Biotech startups are in many ways different from high-tech startups, but one core aspect is common to them and indeed all startups: your early key hires are critical to your company’s success — or failure. Founding or joining a startup is a commitment rivaled in seriousness only by marriage, and the stakes are high, whether you develop the next big app, more efficient solar panels, a new drug against Alzheimer’s, or a test to detect circulating tumor cells earlier.
Investors are said to fund teams first and foremost, and the reason for that is logical. Startups, especially those with novel, cutting-edge technologies or product ideas, operate in an uncertain environment without historical data, established market sizes, clearly defined customer preferences, and emerging business models that might require pivoting and adapting as the company grows. In such an environment of uncertainty experience and quality of the key startup team members is a good proxy for success.
Data bare out that notion, a study by CBInsights shows that 23% of startups fail because they didn’t have the right team, a further 13% blame disharmony among the team and investors for their failure. In addition to the 36% of companies, which failed outright because of people issues a number of the other failures can likely also be attributed to underlying conflicts within the team.
Assemble a Great Team – Easier Said than Done
Much has been written about how to assemble a great startup team, but the reality is, that building the perfect team is much easier said than done. Here are some of the suggestions you keep reading about and — based on my own experience as a biotech entrepreneur — why they are so hard to get right.
- Know what skills you need and then go out to find people who have them without compromising. In a biopharma startup, you will need a CSO with significant drug development experience, a medical doctor who understands disease and treatments as your CMO and a CTO or VP of Development who with deep knowledge of the drug/biologics development process. In the early days, you might be able to combine the roles of CSO and CMO or find a part-time CMO until the compound enters clinical trials, but all these important roles need to be filled by experienced and competent people.
- Shared culture and vision are critical. As a founder, you need to know what kind of culture you want to create and then walk the talk. If you want a to foster creativity and a can-do attitude, then incentives need to reward innovation, novel approaches, and risk-taking, not seniority. If as a founder/CEO you want to remain an approachable part of the team then you can’t have perks the rest of the team doesn’t. It starts with the small things: to save money and foster team spirit as a CEO I never traveled Business Class, even internationally. If economy is good enough for my scientists, it’s good enough for me.
- Don’t hire people like yourself. The flipside of hiring people that share your values and vision is hiring people that are just like you. For a well-rounded startup team, you need complementary skills and balance; you need detail-orientation to your big picture thinking, caution to your risk-taking, realism to your exuberant optimism with the predictable outcome of conflict. How you handle that conflict is a good indicator of the success of your “union.” As in all interpersonal relationships, it is important to keep the lines of communication open and nip issues in the bud instead of letting them fester.
- Know Thyself – Not knowing and acknowledging your strength and weaknesses is one of the most obvious and dangerous “easier said than done” pitfalls. I have met many brilliant scientist founders in my career, creative thinkers with the brains, vision, passion, and drive to do great things. They failed as entrepreneurs because they didn’t know when to back off and let the team do their jobs. They failed because they meddled with operations, told the scientist what experiments to run and when, and got involved in everything from business development to accounting. Not only were they not qualified to develop marketing strategies or change established SOPs, but they also disillusioned their team with their micromanagement.
Hiring is Hard – How to Get it Right
Now that we know that hiring the right people is very important and that there is a myriad of ways of getting it wrong the question is: how do I get it right? There is no one answer to this question but based on my experience the following steps help you make the right decision most of the time.
- Develop a clear profile of the ideal hire and then find that person. The temptation will be great to settle for good rather than keep looking for perfect. Good works for a research assistant, but your CEO or CSO should be a perfect 10.
- Dedicate a lot of time and energy to the hiring process. Hiring is hard, big companies have experienced HR professionals, but startups often have to take a DIY approach to hiring which can lead to mistakes. Cultural fit, for example, is not assessed in one interview. You have to get to know your prospect for a key position which requires a lot of what you have little of: time.
- Get honest input from your team. As a startup founder, you have a million things on your plate all of which are important and should get your undivided attention. Some decisions you will have to make on your own, hiring is not one of them. Have the rest of your trusted team meet and provide feedback on the candidate and take that feedback seriously. Founding a company is a team sport, and even the most qualified hire is the wrong one if they don’t gel with the team.
- Deal with hiring mistakes quickly – hiring mistakes are easy to make and difficult to undo. There might be legal obstacles, there will be financial issues, e.g., around equity, and there could be ethical issues: it is hard to fire a person who gave up a secure job six months ago to join your startup. But if a key hire turns out to truly be unqualified or a poor fit, chances are the situation will go from bad to worse. In that case, you have to make the hard decision to let that person go and to deal with the fallout.
Hire Top Talent and Make Sure You Keep Them
You spent a lot of time and energy on finding just the right people to round out your startup team, and the one thing you want to avoid is that BioCo across the street lures them away. The excitement of being part of a dynamic startup might be enough at first, but in the long run, there is no way around incentives. Incentives have to be financially meaningful, objectively measurable and transformational for the company, e.g., an IND filing with the FDA or the release of a new assay could trigger the vesting of additional options.
And this is where we get back to comparing joining a startup to marriage: it is a big commitment one does not make lightly. Unlike marriage, nobody joins a startup with an “until death do us part” promise, but since you will be spending the vast majority of your waking hours with your startup team, it pays to take the time and put in the effort to get it right!