Team formation is the first stage in launching an entrepreneurial venture. Do not worry about how you will structure your venture at this stage. Here are the steps for team formation:
- Define the problem(s).
- Recruit co-founders who want to help solve the problem(s).
Define the problem(s).
First, you need to define the problem, or set of problems, that you want to solve. The best way to do this is to identify consumer needs.
There are three ways that business owners can discover what consumers need:
1. Personal Experience: If the business owner experiences a problem themselves, there is a high likelihood that other people experience it too and are willing to pay for a solution.
2. Customer Discovery Research: This can involve field observations, data analysis, and listening to customers. The point of customer discovery research is to identify your target market and figure out what problems they experience so that you can solve them.
3. Early-Stage Tests: You will not truly know if people will purchase and use your product or service until you run early-stage tests. The key to this is selling your minimum viable product to prove your concept. If people do not want it, you need to build a better solution to their problem or pick a new one to solve.
Although one or two of these ways may suffice for figuring out consumer needs, it is best to have a combination of all three to ensure product-market fit.
When you are defining problems, you should use personal experience and customer discovery research. Early-stage testing is often easier with a team since your co-founders may bring complimentary skills to the table. However, if you can run tests before recruiting co-founders, you may have an easier time getting them to join your team.
Recruit co-founders who want to help solve the problem(s).
When you recruit co-founders, you want to find people who are competent and care about the problem. The co-founding team should have complimentary skills (e.g. technical/operations), but they should share a common passion for solving the problem(s). Co-founders should also have personalities that balance each other (e.g. extrovert/introvert), and they should be comfortable expressing conflicting viewpoints, as well as resolving disagreements.
Although structuring the venture is not important at this stage, the co-founders should define their roles and ownership stakes in the company. Startup Commons has developed a Pre Shareholder Agreement and a Founders Shareholder Agreement that can be used for these purposes.
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