"Is it the horse or the jockey? And the answer is yes."
– Andy Rachleff
Is entrepreneurial success dependent mostly on the quality of the team, or the idea? Over the past year or so I've heard this question asked many times. I've also been asked my opinion on the question, which I found funny since I don't have much experience forming entrepreneurial teams. Curiously, this question divides most VCs, professors, and entrepreneurs I've talked to into highly polarized camps. There are those who swear that it's all about the team. After all, given smart people who work well together, enough time, and determination, they will come up with a great idea; conversely, a bad team won't be able execute even the best of ideas – they will just screw it up and forfeit their chance. And then there are those who equally confidently claim that it's all the idea: with a crappy idea, any team, no matter how good, will fail. More – they claim – if a crappy team is paired with a good idea, you can always replace the team.
I am of the opinion that your perspective depends on where you stand. More precisely, the answer will depend on what you are invested in, what you control, and what you're optimizing for. Based on these metrics, "success" may mean very different thing. For example, if you are a VC, you are tasked with creating value for your LPs. You know the entrepreneurial teams well, and you have access to a wide network of people. Assuming that you can evaluate ideas accurately, you would consider them more valuable than the teams, which you can modify more or less at will. So it's natural that you would prefer a horse to a jockey. And, from where you stand, you would be right – you don't have time to let teams experiment with ideas; you have access to a lot of ideas and can change teams more easily than you can change ideas (the latter of which, as a VC, you really shouldn't be doing).
On the other hand, if you are an entrepreneur in an early stage of a venture, you are invested in a particular choice of a team, and you believe that you can change the world. Then naturally you believe in jockeys. And, from where you stand, you are right – assuming the team is good, and you have time, and you don't give up, you are bound to produce results.
However, obscured in the above assumption is what makes a team good. Clearly, it's not just a bunch of smart people who like each other. In fact, intelligence and good team dynamics are sometimes not even required. I would argue that to beat a bad idea, a team must have a good idea development process: knowing when to give an idea up, knowing how to evaluate ideas, assessing what works and what doesn't work in a team. In fact, I would say that the process is actually more important than the team, because a good process will help all systemic issues surface, and assuming that the team acts on these issues, with enough time the team should stumble on a good idea.
Of course, the problem with the entrepreneur's perspective is that this may take a long time. If you have good people available, and if you know an idea is good, you're better off changing the team. For VCs, for whom time is scarce and people are plentiful, this is a rational preference.
But a problem with the VC's perspective is that it's usually not clear whether an idea is good or terrible. So, the entrepreneur retorts, that's where the team comes in. Leave it to the team to pursue an idea even if it initially seems ridiculous.
As usual, the answer to the question at the top is "it's both". We should take the more holistic view, and agree with Andy Rachleff who gets this question a lot, but has a witty answer ready. It's both the team and the idea. One may be more valuable to you than the other, but that depends on where you stand, what you can control, and what you're more invested in.