So one of the traps in the lean startup is thinking about oh, I get it, you know, business model and product market fit, I really need to be working on building the product and getting out of the building and worrying about those two things first. And the answer is yes sort of. Of course, you need to be thinking about product market fit because if you don't have that you don't have much of anything else in the business model. But the trap is to think that that's the only thing you need to learn and that you could outsource, oh if it's manufacturing, we'll send someone to China to go learn about. Or if it's channel sales, we'll have somebody else go out and try to sell Target or Wal‑Mart or whatever and they could report back to us. The point is that if all you're working on is product market fit, by the time you do find something repeatable and scaleable your investors are going to look at you and say congratulations, thanks for doing that, now we're bringing in your replacement, the operating exec who actually knows about those different parts of the businesses. And what they tended to do is bring in professional managers, MBAs who've had experience taking a startup from a couple million bucks a year to maybe 100 million and above. The problem is no one ever told you that there was a different skill set that you were going to need to have to go from search to execute.
It turns out that startups don't simply go from search to execute. There's a secret step in the middle that VC's never bother to tell early‑stage entrepreneurs or investors never do because it would just scare them off. It turns out that going from search to execute requires a step called build. And so the question is, how do I become a founder who gets to stay at least through the build phase? And that requires you to backup a bit and say, okay, I think I understand about searching for the business model, but what are the pieces of actually building the company into something that could scale that is going from 8 to 16 to 45 to 150 people? I mean, it would be great if you could be the CEO from, you know, maybe that number and all the way to maybe 800. What do you need to know? And those are skills about sales, those are skills about marketing, skills about finance, skills about manufacturing if you're a hardware company. You need to get out a little more than just product market fit. And if you're interested in doing that it ought to be a conscious choice that while you're working on the core parts of the company you're actually up and looking around and getting advisors and consultants who can actually teach you how to learn rather than just do it for you.
So one of the things that's often overlooked in building a startup is the team itself. And understand the word team doesn't mean one. Now one of the biggest mistakes founders make is thinking it's just about a single person. I've very rarely seen a startup that didn't have multiple people on it all with complementary skills. It's very easy to pick a monoculture of we're all design engineers or UI engineers or hardware engineers. I've seen startups actually work best when you had the people with overlapping skills.
Something else that also gets overlooked is that you want complementary temperaments. Startups are probably one of the most stressful activities you're ever going to encounter. Somewhere near a third and half of startup teams never even make it to funding because they meltdown beforehand.
What you really want to do is see if you can find a startup weekend or some lean startup machine or some Kauffman exercise where you can actually work together for three months or so, or at least a couple weeks under stress, and see what happens when the heat really gets turned up. So number one is you need overlapping skills and number two is you need complementary temperaments.