Faraday Partners is an advisory company enabling early stage businesses to grow more successfully by addressing ‘People Risk’. People Risk is an inhibitor to all stakeholders – entrepreneurs, founders, founding teams and investors – when it comes to building organisations effectively.
Our integrated set of products and services equip companies to limit this risk exposure. By building end-to-end solutions focused around people, we support businesses in a key value creation exercise – providing them with both the understanding of how their business needs to behave and the resources they need to bring this to fruition.
The Importance of People
Many companies have made strides when it comes to addressing questions such as, ‘Can we automate this process?’, ‘Can we understand this data?’, ‘Can we structure this information?’, ‘Can we coordinate this work?’, ‘Can we optimise these operations?’. What this evolution hasn’t addressed is the reality we see over and over again – in early and growth stage businesses, the best team wins.
In early and growth stage businesses, the best team wins.
Despite typically being the single highest expense for most businesses, people are consistently the most under-optimised aspect of an organisation. They are also the key differentiating factor between mediocre and category-leading companies. If you look at any of the most successful internet or software businesses globally, you will find that a large part of their story comes down to the quality of their early team – people who made the right decisions at the right time were able to deliver great outcomes. We see in both enterprise/SaaS and digital consumer businesses that focusing on and building momentum through talent is the key to winning a category or market. People is where the value lies in these businesses.
Value of an Advisory Relationship
Having worked hands on with investors and entrepreneurs to build businesses over the past decade, the pattern we have identified is this: the companies who struggle to deliver on their vision or market opportunity are often also the companies who have failed to be proactive in their talent strategy. There are clear reasons for this.
Founders are focused on the vision, product, market, strategy, team direction and business goals; investors are focused on raising capital, building funds and generating returns across their whole portfolio; in-house talent and HR teams are often overwhelmed by the day to day of hiring, putting out fires and building operational capability for talent. The strategic people agenda slips away. It’s not deliberate and sometimes completely unconscious, but once lost it can be costly and extremely difficult to reverse. Along with these practical limitations is a lack of expertise. It takes time to accumulate knowledge of the talent landscape; it is also a landscape in constant flux and roles evolve at a rapid rate – for founders, investors and internal teams to keep on top of the talent subject is generally unrealistic in periods of rapid growth.
The transformation of the labour market in recent decades poses new challenges. In the same way our economy and business practices have been drastically and irreversibly impacted by technology, so has the labour market as a whole fundamentally shifted to be oriented around it. ‘Big Tech’ companies have a propensity today to dominate and attract talent with opportunities of scale and significant reward, while the recruitment market tends to neglect earlier stage businesses in favour of these larger-scale projects or businesses at the later stages seeking to remedy their People Risk at nearly all costs before a liquidity event. Candidates are being presented with an unprecedented number of options, making talent harder to attract and integrate into early stage businesses than ever before.
Talent [is] harder to attract and integrate into early stage businesses than ever before.
It has never been easier to set up a company or more cost effective to build software, but it’s never been more challenging to build a winning team. This is where we felt we could build a business and this became the foundation of what we have piloted with Faraday. We focus on designing and building organisations with founders from the earliest stages. We bring an international network and global perspective; our strategic insight is the product of more than a decade of observation, listening and participation. Our collective experience has equipped us with an understanding of the factors which determine success or failure – all of them centred around people.
Our goal is to provide ongoing counsel to ensure founders are always on top of the talent subject and problems are addressed before they have the opportunity to manifest within an organisation. If founders get ahead of this topic early and bring really high-level discipline and rigour into their company around these subjects, they have a real opportunity to become world class and return fundamental value from their vision. If they don’t, they stand the risk of being behind the curve, which is not only expensive, but time consuming, painful, and over time will become corrosive to their employment brand, culture and wider industry reputation.
Design, Build & Develop: An Integrated Solution
While there is plenty of advice available to founders, it is rarely joined up into an integrated solution. Many of the strategic choices and their implementation is still left up to the founder’s discretion, often compounding the very problem they’re trying to solve. Founders are remarkable and to be admired greatly, but they have rarely had the opportunity to accumulate a practical knowledge of the integrated challenges of talent in their careers to date.
In the talent market, an Organisational Design specialist is the equivalent of the architect of a construction project – they can design and prepare, but they are not the builder. Rarely are they equipped to implement the strategy that founders need to deliver the business outcome or capture the market opportunity; they might be able to define it theoretically or comparatively, but they generally won’t be able to address a custom situation in a hands-on manner with talent. Many of the companies we seek to work with are creating entirely new markets, where what’s needed is not only tailored expertise, judgement, pattern recognition, knowledge and good taste, but an ability to think about what’s practical, what’s possible and how to achieve those goals with cross-industry leaders.
The link between Organisational Design and Leadership Hiring has historically been extremely weak. We seek to bridge that gap by not only offering the design, but also identifying and appointing the team to deliver it. With the right expertise in leadership functions we then look to the future. Our focus will naturally and necessarily shift to Talent Development. When founders have a high bar in an organisation and we’re bringing in new talent, their growth is essential to the business’s growth. What do we do if people are stagnating? Do we replace those people and lose their knowledge (often priceless to the company), or support those people to really excel within the organisation? Again, this is where an integrated approach is so essential. There is often an assumption that simply providing training, mentorship or coaches is enough, but these rarely serve the organisation’s growth or contribute to business outcomes when delivered in isolation and in the absence of a strategic plan to enhance all aspects of talent together. Solving these intertwined challenges has been at the core of Faraday’s early successes in a series of pilots.
We offer a highly structured approach that is missing in the talent industry, an industry where, today, expertise is so focused upon the domain of design or the domain of hiring or the domain of talent development. The key to our proposition is realising that these domains are completely interdependent and their interactions critical; too often they are performed in isolation or simply not at all, without any consideration of the implications on the talent lifecycle as companies scale. That said, the solution is clear. Excellent organisational design coupled with excellent leadership hiring and excellent talent development are the foundation of building excellent teams. It might seem overly simple to make that point, but it is the destination for founder and investor success.
Looking Ahead
At their core, companies are not their code, products, supply chains or communication capabilities, but collections of people making decisions every second of every day. If you’re not optimising people, you are losing out on massive value and growth. This is compounded at the early stage in every imaginable way. In response, our philosophy is simple: to build world-class companies with world-class people, you need world-class advice from the very first steps. That advice is the essence of what we offer at Faraday.
Andrew is a Managing Partner and Founder of Faraday Partners. He has spent over 15 years advising Founders and Investors throughout the global venture capital and private equity community on a broad range of talent topics related to high-growth internet and software investments.
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