Elena Volotovskaya is the Head of Softline Venture Partners.
As a venture capitalist, I have seen firsthand the pivotal role a strong team plays in a startup’s success. A great team can propel your business to new heights and attract critical investment, while a weak workforce can derail progress, drain resources and even lead to failure. This may seem obvious, but many startups still overlook the importance of team dynamics and make the mistake of prioritizing other factors like product development or market fit.
According to a study by the National Business Research Institute (NBRI), the cost of a bad hire can be as much as 30% of an employee’s first-year salary. For high-paying positions, this can translate to costs ranging from $152,000 to over $220,000 when accounting for recruiting fees, lost productivity and the effort required to correct the mistake. For startups, particularly in their early stages, such costs can be catastrophic.
Among the 66% of companies reporting bad hires, many also cited additional negative consequences, such as strained client relationships, declining sales and diminished employee morale. This is precisely why savvy venture investors understand that their money is ultimately invested in the team—not just the business idea, the product or the startup’s founder.
This raises a crucial question: What type of talent should you focus on—seasoned veterans with proven track records or young, ambitious individuals eager to make their mark? And how to attract them?
Why Your Team Matters More Than Your Product: A Case Study
Many founders begin by hiring friends or familiar faces, believing it’s a safer, more cost-effective approach. However, relying on these hires without addressing skill gaps can be a costly mistake. You need to be bold and seek unconventional methods.
Sam Altman, CEO of OpenAI, shared with Bloomberg, “People were afraid to talk to me because I was saying I wanted to start an AGI [artificial general intelligence]
effort. It was, like, cancelable. It could ruin your career. But a lot of people said there’s one person you really gotta talk to, and that was Ilya [Sutskever, an OpenAI cofounder and one of the leading researchers in the field of artificial intelligence]. So I stalked Ilya at a conference, got him in the hallway, and we talked. I was like, ‘This is a smart guy.’ I told him what I was thinking, and we agreed to meet for dinner. At our first dinner, he articulated our strategy for how to build AGI.”
Imagine if Altman hadn’t approached Ilya Sutskever at that conference; OpenAI might not have come to fruition.
One of the strengths of that original OpenAI group was its ability to recruit talent. Altman successfully attracted early adopters and cornered the market on top AI research talent, even though he often had less money to offer than his competitors. Why? It all came down to courage and an original pitch aimed at the right audience. He focused on young, ambitious specialists rather than seasoned experts.
Altman articulated that the core of their pitch was a straightforward yet bold invitation: “Come build AGI.” He emphasized that this approach was particularly effective because, at the time, advocating for artificial general intelligence was considered a radical and almost heretical notion. This unconventional stance served as a filter, eliminating 99% of potential candidates and leaving only the most innovative and talented thinkers, which Altman deemed immensely powerful.
This example is truly inspiring and demonstrates that for a startup founder, it’s not just about having money; it’s about having a compelling idea that can help assemble a strong team.
How To Build A Team That Wins
A survey conducted in 2020 among 885 institutional venture capitalists from 681 distinct firms revealed that 95% of respondents identified the team as a crucial investment factor. When asked to pinpoint the most significant element influencing their investment decisions, nearly half of the venture capitalists—47%—highlighted the team, significantly surpassing other considerations.
From a venture investor’s perspective, the team is often the deciding factor when choosing whether to fund a startup. In my experience, the right team isn’t just a collection of talented individuals—it’s a group that works together, adapts quickly and knows how to execute. I would suggest seeking the following:
• Complementary skill sets (a diverse team with various strengths)
• Passion and alignment (teams that are deeply invested in the company’s mission)
• Execution ability (the capability to translate ideas into action and scale as the company grows)
These factors are critical in determining whether a startup possesses the potential for success and sustainable growth.
Tapping Into Global Talent: Eastern Europe
While Altman’s story about pursuing Sutskever is certainly inspiring, it represents an exception rather than the norm. To mitigate the risk of making poor hiring decisions and save valuable time, I also recommend using professional recruitment services. Where to look?
Startups often confine their hiring efforts to local talent, but expanding the search to a global scale can yield exceptional, cost-effective options. It’s my observation that Eastern Europe, in particular, is home to a wealth of highly skilled professionals who can help scale your startup without the higher costs often associated with hiring in Western Europe or the U.S.
According to The National, some companies in the United Arab Emirates are increasingly looking to countries like Poland, Ukraine and Romania, where the tech industry is thriving and salaries are more competitive compared to Western markets. One founder notes that when hiring, every startup must first understand what type of person they seek to employ.
Conclusion
Hiring the right people from the start is one of the smartest investments a founder can make. A strong team drives execution and attracts investors, giving your startup a competitive advantage. Delays in building the right team translate into missed opportunities to scale and capture market share, underscoring the critical role of strategic hiring in early-stage success.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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