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When it comes to building a strong founding team, there isn’t a lot of gray area. As Noam Wasserman points out in The Founder’s Dilemma, in small business, “people of the same gender or race and people of similar geographic origins, educational backgrounds, and functional experiences are disproportionately likely to found companies together” ( 91). This tendency toward homogenous teams can be beneficial when growing a startup, as the founder does not have to look too far to find people with common interests. Often homogenous teams are made up of the founders inner circle of friends, friends of friends, or mutual acquaintances. Wasserman states that one of the primary benefits of building a homogenous team is that “choosing cofounders from among people with whom he or she probably has important things in common is often the quickest and easiest solution” (91). They also have other interpersonal skills already in place such as communication, trust, mutual understanding, and the common interests that allow an organization to create an identity (Wasserman, 92).

However, the short term benefits of ease and speed of homogenous teams eventually level out as the founding team begins to see overlap in their abilities, leaving gaps in the organizational structure, and requiring changes. Heterogenous teams are built around diversity in terms of background, gender, age, skills, and experiences. Differences naturally create tension as people have to take time and effort to understand and empathize with those outside of their realm of experience.

So, at start up many founders choose homogeny in order to side step the discomfort of getting to know a diverse group of people. Homogenous teams are not inherently bad, but diversity offers more positive incentives when it comes to team building, provided the team can master the art of communication.

“Teams with diverse networks are often more creative and innovative, have better access to a range of potential investors and corporate partners, and are able to tap into a wider range of potential employees” (Wasserman, 94). The old adage, “it’s not what you know, its who you know” rings true when considering the benefits of a heterogenous team. But “soft factors” as Wasserman states, such as compatibility, personality, risk  tolerance, commitment level, and values can create significant friction in a heterogenous team (96).

Another sticky subject under homogenous teams is relational teams, which covers teams made up of family ties, husband and wife teams, past co-workers, and friendships. Since it appears these kinds of homogeneous teams will never go out of style, Wasserman offers ways to mitigate potential problems in these kinds of relational teams. Most of his advice centers around prompt, honest, and direct communication. But a founder must keep in mind that even though good communication can offset a world of difficulties, it cannot necessarily change the emotional component of working with relational teams. While Wasserman does not dissuade relational teams, he does point out the peril of joining a team with someone with which you have strong or lengthy emotional ties.

Moving beyond the concept of homogenous versus heterogeneous teams, whoever a founder decides to bring in must have passion. To quote the entrepreneurial powerhouse Martha Stewart,

“There is no single recipe for success, but there is one essential ingredient: passion.”

She recommends seeking out “people to work with who are brimming with talent, energy, integrity, optimism, and generosity.” If you can find that among your friends and family, coworkers or acquaintances, then by all means bring them on your team. Just make sure each person is both passionate about your vision and the job required of them to bring your vision to fruition.

6 Comments

  1. Hi Joy-
    Thank you for sharing! I like the point you brought up about the ties of working with family. My mother has owned and operated her own business for over 30 years but has never push on my sister of I the need or desire to take it over because of the challenges with family owned and operated business. I think is value in family business but certainly extra challenges that could be a slippery slope when making company-wide decisions.

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  2. Back when I was in high school I worked with my father on his small business. He had excellent sales skills but was not all that skilled at technology. I was your typical nerd who enjoyed computer programming and building the computers at that time. Yes back then you had to build a computer to use it and 16 K of memory was considered abundant. Floppy disks held 100K and there were no hard drives.

    In any case, we had an excellent working relationship and I could provide the data from past sales that he needed to sell the product. I doubt he would have invested in technology for his company in those early computer days unless there was the side benefit of helping his son. And I doubt I would have been as dedicated to writing software for anyone except for my father. So when I read all of the doubt that authors convey about working with a relatives, my perspective is quite different. The bonds of family members are strong and powerful and may be so powerful that they can help a business overcome adversity or take on challenges if they would never take on otherwise.

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  3. It’s wildly attractive to begin a venture with friends or family – people you know, like and trust. I’m considering helping my husband and daughter when they start their companies. To try to mitigate issues, we will establish very clear rules of engagement that will require solid communication. I’d like to add to communication, that we will also need understanding and agreement. Wasserman addresses this in his closing remarks for homogeneous teams. He recommends that teams agree in advance on how they’re going to resolve the issues they’ll never expect to encounter. For example, if there’s a stalemate on an important decision, how do the team proceed? Does one person have the final say? Wasserman also suggests creating a ‘disaster plan’ (115) for the irreconcilable scenarios that no one thinks will creep up because everything is moving along so well in the beginning. At first I thought Wasserman’s approach was pessimistic; however, after more time I began to realize it was realistic. Just because you expect something might happen, doesn’t mean it will. But if you’re prepared to handle it and execute the outcome the way you planned, you’ll have a better chance of salvaging relationships. (And it’s my experience that crafting solutions in the heat of the moment rarely results in win-win outcomes.)

    Right now, my family and I don’t expect issues to become unmanageable problems – the businesses are in the concept phases and we’re under no stress to perform. But this will change and we will be proactive at the onset by considering as many worst-case-scenarios as possible and agreeing on how to best handle them. I expect we will have to periodically revisit this exercise. As we grow with the businesses, we will find new opportunities for potential issues as well as better solutions for those worst-case-scenarios. So, if we do encounter them we will be ready.

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  4. Joy,
    Another great post! I really have enjoyed reading all your posts. They are well written and thought out. I don’t think I would want to work with my family, it would be a hot mess! “No, I’m right” “NO I AM” etc…

    Would you want to work with your family?

    I feel like a homogenous team for any business isn’t the best choice – there are times when you need that other person to think outside the box and not agree with everyone else.

    Check out this article – https://lifehacker.com/plan-more-effectively-with-the-tenth-man-rule-1689738373 – I’m sure there are better ones out there on this topic!

    Lexi

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  5. I agree with that last paragraph – create the position with what you have in mind for that position then find the person that fits the position. Do not find the person and create a position around that person. Unless they have been with your firm for a couple of years and it needs to be updated to include other responsibilities.

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  6. Great read Joy. I like your point about passion, I am sure this is so so true your industry but also applies across the board. It is important with either type of team that the founder understand the pros and cons so that when issues arise they are not blindsided. If we have a solid understanding then we can have a plan, and if we have a plan we can come up with a solution. Great quotes throughout as well.

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