Having a dedicated team in the early days helps a startup sail through all sorts of troubles, from funding to developing products. But what if the core team jumps ship?
Sachin Parikh, the founder of travel app EasyRoads, clearly remembers the day his key team members announced they were quitting. Parikh, a Mumbai resident, was preparing for the last round of a pitch competition and was supposed to take a flight to the competition venue the next day, when five team members declared their intentions. “It was the hardest time for me. A big investor had shown interest in coming on-board, and I had a tough time emotionally compartmentalizing during the pitch, especially when one of the decks in the presentation was on team building," recalls Parikh, 39. With the core team leaving, he was left with just two junior employees.
To Parikh, things seemed “hunky-dory" as the team had been hard at building the business for 18 months. In hindsight, however, he believes the discontent might have been building up for some time over multiple issues—salary, low funds, working out of a pub for a temporary period. “I think, I saw this coming. I could sense it with their body language. But when we had daily huddles, they would say everything was going well. Unless people don’t voice what the issue is, how do you act upon it," asks Parikh.
It’s not unusual for startups to face financial crunch, especially during the early days, and having an agile, strong and dedicated team is crucial to build a robust business. Founders also get a morale boost when they see that the core team is as invested in the business as they are. But what if the building team jumps the ship?
Achitra Borgohain, founder of e-waste startup Binbag, had lost two of his three employees due to insufficient funds, and the third employee left as she wasn’t keen on the company pivoting. “At that time, we were consumer-facing but that strategy wasn’t working for us. I was contemplating pivoting to B2B and remember having a conversation about this with that one employee. She wasn’t keen on the new strategy. So we parted ways," he says.
Borgohain believes that while pivoting, if your employee is not in sync with your vision, then it’s better that they move on.
RETURNING TO GROUND ZERO
While it’s stressful when the team that you have painstakingly built decides to call it quits, it becomes more difficult to plan ahead when a co-founder throws in the towel.
Bengaluru’s CarveNiche founder Avneet Makkar, 43, experienced something similar. The 43-year-old started the ed-tech company with a former colleague from Infosys in 2011.
Since she and her co-founder didn’t have sales experience, they added another co-founder to fill this gap. On his advice, they hired a team of eight to create the sales team.
But soon Makkar and her co-founder learnt that the third partner, who was handling sales, was simultaneously working with another startup, had taken equity stakes and built a sales team there too. He was eventually asked to leave, but it also resulted in Makkar letting go of the entire sales team as she had lost trust in them.
“It was a tough call for us. All the money from our first round of investment was spent in those eight to nine months. It was such a loss. Fortunately, our investors didn’t lose faith in us," Makkar says. The whole situation, however, took a toll on CarveNiche’s initial co-founder, who decided she couldn’t take it anymore. “So, in a span of 10 months, I had lost two co-founders and left with no sales team," she recalls. Left with only four employees from 35, Makkar downsized and pivoted to a B2C approach.
At times, product gestation and focusing on hiring people with only one kind of expertize can prove to be costly for founders.
Shivalik Sen, co-founder of Vahanalytics, which was acqui-hired by bike taxi app Rapido few months ago, learnt this the hard way. Sen, 27, along with his three hostel mates from BITS Pilani, Goa, had started the venture, which uses data and machine learning to improve people’s driving, in 2016.
They managed to raise the first round of funding within a few months. Around the same time, the two non-tech co-founders started feeling restless, since most of the work of building the product was being done by the two tech co-founders, including Sen.
“It was a really difficult concept to implement with the customers bearing the burden of the teething problems during implementation. The two non-tech co-founders had a hard time selling the product and ensuring the pilot stage of the product worked," Sen says. Meanwhile, the team made the mistake of hiring a tech team of about 10 people. “We were too naïve to realize that we should have hired smart sales and marketing people instead of just tech people. Another error we made was hiring only freshers," says Sen.
The final straw was not qualifying for Y Combinator. The startup’s financial health depended on the money provided by the accelerator. Dejected, the two non-tech founders left soon after. Sen had to lay-off six employees. “That phase was very bad. We thought maybe we should also quit. I am sure if we had gone to a doctor, I would have been diagnosed with depression," says Sen. Eventually, Sen and remaining co-founder Someshwar Dash managed to raise the second round of funding. After the acquisition, Sen and Dash are heading Rapido’s data team.
Fintrust Advisors co-founder and angel investor Anurag Jhanwar has found people management skills are relatively poor in startup co-founders as “many are fresh graduates from colleges or the work experience has not let them see real human resource dynamics at play."
A NEW START
Founders believe the experience of reassembling the team has taught them lessons in managing people. In the past two years, Makker’s team has grown from four to 22. She’s even getting two co-founders on-board. “Both the co-founders have been associated with the company for a long time and share the same value system. It took me a long time to develop this trust," admits Makkar.
Borgohain, too, took time to hire by first ensuring the new strategy worked. After working alone for six months on gaining some traction, he began hiring people. This time, he was specific in selecting people for specific functions and having domain experience in e-waste sector. “One difference I see from earlier is that I am clear about people’s roles and Binbag’s roadmap," he says.
Learning from their past mistakes, when they got fresh set of funds, Sen hired few experienced people. But when he saw that the company was unable to sustain for a long time, he began considering getting acquired. The experience, however, has made him “wiser" when it comes to hiring and managing a team now. “Earlier, we were overfriendly with the team as they were freshers. The problem with that is, they start taking lot of liberty and we saw this with the performance slipping. Now, we are friendly but keep a distance. We have also stopped obsessing about skill sets now. What’s important is how a person deals with stressful situations with maturity. Also, if people are unhappy, it’s better they leave because in a small team, it’s shocking how quickly it rubs off on everyone," he says.
With five employees, Parikh now is cautious of any sign of discontent that may arise among team members. “Earlier I may have registered the signals but ignored them or took the people for granted since we got along so well. Now, I tell people that if they want to leave, they are free to but at least to give some heads up," says Parikh.