again. As attorney Michael Esquivel of Fenwick & West puts it: "Early on, VCs and investors are largely focusing on investing in the people and the vision of the team."
Here's what others have to say about why and how your team matters:
1. A strong team attracts loyal talent...
From Steve Davis, partner in Goodwin Procter’s Technology Companies Group and Founders Workbench contributor: "The most important criteria of a successful startup is to have a smart, open-minded and passionate founding team. With those attributes, the team will be able to recruit loyal and driven talent, attract value-add investors, and work through issues as they execute on the business plan. A lack of any of those attributes significantly reduces the likelihood of success.”
2. A business-minded CEO keeps the trains running on time (and then some)...
From Fred Hernandez at Mintz Levin: "Hire a business-minded CEO who hopefully can wear the CFO cap to keep tabs on budget. That person will keep the trains running on time and release the innovators to engage in what they do best."
Karina Sterman of Ervin Cohen & Jessup expands on the notion of senior leadership thusly: "One of the essential attributes that leads to success beyond the start-up phase is bringing in at least one person with experience in the actual operations of a business. I have found that the exuberance and innovation of entrepreneurs is not properly balanced with the wisdom and foresight of a more senior member of the team, whether in as a member of management or even a temporary consultant. However, while the senior person may slightly dampen the pie in the sky enthusiasm, she or he is much more likely to set the entrepreneurial endeavor on a coarse toward success by introducing concepts that many start-up proprietors don’t consider: intellectual property protection, market positioning, recruitment, employment law compliance, and other key decisions that could derail a venture just as it is getting off the ground."
3. A strong team should compliment a founder's skills...
Chad Hinrichs at GableGotwals: "Inventors are an extremely creative and intelligent group of people. However, being a prolific inventor takes a separate set of skills than what is needed to run a successful business. This can be especially true in highly technical areas. For that reason it is important for the inventor to identify their strengths and weaknesses and build a team that compliments their skills. This often breaks down along the lines of having a person focused on the technical issues and someone focused on the business issues. The inventor may have the perfect solution to a widespread and expensive problem, but if they cannot get the financing in place to get the device built or the sales skills to sell the product, the outlook can be grim."
4. Incentivize your team like crazy...
Michael Esquivel again, from Fenwick & West: "To create a culture capable of exponential growth and development, it’s important to incentivize your team like crazy. That’s fundamental to scaling the initial vision into a viable business and really develops a sense of shared purpose and laser focus on the success of the venture."
5. Don't just stop with employees, build a team of advisors...
Fred Hernandez again, of Mintz Levin: "Build a lineup of business and legal advisors who are part of the team and have an interest in advancing the long-term goals of the company from a strategic and budget standpoint, rather than outside contractors who simply bill for ad hoc services and do not share the same level of commitment."
The more winners in your circle, the more your own likelihood of success increases... - Jeremy Shure
What About That Team?
Your people are indeed everything, but what about those people, exactly, makes the difference?
1. Integrity...
Terry Kelly, partner at law firm Dorsey & Whitney: "The entrepreneurs I have had the privilege to work with have been diverse; although most are brilliant, highly motivated and willing to take risks, all of the successful ones have had vision and integrity. It is hard to overstate the importance of integrity in at least two respects. First, it means to be honest internally about the idea or product, and how it fits in the marketplace. Entrepreneurs that do not identify competition and face it head on in their plan are unlikely to succeed. Second, it means to be forthright with the team, and particularly investors. When entrepreneurs face a problem, perhaps an unexpected cost or threat of a lawsuit, successful entrepreneurs are forthright in communicating with investors regardless of the financial costs. They use the event as an opportunity to demonstrate their leadership and ability to solve problems."
I have seen investor respect and confidence grow immeasurably for entrepreneurs who face problems directly, communicate clearly and timely, and work through the issues...
2. Confidence & Initiative...
Glen W. Price, partner in the Business Services practice group at Best Best & Krieger LLP: "Initiative is that sense of opportunity and urgency to fill a niche in the market that is underserved or to see the potential of a new technology. Carrying through on that opportunity and turning it into a viable business is all about confidence. You need confidence to build a team, assemble financial resources and put a product out in the market. A little bit of impatience is helpful as well. There is rarely the time or resources to perfect an idea or a product. You need to know when to get version 1.0 out and build from there.”
3. Intellectual Curiosity...
Philip Amoa, a member of McCarter & English’s Corporate, Securities and Financial Institutions practice group: "Entrepreneurs, like three-year-olds, tend to go through a 'why' phase. Getting answers is how you learn and develop. And though it’s generally a relief when a toddler grows out of it, entrepreneurs should remain as intellectually curious in all matters affecting their business for the life of their business, be it on the technical side or operations. Curiosity that extends beyond just building a product is a necessary part of making the well-educated and balanced decisions that keep a venture running."
4. Winners...
Jeremy Shure, a founder of Akerman's Emerging Companies Practice in New York: "My advice to an entrepreneur is to surround yourself with winners – people who are the best at what they do. The more winners in your circle, the more your own likelihood of success increases. I always recommend taking an inventory as you and your company progress to ensure that, with each successive year, you select winners who will continue your positive trajectory. It is also crucial to focus on team building and making new employees feel a part of the incredible work being done – the stronger the team’s energy and synergy, the stronger the team."
What Else, Beyond Team?
The right place to be aggressive and to take risks is on the game-changing technology and disruptive go-to-market strategy at the core of your company... Michael Esquivel
Of course, there are many moving parts to startup success beyond building a great team. Here's what we heard back about a few of them:
1. Have a longterm vision of the road ahead (including strategic use of IP assets)...
John Dower, partner at Australia-based Freehills Patent Attorneys: "An important contributing attribute for the success of a startup is a vision of the road forward beyond the immediate hurdles of getting started. In particular, strategies for moving into potential markets and countering competitors should be borne in mind right from the beginning. These strategies include preparing a long-term roadmap that also relies on the strategic and measured use of assets such as intellectual property.
Startups that stand out are those that understand that the value of intellectual property lies not in itself but in the underlying assets that are protected, including inventive concepts and brands. A scattergun approach can add substantially to costs and lacks focus. Protect what is important and protect it properly. In other words, do not be attracted by the false economy of self-filing, providing last minute instructions which compromise the quality of an application and add to costs down the line, or disclosing and then filing, which in the case of patents creates potential invalidity issues in many jurisdictions. In some industries we have also seen startups positioning themselves strongly in markets where they have used patent applications or granted patents as deterrents for competitors. To this end, the use of cost-effective and fast approaches (such as Innovation Patents in Australia and processes for expedited examination) can be used to file several patent applications within a product space resulting in a difficult mine-field for competitors to negotiate safely."
2. Step outside your comfort zone...
Jeremy Shure of Akerman again: "It is critical to push yourself outside of the confines of what you think is your 'comfort zone' and so that you become accustomed to tackling areas of work from which you might have normally shied away. When it comes to success, there is no such thing as afraid. These are areas where I am exceptionally proud of the many teams with which I have the honor to work. Each day, they strive to step up their own game, no matter how great the day before was, and they do so in a manner that engages all of their employees to be excited about their work."
3. Focus on a specific product...
Fred Hernandez of Mitz Levin again: "Focus on a specific product with realistic and practical means of production and distribution. That focus is key to building a realizable business goal. Without it, the company and its creative management may waste time and resources trying to do too many things."
4. Keep your legal simple...
The final word, from Michael Esquivel again: "Keep the legal aspects of your business simple. The right place to be aggressive and to take risks is on the game-changing technology and disruptive go-to-market strategy at the core of your company. Experiment, get creative and really push the envelope in these areas. It’s tempting to translate that same mentality into other areas of your new venture as well, but when it comes to legal you’re much better served by just keeping it simple.”
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[image credits: inventorium and teamwork]
