The People Fallacy

“When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.” - Warren Buffet

You hear it every time you listen to a successful entrepreneur speak. "It was because of an outstanding team that we'd put together!" they say. "Our team of people was the key reason why we succeeded" they confirm.

But there are a few fallacies with this line of thought:
1. Silent Evidence -
No one talks about the thousands of businesses that started out with seemingly good people with pedigree backgrounds but failed. Think about LTCM, or the dot-coms that got started during the dot-com boom / bust.

2. Hidden Agendas -
The other thing to think about is that the entrepreneur or venture capitalist stands to gain from saying that their team is great. The entrepreneur / investors benefit from a work-force that feels appreciated in public.

But this kind of thinking is dangerous. Why? Because, you'll begin to think that if you have good people the business will take care of itself. You also tend to believe that good people will stumble onto a well-differentiated position for the business. But people with corporate experience or engineering degrees are no guarantee of attaining differentiation. A good positioning for a business arises only from the right kind of training, understanding and attitude.

I'm not saying that you don't need good people. All I'm saying is that good people are not a guarantee for business success.

So ... did the positioning come first or the people come first? It's the positioning. If you have good positioning, you'll taste early success. This will attract star employees and investors to you and put you on a virtuous cycle. So stop hunting for people and start thinking more about the positioning for your business.