I had an interesting conversation yesterday with someone who is graduating from B-school and wanted some advice on what to look for in a startup – “a great team or a killer product”?  The obvious answer is both, but then again it’s better to be rich and healthy than poor and sick.  But what if it’s either one or the other?  There is now way to decide without a lot of qualifications.  First, “killer product” is not a meaningful concept unless it describes actual traction in the marketplace.  If there is real traction in the form of accelerating growth in customers or usage at non-trivial levels then that’s huge.  Many companies never get there.  I would pick that over an experienced team that has been at it for some time without gaining traction.  It’s true that experienced teams have a better shot of eventually finding something that works, but it can be a tough slog and once a company has started going down a particular path the set of possible things it can do is greatly reduced.  So if you compare companies that have been around for some time, traction trumps experience, but if you are comparing companies that are pre-launch or just launched the quality of the team should be a crucial factor.  Which begs the question how you should pick between a company with a lot of traction and an inexperienced team versus a pre-launch company with a very experienced team.  That, I believe can only be determined on a case-by-case basis and there is a good chance you will be wrong.

I had an interesting conversation yesterday with someone who is graduating from B-school and wanted some advice on what to look for in a startup – “a great team or a killer product”?  The obvious answer is both, but then again it’s better to be rich and healthy than poor and sick.  But what if it’s either one or the other?  There is now way to decide without a lot of qualifications.  First, “killer product” is not a meaningful concept unless it describes actual traction in the marketplace.  If there is real traction in the form of accelerating growth in customers or usage at non-trivial levels then that’s huge.  Many companies never get there.  I would pick that over an experienced team that has been at it for some time without gaining traction.  It’s true that experienced teams have a better shot of eventually finding something that works, but it can be a tough slog and once a company has started going down a particular path the set of possible things it can do is greatly reduced.  So if you compare companies that have been around for some time, traction trumps experience, but if you are comparing companies that are pre-launch or just launched the quality of the team should be a crucial factor.  Which begs the question how you should pick between a company with a lot of traction and an inexperienced team versus a pre-launch company with a very experienced team.  That, I believe can only be determined on a case-by-case basis and there is a good chance you will be wrong.