Naval Ravikant, entrepreneur and angel investor, answers the unavoidable “What do you look for in a startup?“. Although his answer doesn’t differ much from others I’ve seen before, he’s very direct and touches really good points:

“I look for two things that are paramount above all:

1. Great team. It’s obvious. It’s a tautology. Everybody says it. You have to be working with some of the best people in the industry you’re in.
2. Huge market. Niche markets just don’t work because the first idea never works. You always have to change the idea, so you need room to maneuver in a big market.”

Nice! He goes on saying:

“There are three more factors that I look at. Not all three of them are required but I prefer a company to have at least two of them:

1. Difficult technology that is compounding over time.
2. A proprietary distribution channel. A clever viral marketing, or SEO, or partnership, or whatever strategy that gives them a leg up over competitors.
3. A direct monetization model. Something more than throwing up 10 cent banner ad CPMs.”

In this era of feature-less applications supported by ads or other indirect business models, it’s refreshing to see factors like “difficult technology” or “direct monetization model” come up on this list. I still don’t get those applications that anyone can replicate in a weekend in PHP and for which is impossible to understand the business model (e.g., don’t have a “pricing” or “buy” link in their home page).

But what I really wanted to write about is his first point. I’m always telling this to my colleagues and friends, but I realized I had never written it clearly in this blog, so here it goes:

To create a great product you mostly need a great team

From my experience, people give credit to a lot of irrelevant stuff around the project, instead of recognizing that, besides the team, the rest are mainly “distractions”.  Managers who happen to be fortunate enough to manage great teams are sometimes led to believe that a certain “cool” managerial style (e.g. card sorting prioritizing meetings, getting the whole team out for the cinema, etc.) is responsible for their successes. It is not. It doesn’t matter. Switch your management techniques at will, because the team will probably continue to deliver great results. When those managers are given a different team (not as good as the previous one), they try to use the same techniques but the outcome is not the same.

The canonical example of this phenomenon is the C3 project, the project that gave birth to the famous XP methodology. The project was running late on schedule so they brought in Kent Beck, Ron Jeffries and a few others who were able to ressurect the project and deliver it (nearly) on time. Many people attributed the sucess of the project to its revolutionary methodology (XP) but didn’t realize that the team behind it was comprised of programming top stars, who would do a great job no matter what. In fact, many subsequent XP-style projects have proven that this methodology works best in small teams with highly competent and experienced programmers. No kidding, hein?