All Money Is Not Created Equal

Chapter 15Your Team: Getting the Right People in the Right Jobs

This is not a management or leadership book; I'm not going to tell you how to build a team and get the most out of it. There are plenty of good books and other sources of information out there, and I list some that I have found useful in the Appendix. But there are several ways in which your team or the structure of it can affect your company financially, so that's the perspective from which I'll be looking at it.

There are three costly team-related mistakes that we often see: too much turnover, hiring too fast, and being penny-wise and pound-foolish when it comes to financial talent. Most of our lending is done to later-stage companies, so these mistakes have already been made – and the damage done.

Companies that come to Runway are still in business, so the mistakes weren't fatal – for them. There are undoubtedly hundreds of venture-backed companies for which at least one of these mistakes contributed to their demise. I'm hoping to help you avoid them, or at least mitigate their potential damage.

Too Much Turnover

One of the first things we look at when evaluating a company is employee churn. Employee turnover, especially among the engineering, sales, or executive teams, is a real red flag. It suggests that either you have bad judgment when it comes to hiring, or there's something wrong with your culture that makes it difficult for you to retain people. Constantly having to hire people is not only a distraction, ...