Part 10: Building the Team

NEW YORK, United States — To build a successful business you need to have the right team in place. But what constitutes the right team? And how and when should it change and grow? Who are the key people you need at the concept phase? At the launch phase? At the scale phase? Who do you keep? Who do you let go?

These are the tricky questions I asked myself often in the early days of Moda Operandi (M’O). Getting the team right is not easy. It’s a careful balance between talent and timing, needs and “nice to haves.”

Here’s how I went about team building during key stages of the company’s growth and lessons learned along the way.

Phase 1: Finding a Partner

My first step was to find a partner and co-founder. While not every start-up requires a partner, it was important for me to bring in somebody who understood the concept and would complement my skill set. With a highly attuned aesthetic sensibility to complement my business acumen, I knew Lauren Santo Domingo would be the perfect partner. When she agreed, I was thrilled — and the team had just doubled in size.

If you think you need a partner, making the right choice is perhaps the most critical decision you will make for your business. Take your time to find somebody you really think will give your business the best shot at succeeding. Beyond filling holes that you may have, a good partner tends to share your uncompromising passion and conviction for the concept. A good partner keeps a thick skin and a cool head that helps survive long, late hours and fend off stress and criticism. A good partner stands side by side with you, in the best of times and in the toughest of times.

Phase 2: Getting the Product Live

Unless you are an engineer yourself, one of the most bedevilling challenges any internet start-up CEO faces is how to attract in the right technology talent in order to get the product live. It’s something of a catch-22, as good engineers are in such high demand that they command high salaries and often prefer to join businesses with a proven concept and cash, while you need someone to get the product live before you can prove your concept and raise money.

Knowing this, one of the smartest things you can do is find a partner who is technical. In fact, many investors will shy away from investing in a start-up if one of the founders is not an engineer, as the proof is ultimately in the product and they want someone with skin in the game to oversee the actual build.

Since neither Lauren nor I had a technical background, however, this was a real gap in our team and a significant challenge. We had limited resources in the early days and knew we had to keep the team lean. But we also knew we needed to move fast and launch the product.

As we aimed to go live by New York Fashion Week in February of 2011 (which was just a few months away), we decided to parallel track two approaches: recruiting a chief technology officer (CTO), while simultaneously hiring in an external agency to start building our platform. To be clear, this was not ideal, as Lauren and I lacked the technical expertise to really assess prospective CTOs and agency proposals. But we asked people for advice and recommendations and ultimately went with our gut and hired an agency whose engineers seemed really smart.

We were lucky. The agency did a great job for us, putting the early platform in place. Then we got lucky again: 5 months into our search, we found a CTO. With the combined around-the-clock efforts of the agency and our new CTO, we were able to deliver a functional site on time for our Fashion Week deadline.

Phase 3: Proving the Concept

Now that you’re live, with perhaps a couple of partners, a technology lead and some external support, the team issue becomes even more complicated. You’ve burned through cash to get the site up and running and you need to prove the concept to raise more money. But proving the concept requires a bigger team. Who do you hire with the money you have left to get the business to the next level and the investors back to the table?

M’O launched in February 2011 and had just enough cash in the bank to survive until May. So we decided we had to keep the team extremely lean. Just before launch, we hired a chief marketing officer to acquire customers, a producer to handle our photo shoots, a merchandising assistant to write product descriptions, an editorial assistant to write content for our magazine and a couple of customer care experts-cum-stylists to work with our customers. We figured these roles were essential. Everyone else was freelance. We took on interns. We all crowded into a tiny office space and plugged away.

We went live at 12.20pm on February 16th with our very first trunk show: Alexander Wang Fall/Winter 2011. Lauren made the first purchase, a dress and puffer jacket. I made the second, a knit sweater. Then, we waited. For the first three days orders were really slow. Trickles only. Those were a tough few days. I wondered whether we had been wrong about the whole viability of the concept. I didn't sleep and was obsessed with staring at the site and our (lack of) sales. Then we realised that a small user interface issue was making the shopping experience confusing. We made a quick fix on the fourth day and the orders started flooding in. In fact, our first two months of sales were so strong that we were able to quickly raise a second round of financing significantly larger than our first.

The takeaway: be very careful about the size of your team. Hire only the key people you need to get by and nobody else. Use freelancers and interns for everything else. If you run out of cash before your concept takes off, you are dead in the water, so every dollar saved is very precious.

Phase 4: Prepare to Scale

Once you have your second round, you can take a breath and start to fill out the team properly while you prepare to scale. This doesn’t mean going nuts, but it means taking on a few more key people who can own areas of the business.

At M’O, we hired experts in each of the functional areas. Over the following months, we brought on a more experienced chief marketing officer, a chief operating officer and an artistic director. These senior hires were expensive for an early stage company, but we knew we needed to grow quickly and could not do it without this level of talent. At the same time, we began to hire across the organisation to support the various functional areas. We also moved offices.

Phase 5: Getting Big

As the business takes off, it will hopefully start generating meaningful numbers. You may want to raise another round. This is when you can really grow your team out.

Today, in our new office, with our latest round closed and most of our senior executives in place, M'O's recruitment efforts have primarily be focused on broadening the team across various functional areas. We are now over 70 employees. A middle management layer has taken shape. In some cases, some of the early employees have stepped up and taken on the bigger roles within a larger business. In other cases, people were unable to keep pace with the growth of the business and have been replaced with new hires. Dealing with this is always a difficult part of being a good CEO, but sometimes good people no longer fit their roles.

Our current senior management team is my bedrock. As M’O has grown and taken on momentum of its own, I need to spend more and more time with customers, partners and investors. This means I don’t have as much time to address smaller issues that I used to welcome tackling directly, which makes it critical to have strong senior managers in place, reporting back to me only on critical concerns and updates. They batten down the hatches, while I steer the ship into the growth storm I see on the horizon.

Previous articles in the Finding Your MO series:

Part 1: From Big Idea to Launch
Part 2: The Need for Speed
Part 3: The Business Plan is Your Roadmap
Part 4: Making the Most of Mentorship
Part 5: How to Choose the Right Investors
Part 6: How Wise is Conventional Wisdom?
Part 7: Going International
Part 8: Managing Investors
Part 9: Acquiring Customers

Áslaug Magnúsdóttir is co-founder and former CEO of Moda Operandi.