Engineering a Team to Execute Your Business Model

Build a team that drives sustainable growth and executes your business model effectively. Learn to strategically choose partners, structure equity, balance internal and external talent, and foster a culture of continuous improvement and collaboration.

In our entrepreneurial journey, understanding the nuances of building and growing a team is pivotal. Drawing from our own experience, this lesson explores the crucial elements of building a team that can effectively execute a business model.

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When starting a business, weighing the needs and benefits of a partner is crucial. In the beginning, your time is taken up by the legwork required to set up business systems and bring your brand to life for the first time. It's tempting to think you need a partner to grow the business fast, but it's vital to assess what you already bring to the table and what additional value a partner would add.

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Our experience taught us that unless our business required unique, novel product developments, equity should be primarily reserved for business growth, not just early-stage low-wage labor. But let's say you find someone who is aligned with your vision for the company, is fully committed to prioritizing business growth, and adds unique value to the company. You choose them as your partner.

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Now, how do you decide the equity split? An early mentor advised against splitting all equity equally because value is rarely ever equal. Instead, in our first business, we went directly against that by creating opportunities for the validation of equity, rather than using revenue generation and strategic direction to substantiate a partner spot at the table. It caused us to want to renegotiate equity at certain business milestones or on a calendar basis, and it chipped away at our company culture year after year.

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If you are unsure of the value each partner may bring to business development, set a distant target to renegotiate your ownership structure and don't ever fall into the trap of doing so annually. The decision to bring on partners should be both strategic and practical. Our approach emphasized the need for partners to contribute directly to business growth, particularly in sales.

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We realized the importance of considering long term implications of ownership structures when our lawyer advised us to consider the divorce while walking down the aisle. It might not feel right to analyze what the end of a partnership would look like as you're starting a business, but doing so will contribute to the owner's shared vision and commitment. In our first business, we used an aggressive vesting structure to ensure commitment in our early stages.

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It said that partners got $20 cash if they left the firm before four fiscal years had occurred. That certainly motivated partners to stick around, but if that's the only reason yours do, you probably chose the wrong people. Choosing the right business partner is like choosing a copilot for a long haul flight. You need someone who shares your vision and can navigate turbulence early on in our first business.

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We partnered with four individuals based solely on the idea that we were able to accomplish the work we needed to turn a profit. We focused on skills and time sacrifices rather than shared values around business development, validated by performance and our bootstrapped video service. We weren't creating new technology, so skills aren't valuable to ownership like they can be in a tech startup seeking early stage investment.

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We didn't really need titles like CEO, CMO, or CTO. We needed each partner to prioritize sales and strategy while hiring out the other roles. We learned that ownership structure is critical to unlocking your potential, and it can limit it just the same. It's like setting rules for your game. It's essential. Everyone knows their responsibilities as owners and they're rewarded for the business growth they own.

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If you don't have enough equity left in your structure to properly reward business growth, you need to reexamine the split. This clarity and alignment are vital for long term success of your team, because a demotivated salesperson will end up leaving. In our second business, Baaqir and I aligned on one thing. We focus nearly all of our time on selling business and marketing our capabilities, and we hire talented people to support the rest of the business's functions.

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We separated time based tasks and project relevant skills from our stake in the business. It really helped motivate an ironclad focus on business growth and cut away the time costs of evaluating our worth based on an ever expanding list of equity justifications. Balancing immediate needs with long term goals is the essence of future focused team engineering. It's tempting to overstaff for short term projects and pain points, but it's crucial to understand the long term trajectory of hires and the cash flow their salary ties up. 

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Assessing how employees fit into the evolving business model is critical for sustainable growth. We encountered scenarios where a misalignment between an employee's skills and the company's future direction led to inefficiencies that could have been avoided with a more forward looking hiring strategy. For example, we hired a young graphic artist to support our digital courses' consistent need for graphics. 

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However, it took four months for one of our partners to train him to the level that we needed. So instead of hiring an experienced artist and paying them more, or spending two weeks finding a solid bench of graphic contractors whom we could use whenever we needed, we cost the business a total of eight months of training time, and tied up future cash flow for a new salary in the process.

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In our journey, the balancing act between internal and external labor was a constant theme. Internal hires offer stability and cultural integration, but carry higher long term costs and commitments. Initially, we thought filling our team and assigning equity was the way to get everyone involved and committed. But this approach was flawed because it wasn't based solely on what we needed for the longevity of the business.

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Instead, we shifted to capitalizing on external labor, which allowed us more flexibility and scalability. Without the long term commitment of internal hires. External labor can also provide high expertise for project specific tasks. Developing a streamlined process for engaging with external contractors proved essential for projects that required specialized knowledge or skills that we might not need again. This process ensured that we always had a reliable for professionals to handle fluctuating workloads, allowing us to maintain agility in our operations.

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Oftentimes, experience means speed as much as it does quality. Our highly experienced motion designers might cost more, but they contribute to the seamlessness of a project tenfold.

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Building a company culture isn't just about hiring talent and having a fun workplace. It's about nurturing a growth mindset. We looked for team members eager to grow with the company and contribute significantly in their areas of expertise. Though we value self-awareness, we found third-party culture guidance from leadership and communication coaches to be extremely valuable in addressing all rooms for growth without blind spots caused by our own biases or lack of radical candor.

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This approach helped us create a culture focused on continuous learning and adaptability. Key drivers for business growth. The importance of company culture cannot be overstated. Our focus on respecting diversity and personal growth created an environment where employees saw their work as a pathway for overall development. Incorporating elements of fun and maintaining focus on both personal and professional growth helped us build a team that was not only productive, but also highly, deeply invested in the company's success.

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Now, meaningful time with your team doesn't always have to be directly work related, whether it's a lunchtime ping pong battle, an end of the quarter celebration at our favorite Korean barbecue spot, or reorganizing our gear shelves for the fourth time this year for no reason. We're always reminded by these moments and why you've committed your time to your team members.

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Navigating co-founder relationships is as much about fostering respect and collaboration as it is about managing tensions and ensuring transparent communication. Our experience taught us the value of addressing issues with radical candor and a respectful approach. We learned that it's not just about equity and roles, it's about aligning with the company's long term vision and ensuring each co-founder contributes to sustainability.

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Transparent communication and understanding each other's strengths were pivotal in navigating tensions and building a solid foundation for our business. Maintaining a balance between close collaboration and necessary personal space is key to a sustainable team to match your sustainable model. Engineering a team to execute a business model is a multifaceted challenge. It requires strategic decision making and partnership. A future focused approach to team building a balanced use of internal and external labor.

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A growth fostering culture and healthy co-founder relationships. These elements, drawn from our own entrepreneurial journey, underscored the complexity and reward of building a successful small business.