Getting Started as an Entrepreneur/Team/The Layers of a Team

The Layers of a Team
Teams, though they may not be hierarchical in structure, have a natural layering of levels of involvement among their various players. You can think of a team as a series of concentric circles, with the most central players at the core, and those with more fleeting or peripheral involvement in the outer layers. As needs and roles shift through the life of a venture, so do individuals’ location in the concentric layers of the team. The core: you and other major stakeholders The core of the team might consist of you alone, or you and several other people who have been central to the project from its outset. You are the ones with the most at stake. You’ve invested a lot in this venture, and your investment is not necessarily financial. In fact, you’re more likely earning sweat equity: the energy and hours you invest in a venture that give you a personal stake in its success. You are the ones who care most whether or not this venture succeeds. The outer layers These are the people who have less of a stake in the project’s success but will contribute to make it work. They might include advisors, mentors, and people who will perform concrete tasks for you along the way without taking a central role in the planning. As your project progresses, you may want to draw some of the more peripheral people closer to the project’s core. It may become more important for them to be stakeholders and to benefit directly from the project’s success. Likewise, some of the original stakeholders may draw away from the project’s core, and take more peripheral roles. A team is dynamic, constantly in flux. Defining roles To be effective, team members need clear roles and responsibilities. It is important to hash out the details of what needs to be done and who is responsible for each task. Early in your team’s formation, discuss how individual team members’ talents will best be put to use and the kinds of people you want to bring in to fill leadership roles. This discussion is an important part of clarifying your shared organizational vision. Here are a few typical roles in a company, briefly defined.1 (See section 5, The Company, for a more detailed discussion of company structures.)

The Board of Directors is a group elected by a company’s shareholders to oversee management of the corporation. Directors may work voluntarily, or they may be paid in cash and/or stock. They assume legal responsibility for the corporation.

The Board of Advisors is a less formal working alternative to a board of directors, often used by smaller companies that want to bring in senior people but aren’t yet ready to ask them for a commitment. The board of advisors usually has 3-7 members and meets periodically, but doesn’t have legal responsibility for the company. Legally, a board of directors is still required.

The CEO (Chief Executive Officer) is the highest level executive, other than the board Chair. Typically, a company brings in a CEO after it has achieved financing or some other level of success. At this point, the CEO lends experience to the management team, and helps provide broad strategic direction.

The President runs the company day-to-day, and understands both the details and the big picture. The President is often the company’s founder, and sometimes also serves as the CEO, particularly in smaller companies.

The VP Sales and the VP Marketing fill critical roles in any company, but particularly in early stage companies. Well-connected people dedicated to sales and marketing make all the difference, especially if they can influence the product people.

The CFO (Chief Financial Officer) is responsible for the company’s financial planning and record-keeping. Many CFOs supervise people like the controller and bookkeeper, and set the company’s strategic financial direction.

The COO (Chief Operating Officer) is responsible for the day-to-day management of a company.

The CTO (Chief Technical Officer), in a technology company, is usually a founder, in charge of the core product. The CTO and COO develop the company’s product offering. Whose company is this, anyway? It’s never too early to begin talking about ownership. The issue of who owns the venture and how much of it each person owns can lead you to disastrous conflict when things change (e.g., someone leaves the company). Work together to devise a model of ownership that everyone is comfortable with.

You can choose from several possible models, including vested ownership, where people gain a certain percentage of financial interest with each passing year, and milestone-driven ownership, where milestones in the company’s development dictate who owns what percentage of the company’s shares. When you devise your ownership plan, allow for changes in the company structure. Set up a system for treatment of new people at different levels. When you bring someone new on board, will she have ownership? How will you transfer shares from one person to another, should the need arise?