Chris Corcoran: Why Startups with More Business Types than Engineers are Wrong

As per the title of this post you might guess that I'm not going to pull any punches and I'm not. I am here to tell you flat out, if you are working on an early stage web startup and you have more business types then engineers on your team that you're doing something wrong. That's it, there is nothing more to it.

[Update]: Jason has told me that three sentences does not warrant a guest blog post and as I promised him a post I have to elaborate on my point a bit. So, let me start by providing you with a little history and some background on this point.

Why Startups with More Business Types than Engineers are Wrong

Lets first start with a little observation. I've found that Startup Weekend can serve as Petri dish of sorts where you can observe how companies and teams are built in a condensed form. Startup Weekend is an event that attempts to jumpstart companies by condensing the first 3 months of building a startup into about 54 hours. Basically anyone who wants to pitches an idea on the first night, then teams are formed around those pitches. The teams then use the remainder of the weekend to build their startup and pitch it on the last night. The team with the best pitch on Sunday night gets a big prize and bragging rights.

Now, I don't like to look at the winners and the losers from Startup Weekend as a much more telling metric is how teams manage to continue on afterwards. The goal of Startup Weekend after all is to spur the creation of companies, not to simply give the winners a pat on the back. So which teams do manage to carry on after the curtain has dropped? You guessed it: it’s the teams with the solid engineering focus. The teams that were either founded by or had a majority of engineers are the ones that typically end up carrying on. More often than not it’s the teams whose only products were a slick presentation and a mock up that ended up falling apart. You can see this in startups from the last Startup Weekend who have died (Release Q and Meetlie) vs. those that continued (Doodlebugging and Motini). 

What Startup Weekend shows us is that if you don't have a solid engineering focus you're going to die. If you don't have people on your team devoted to the product and actually building it then you don’t have much. You can do all the market research and marketing you want but if you're not building and producing something you're dead in the water.

I may be a bit biased as I am a developer myself, so to back this up, I'm now going to quote some very smart people that support my idea:

Brad Feld, Co-Founder of TechStars and an accomplished angle investor, has a great quote about why the startup scene in Boston fell off in the early 90s: "Something happened—probably all the MIT and Harvard business school students flooded the system with a bunch of crap, and the VCs retreated" While this might be a view from a macro level, the same is true at the micro; to have a great startup community you need great startups. To have great startups you need to have engineers building great products.

I'm also a big fan of the Mint.com simple valuation model that Aaron Patzer presented in his talk on startups. If you haven't watched it I highly recommend you check out. In it Patzer half joking presents a model where every engineer increases your valuation by $500,000 and that every business guy decreases your valuation by $250,000. It's a pretty simple calculation but it also makes a lot of sense. In terms of building your initial product and what you can actually sell, engineers add value and business guys don't.

Okay, before you go and fire your CFO, VP of Biz Dev or Managing Director I should probably recognize the world does need business types. In fact startups need business types, it just depends on when and how many you add to the mix. My argument is not that every startup should be solely engineers; that's just ridiculous. Startups need business types to keep the engineers happy and help develop the concept (customers live outside the building!). My argument is that if you're looking at founding a startup, it needs to have a solid engineering base or its going to flounder.

My advice if you're a business guy looking to build a startup is you need to befriend and recruit developers like it’s your job, because it is. Don't even think of 'founding' your company, don't even name it, until you've got that solid engineering team behind you. Otherwise you're just a guy with a powerpoint file, and you're going to have a hell of a time getting anyone to look at it. My advice for engineers is you've already got a leg up, start recruiting as many classmates and friends as you can. I'm sure you'll find a business guy when you need it.

Chris Corcoran is currently Co-Founder and CEO of DoodleBugging where he builds awesome things When not shifting paradigms, Chris is an engineer at Shareaholic and the iSENSE Project. Chris is currently completing his MS in Computer Science at UMass Lowell.