Startup Advisory - Afrikan Heroes

Four Things I Wish I Knew as the New CTO of a Startup

February 14, 2020

Isabel Nyo is an Engineering Leader, Technologist, Author, Speaker

When I first became a CTO of a startup, I was young and inexperienced. I was technically capable, had led multiple software projects and had a great track record on delivering software projects on time and within budget. But I really had very little idea about how startups work. I had no idea how I was going to be challenged when I took on the role of a CTO. I understood working at a startup, as a hands-on CTO, was going to be different from working as a developer in large corporations. I knew there would be unknowns but I truly didn’t know I would struggle with it as much as I did.

I was hired into the role because I applied for it (note: my motto is that if you want something, you’ve gotta make it happen), I had a pretty awesome CV and I guess I did well in interviews. As it was a small startup, I reported directly to the founders of the startup. I was basically the face of IT and software development arm of the startup. The startup model was a combination of Managed Services and SaaS. The role and responsibilities were many and I got a chance to wear many hats; I was responsible for internal IT infrastructure and operations such as maintenance of LAN system, DNS configuration, back up of internal services, data redundancy plan, and even printer issues. I was also responsible for bringing in businesses; meeting potential clients, pitching and talking about our solutions and liaising with existing clients and making sure they are happy. Then I was responsible for technical design and architecture of web applications; making sure they are robust and secure. Lastly, there is people management aspect; hiring, growing and providing suitable assignments for my team members.

Funnily enough, for the four main areas that I was responsible for, IT, client liaison, software development and people, I thought I did most of them quite well. Even though I didn’t enjoy the “sales” aspect of client liaison and pitching, I won a few clients as a result of my honest and straight-to-the-point approach. Founders were delighted and it was all good. Software development was my jam so I did well there and I really enjoyed that aspect of my role. I also had a great relationship with my team members; we were a close-knit team and we would even hang out outside work hours. Internal IT wasn’t my strong point and I didn’t like fixing printer issues but I actually learned a few things about networking so I didn’t mind it too much. Despite all that, I wasn’t feeling happy and I always doubted that I was doing a good job as a CTO. Everything was so chaotic. I questioned my own abilities and the value I brought into the company. I didn’t look forward to coming into work every day.

As a result, I quit my well-paying job as a CTO after just a year and went back to being a developer. I remember wanting to quit sooner but I didn’t because I promised myself that I’d stay at the startup for at least a year. I kept my promise; I resigned in the month of my one-year anniversary. After that, I was so much happier and thus, I never really sat down to think about why I felt so unhappy as a CTO of a small startup. Until much much later when I decided to give engineering management role another shot.

Almost more than a decade later, just a few months ago, I was speaking to a new startup CTO and I saw my younger self in him. He is technically capable, is an awesome team player, and has an impressive CV. He has recently taken on the role of a CTO at a small startup and he told me he is struggling.

I am putting together this article with the hope that it will help new startup CTOs in challenges that they might not necessarily find the answers for in leadership books. A lot of the challenges that I faced were due to not having a strong foundation of business acumen and lack of strategic and forward-thinking.

Image result for Startup funding Africa

Insight one: Actions speak louder than words. Data speaks louder than actions.

Many times, I was asked to come up with a proposal for a project by founders. It could be a new business idea or an additional feature to an existing solution. I then usually provided an estimate on how long it would take to deliver the project, how many developers would be needed and so on. I never questioned the status quo. These days, I have come to realise that leaders don’t want someone who would just execute without questioning. Leaders want someone who would come back with research, data and finding on whether something is worth doing or not. Especially at a small startup.

Insight two: Functional skills may be necessary in early leadership journey but what got you here won’t get you there

Before becoming a CTO, I had always been a developer. I started my career as a developer. So I was very comfortable with my functional domain; when my developers asked me about programming best practices or when they needed help with debugging a tricky code, I would be there giving all the right answers or worse, solving the problems for them. When there was a need to hire a server administrator who would be reporting into me (back then, they were called server administrators instead of devops engineers), I freaked out. After freaking out for a few days, I started reading all the books that I could find about server administration. For a few weeks, Bash was my best friend. I was worried that I wouldn’t be able to help my team member if I didn’t know how to do their job. I didn’t realise that having functional skills are not as important as having a vision, knowing and understanding what needs to be done and being able to take people on a journey of why we are doing what we are doing. If only I knew that, I would spend less time trying to upskill myself on technical skills of server administration and spend more time with my server administrator explaining the why.

Insight three: Strategy and execution are equally important

There is conflicting advice in the business world on which one is more important; strategy vs execution. Some say that strategy is more important; without a clear strategy, everyone will be shooting in the dark. Others say execution is more important; if there was nobody on the frontline working on delivering results, having a strategy printed and stuck on every wall couldn’t help. What do you think? I’ve learned that they are equally important, it’s not about one or the other because they are not mutually exclusive. I wish I had known this because earlier in my career, I was in the latter group, those who think execution is more important than strategy. I didn’t make an effort to understand the company’s strategy. In my mind, I would be thinking, just tell me what needs to be done and I’ll get it done. Too much talking, let’s start executing already.

The consequence of this mindset was that I couldn’t see the value I was adding to the startup and I couldn’t see myself working there for longer. It wouldn’t be so much of an issue if I was an individual contributor, but when you’re a startup CTO and when you don’t understand the vision and strategy that the company has, let alone buy into it, your team members are going to feel the same; lack of clarity, uncertainty, and enthusiasm in general. After all, no employee, even the most introverted developer who enjoys low-level programming, wants to be a cog in a machine.

Insight four: Not all processes are evil

It’d be hard to imagine in this day and age, but I did indeed run an engineering department at a startup with no formal process for a year. There was no project management or collaboration tool in sight, everything was done via emails. I’d come into work early every Monday and list down priorities for the week. I would then assign tasks to my team members via an email. We would then discuss the tasks when everyone was in the office. It wasn’t a standup because sometimes we would do it via an email, or face to face while getting our morning coffee, and other times, we would just huddle around someone’s desk to discuss. There is no consistency. Every Wednesday and Friday, all of us would send an email updating each other about the progress of our work. Code reviews were done mostly by me, my developer would ask me to come over to their desk, and I’d provide feedback on their code there and then.

Not having any kind of process meant it was hard for us to know if we were working efficiently. A lot of tasks couldn’t be shared because there is no way for a different person to know how to even begin doing something. Documentation was non-existent. I was lucky that there was no staff turnover in the year that I was there. Otherwise, handover and onboarding new people would be quite expensive, not to mention chaotic. Another problem with not having any kind of process is that I felt like I was a gatekeeper for many things. I couldn’t scale myself. But I had to admit, back then, scaling myself wasn’t something I had in mind. I just remember feeling very overwhelmed every single day.

Final words

Those were the four things that I wish I knew as a CTO of a startup. Firstly, I wish I knew how to challenge the status quo with data. Secondly, I wish I knew how to add value to my team beyond functional knowledge. Thirdly, I wish I knew strategy and execution are equally important, and how to communicate strategy in a way that’s relatable and motivating for others. Fourthly, I wish I knew not all processes are evil, in fact, having no process is eviler.

Last but not least, I wish I knew everything in life can be learned, whether it’s technical skills, business skills or something else; you just gotta stay curious and have the willingness to improve.

Isabel Nyo is an Engineering Leader, Technologist, Author, Speaker from Sydney, Australia

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer.
He could be contacted at udohrapulu@gmail.com

10 Secrets For Startup Success From Kuli Kuli Founder Lisa Curtis

February 9, 2020

Curtis is the Founder & CEO of Kuli Kuli

Today I turned 32. It feels un-momentous in every way but one. Ten years ago I began a journey that led me to start and run a multi-million dollar business. Your twenties are supposed to be a time of adventure. A time of cheap flights, sleeping on couches, exploring new countries, pursuing your passion, and meeting lots of new people. I’ve done all of those while starting Kuli Kuli.

My flights were mainly red eyes for work conferences. I sleep on my friend’s couch in Brooklyn because I’m too frugal to spend precious company money on Manhattan hotel rooms. (Not past tense, we’ve raised $10M and I still do this). I’ve met loads of new people, but mostly through professional networking. I’ve travelled, mostly to meet with our moringa farmers. And I’ve pursued my passion, turning a Peace Corps dream into a thriving company. And it came with a lot of learning, and many failures along the way. If I could go back to my 22-year old self, there are so many things that I’d love to say.

1.People are Everything, and They’re Not Robots.

I started Kuli Kuli out of my love for the people I met in my African Peace Corps village. When I returned to the US, my idea for a mission-driven moringa food startup became a feverish side hustle that I spent early mornings, late nights, and long weekends working on. When I was finally able to quit my day job and pursue Kuli Kuli full-time, I kept the same hours. I still work more hours than almost anyone I know. But in my youth, I expected everyone around me to keep up. I’ve learned the hard way that people are not robots. They cannot work all the time — especially if they aren’t working on someone else’s personal dream. I now seek to understand the dreams of the people who work with me and actively help them bring their dreams to life too.

2.Hold “Relationship Check-ins” with Your Co-Founders.

One of my biggest regrets is that my 20-plus year relationship with my childhood best friend was destroyed in the process of starting Kuli Kuli. There are a lot of reasons why we “broke up” — none of them fit to print. But there is one overarching reason why things ended the way they did. We were so busy working on the business that we forgot to work on our relationship. We stopped being friends, stopped being friendly co-workers, and devolved into an ugly space that we never recovered from, even years after we’ve ceased working together. My remaining co-founder and I now have monthly “founder walks” where we talk about how we’re feeling about the business, how we’re supporting each other, and generally what’s going on in our lives. We also make a point of hanging out outside of work and having fun with our partners and families. For the record — I also do monthly “relationship walks” with my romantic partner and it is one of the things that has kept us solidly in love over the past ten years.

3.Turn Down Investors.

When you start a company everyone tells you to be careful who you take money from. They seem to forget that there generally isn’t a long line of people waiting to write you a check. Especially when you’re a triple threat of young, female, and unconnected (i.e. not born into piles of money), it can be exceptionally difficult to get even one person to say yes. It took me almost a year to raise Kuli Kuli’s first $500,000. I raised it from nearly 30 different people, one small check at a time. I never imagined that just a few years later I would decide to turn down a million dollar check and prolong my fundraising round. I had learned from my experience with one small investor who made my life utterly miserable that having the wrong people invest in your business is worse than spending a few more months finding the right investors. I feel so fortunate to now have investors who not only believe in Kuli Kuli’s vision and social mission, they also leverage their talents and networks to help us get there.

4.Celebrate Wins Big and Small.

Though you wouldn’t suspect it upon meeting me, I can be very serious. I care deeply about Kuli Kuli’s mission and throw myself into turning that vision into reality. I won’t rest until I’ve made real progress on reducing climate change and helped all the women we source from achieve true equality. With goals like that, it’s hard to see the smaller wins, like when we launched into our 10,000th store, or when we launched our amazing-tasting new organic superfood shots. After a decade of doing this, I’ve realized that the roller-coaster of startup life is only fun if you celebrate the highs. Celebrating those highs makes you better able to cope with the inevitable lows.

5.It’s a Marathon, Not a Sprint.

A friend told me recently that she’s glad I’ve become a better friend, unlike when I started my business. The comment took me aback — I thought I’d always been a good friend. During the early days of Kuli Kuli I went to a networking event almost every weekday evening and often spent my weekends passing out samples at various grocery stores. I made an effort to see my friends — but it was rarely for large amounts of time as I’d inevitably have to run off to one event or another. I now know that the people I love are what makes life worth living. Though I still do lots of networking, I’m choosier about the events I attend.

6.People Will Leave — Don’t Take it Personally

As a startup founder, it’s only natural that you live and breathe your startup. It’s often hard to separate your identity from that of your company. When people quit your company, it’s nearly impossible not to take it personally. I knew that startups traditionally have low retention rates and that the Bay Area has a culture of job-hopping. That being said, I was taken aback when a few people quit Kuli Kuli last year. It made me question everything I was doing — from our team culture to my own leadership style. My board and advisors helped me to understand that while it was important to conduct exit interviews and understand why people decided to leave, it was also critical not to take it personally and to see departures as opportunities to learn from and create an even better team.

7.Take Care of Yourself, So That You Can Take Care of Business.

I work more than almost anyone I know. I also sleep, exercise, and meditate significantly more than most people. Often, when I’m stressed out and feel overwhelmed, I’ll go for a run. I’ve found that taking the time to take care of myself, and making sure that I’m in a positive, solution-oriented state, allows me to be far more productive than burning the midnight oil to sink in a few more hours.

8.Culture Doesn’t Create Itself

Building a positive team culture, even at a small 13-person startup like Kuli Kuli, requires deliberate thought and structure. I used to think that leading by example was enough. I’ve since learned that documenting Kuli Kuli’s core values, getting monthly feedback from our team, and putting together a Culture Committee to actively create bonding events has led to an incredible, cohesive team culture that has paid off with a happier and more collaborative team.

9.Stop Pitching and Be Authentic

It can feel like you’re always pitching your startup. You have to pitch it to investors, to the media, and even to your own team. While it’s important for founders to be extremely effective at communicating their startup vision, it’s also important to know when to stop pitching. I’ve found that a lot of the greatest support Kuli Kuli has received has come from when I stop pitching and tell people the areas that we’re struggling with. I do this with current investors, but also potential investors and advisors. It always amazes me the extent to which people go to great lengths to help when you open up and describe where you’re struggling.

10.Know Your Weaknesses, and Hire for Them.

No one is great at everything. I could fill an entire page listing out all my weaknesses. One of the biggest things I struggle with is financial analysis. My entire background has been in writing and communications. While running a company has forced me to get better in Excel and interpreting financial statements, I’ve also learned to hire people who are better at it than I am. I used to run all of Kuli Kuli’s sales — and then at some point realized I had reached my limit and hired a head of sales with 20+ years of food industry sales experience. It’s fine to have weaknesses as long as you have the self-awareness to recognize them and the humility to hire people who are better than you and can compliment your strengths.

The wonder of startups is wherever you begin your journey, the road will be more crooked than you expect and each bend and curve will teach you about yourself, your company, and how to create success. I’ve learned a lot in the past decade. And I know the next decade has even more in store for me to learn. I can’t wait to share more of what I learn along the journey. I’d love to hear your learnings too.

Lisa Curtis is the Founder & CEO of Kuli Kuli, a brand pioneering a green superfood called moringa.

..

Charles Rapulu Udoh

Investors to Avoid For Your First Fundraise

February 8, 2020

Saptarshi Nath is formerly a co-founder @OvercartInc

First-time founders often have to raise small Angel rounds before they can get enough traction to raise serious money. Typically, such Angel investors will come from varying backgrounds — an ex-boss, a well-to-do friend, an experienced F500 executive, an ex-entrepreneur, or a family-business owner.

You will hear a lot of No’s — maybe dozens, or even hundreds — before you close your first Angel or seed round. So when a first Yes comes by, it is incredibly difficult to take a step back and assess the value of the Yes.

[Fund raising]’s filled with painful no’s: No’s that take your breath away in how quickly and rudely they’re delivered; no’s that are tied up in pretty little ribbons and disguised as “let’s keep in touch”; no’s that come in the form of deafening silence after a series of promising meetings.

Preethi Kasireddy, on What I wish I knew about fundraising as a first-time found

I’ve compiled here a list of by-no-means-exhaustive warning signs that can help you identify Angels that aren’t right for you. Most of the warning signs below assume that you’ve done your due diligence on the investor to ensure that (s)he is relevant to your business in the first place. Most Angel investors don’t like being just a cheque-book for your business — they also want to add value to your business along the way. Possibly through feedback on your product, introduction to clients, or connections to potential hires. If you’ve reached out to an Angel investor who knows she’s not the right fit, you may see all of the warning signs below.

Asks about long-term business metrics for your six-month old business.

Typically Angel investors that have not started businesses themselves are well-versed in how a large MNC operates but not as much about what a fledgling business with a few thousand dollars in the bank looks like. They may naively ask for metrics (such as customer life-time value) that don’t matter to a fledgling startup. They could mean well, but accepting that money could lead to a host of issues in the near future. Imagine struggling to meet your MNC investor’s expectations when trying to sign on the next paying customer, or deploy the next version of your app. As an entrepreneur, it is not your job to educate your Angel investor.

Is a bit too interested in your valuation and exit plans.

Counting the money too soon can ruin your business before you start.

Someone told this Angel how much money she made on an early-stage investment and our man can’t wait to make 10x on his money. Valuation, any valuation, for an early-stage business is meaningless. By default, unless it is illegal in your jurisdiction for some reason, use a convertible note (like Y-Combinator’s SAFE document) to raise your early investments.

Everyone wants an exit — heck, likely even you do! — but no one wants an investor that is in it only for the exit. Such Angels will become a pain in all the rear ends when your runway is short, and will likely try to force you to an acquihire or lowball deal to help save the $20,000 he put into your business. Be polite when showing them the door.

Is stuck on terms of the deal. Or suggests weird Board structures.

Non-standard terms in any term sheet at any round is a warning sign. Typically, Angel term sheets are overridden when you raise a Seed round from professional VCs. Most Angels who have done multiple deals understand this and won’t make a big deal of terms. Be wary of those that do.

This is rare, but once in a while you will come across an Angel that wants to see a Board with 5 Directors and an Independent Director. In those rare cases, it is ok to walk out — polite discourse be damned. While having a governance framework is beneficial, even critical at the appropriate time, it is nothing but an expensive distraction at this point.

Doesn’t respect your views or your time.

Keep reminding yourself — no one knows your business like you do. Unless you’re building the 175,345th copy of Groupon, this is probably true. If an Angel investor who’s just heard your 10-min pitch starts telling you how to run your business, you know you’re signing up for a rough ride if you take his money.

Sometimes, the investor’s perception of you is easier to observe: did he arrive late at the meeting without a viable excuse or apology? Did she get constantly distracted by her phone?

Unwilling to talk about his/her past investments.

Most investors love to talk about their past investments. Some like to talk only about their successes. Others like to talk about their failures. Still others talk about the ones they missed. No good Angel investor is unwilling to talk about past investments at all. Of course, there are exceptions and idiosyncratic characters — but most Angels haven’t earned their way into being idiosyncratic yet.

Offers to introduce you to other Angels without first committing himself/herself.

Of course, some Angel do invest with a friend or colleague — and that’s perfectly alright. Saying “I really like what you guys are doing but I typically invest with my friend, Shark. Do you mind if I connect you to him?” is legit. But if the investor looks like he’s trying to introduce you to as many people as possible to give himself more comfort around the investment, let him/her know as politely as you can that you don’t have too many spots left.

Finding the right Angel investor for your business is often as critical as finding the right cofounder. Your business is the most vulnerable in the first year and the wrong investor can have a lasting impact on your long-term viability. To maximise the impact of the time you put into fundraising, start early, build ongoing relationships, and don’t be afraid to ask for introductions. And, like all good salesmen, always be closing.

Saptarshi Nath is formerly a co-founder @OvercartInc

Charles Rapulu Udoh

Fundraising? Don’t Say These Things to Investors

February 2, 2020

SarahADowney is the Operating Partner at Accomplice. Formerly of Ovuline & Abine. She is also an angel investor

Avoid these ten instant disqualifiers

Fundraising is hard, especially for first-time founders. You have to learn a new language and skill set in addition to your day job (the not-so-minor task of getting a startup off the ground). Suddenly, you have to be conversant in valuations, SAFEs, fund theses, dilution, cap table math, term sheets, and allocations.

And if that wasn’t tough enough, nobody tells you that you’re tiptoeing around metaphorical landmines in the form of statements that investors hate to hear during fundraising.

These are “instant disqualifiers” — things that almost always make us pass in our heads the moment we hear them. We may sit through the rest of your pitch, but we’re mentally checked out. Instant disqualifiers are more than red flags; red flags point you in the direction of “no” but don’t guarantee it. For example, here’s a list of founder-related red flags for angel investors.

All investors have their preferences, of course, but I’ve noticed some instant disqualifiers that seem pretty universal. The idea to make a list arose from a conversation I had with two of my fellow investors on The Pitch Show, Charles Hudson and Michael Hyatt. We’d just come out of a pitch where a founder had said something that made us all disengage in our heads immediately (he said his big vision for the company was to get acquired in a couple years.

We were talking about it in the green room after, and some of the producers for the show were surprised that a statement that seemed as innocent as “we want to get acquired” would cause all of us to recoil. We each threw out a few other phrases we never want to hear and overlapped on almost all of them.

So founders, listen up: don’t say or do these things if you don’t want to throw a colossal wrench in your chance of getting a term sheet. Of course, this list is filtered through my personal biases around things I really don’t like to hear; I’m not saying it’s 100% applicable to other investors. I’m all for speaking your mind and not censoring yourself, and authenticity is critical when meeting investors, but you should know the risk you face with these specific statements that investors are hard-wired to hate. My intent in sharing this list is to protect you from blowing up an otherwise fruitful investor interaction.

Obviously, note that avoiding these things doesn’t guarantee you an investment. Investors often see 100+ companies before writing one check. We’re looking for a magical fit and feeling (and as a founder, you should be as discerning too).

“We don’t have any competition.”

Not true. You do, so either 1), you don’t know about your competitors, which shows you’re unprepared on your market research; or 2), you’re overly confident in dismissing those companies because you think yours is better, which is the market’s decision to make, not yours.

It is extremely rare — outside of true frontier companies that are thinking 5–10 years ahead and creating new categories or spinning out lab-developed science — that a company doesn’t have any competition.

Absurdly high valuation

A way-too-high valuation shows an investor any number of bad things about you and your company: 1, you don’t understand how the market is pricing companies like yours today; 2, you’re surrounded by crappy advisors giving you crappy advice; 3, you know you’re pricing too high but you think you can pull one over on the investors.

Absurdly low valuation

Not quite as bad as the absurdly high valuation, but almost. It shows an investor that you either don’t know what you’re worth, or that you aren’t worth much. Sure, you’d be giving investors a good deal, but they don’t want to take advantage of someone who’s naive.

For a stunning example of both the absurdly high and low valuation playing out in real-time, listen to this episode of The Pitch Show where the founders came out asking for a $30M valuation, then dropped to $3M within five minutes.

“Our end goal is to get acquired.”

Or put another way, “We are going to flip this in a few years.”

The most likely outcome for any startup is failure. The most likely “success,” depending on how you define it, is an acquisition. But even though investors know that many startups are likely to end in an acquisition, we still don’t want founders to aim for that from the beginning. It signals that the founder isn’t in it for the long term.

Investors tend to believe that founders need to aim incredibly high — like building a big, long-lasting pillar company, or getting to an IPO — in order to land decently — with an acquisition. Aiming for an acquisition from the outset feels like you’re limiting your company’s future, and of course investing is all about the outsized opportunities. It’s like that phrase, “Shoot for the moon: even if you miss, you’ll land among the stars.” Which is technically crap, because the stars are much further out in space than the moon is. But I digress.

However, if an investor asks you, “what do you think the most likely acquisition outcomes are,” you need to be prepared with an answer. You should know which established companies today may want to buy your startup in the future, assuming that you accomplish what you’ve planned. But this is a reactive answer to a VC’s question and not a proactive strategy for the ultimate outcome of the company.

Rambling, unfocused pitch email

Look, we all get nervous speaking in front of others. Stutters, dry mouths, and mental blanks happen. But when you’re writing, you’ve got the time and safety to choose your words carefully. Your message should be clear. Thus if your first interaction with an investor is via a rambling, incoherent email, we’re done. It tells us that you lack several skills that we view as critical to being a good founder: communication, emotional intelligence, persuasiveness, judgment, and self-regulation.

I’ve seen investments happen despite an ugly pitch deck (rarely), but I’ve never seen them happen despite a poorly written first email.

Tips for a good first pitch email:

Get a warm intro from someone the investor knows. If you can’t do that, reference the investor’s interests, portfolio, or anything else that shows you care.
Keep it to one paragraph, maybe two if they’re short. Brevity wins over investors, both in writing and in person. As my Accomplice partner TJ Mahony put it, “if they say at any point in the conversation, ‘This is going to be a little long in the tooth, but bear with me,’” it’s almost always headed somewhere bad.
Grammar and spelling matter. With Grammarly, you’ve got no excuse.
Send either email copy by itself or add a (very brief) slide deck. Don’t ever send a business plan or a one-pager. Nobody outside of business school or 1990 uses or reads those.
Your deck doesn’t need to be beautiful, but it helps a lot. If it’s ugly, it tells us that you don’t value good design. Avoid hokey stock photos with smiling business people.

Creating false urgency around a fundraise

Founders are often coached to run a process with their fundraise and pit investors against each other to create urgency. Although this tactic can work, creating false urgency where none exists will backfire. Put another way, it’s smart to engage with all your investors at the same time so that, ideally, you can get term sheets around the same time and create competition. But saying you have a term sheet in hand when you don’t is not okay.

One example I experienced: two founders who had been relaxed and easygoing throughout our interactions suddenly told me they had multiple term sheets out of nowhere and I needed to act fast or miss out on the deal forever. It wasn’t an obviously strong company and the timing and urgency felt off. I called them on it, saying I’d really liked our meetings up until this point, but I felt like they were getting advice to create pressure where it didn’t truly exist and I was passing. Two days later they admitted that one of their existing investors told them to fabricate having term sheets.

This tactic doesn’t draw good investors in; it makes us remove ourselves.

Any substantive lie

Puffery happens during fundraising, especially during the first pitch where you’re trying to hook investors to bite. But there’s a difference between puffing up your story and lying. Lying means we’re out. The founder/investor relationship often spans decades and is based on trust. Violating that trust is a sure way to lose investors’ interest.

Technology company with no technical founders

It sounds crazy, but it happens way more than you might expect. If you’re building a technical business, you’d better have at least one technical founder, or at least a high-level exec already hired who’s on top of engineering. Three business people with zero technical skills aren’t going to build the next Google. And no, outsourcing your product development to an agency does not count.

The founders aren’t full time

Not everyone has the financial stability to be able to quit their jobs and bootstrap a company. But by the time you’re pitching VCs for their commitment, you’d better be committed, too. And nothing says “I’m not committed” like having one foot in a startup and the other out the door at your old employer, not to mention the potential IP risks that come from developing a company while working somewhere else.

When founders plan to hire a salesperson before they have customers

This one came from Mike Viscuso, who’s not only an investor at Accomplice but the CTO and co-founder of Carbon Black, which went public and sold to VMWare for $2.1B in 2019. Let’s just say that Mike knows a thing or two about building and selling software and creating massive companies, and he tunes out when he hears this. I see this most often with founders who were salespeople in the past; it’s like they’re overly eager to build out a company function that they know and understand without regard for what makes sense (i.e., staffing a team to sell something that doesn’t exist).

@SarahADowney is the Operating Partner at Accomplice. Formerly of Ovuline & Abine. She is also an angel investor.

Charles Rapulu Udoh

Mauritius-based transport startup Vite raises pre-seed funding round

January 30, 2020

Mauritius-based mobility startup Vite has raised a pre-seed funding round from Oui Capital to launch full operations after a highly successful beta testing period.

Vite is the first app-based mobility company in Mauritius, which has just concluded a beta testing period that saw more than 6,500 app downloads and 500 completed trips.

The pre-seed funding round secured from Oui Capital, an early stage technology venture fund launched one year ago that invests in promising technology startups across Sub-Saharan Africa, is designed to provide Vite with the financial and operational support necessary to launch full operations on Mauritius Island.

“Oui Capital is pleased to announce our investment in Vite, Mobility has been and remains one of our fund’s core verticals as we believe connecting people and goods is a vital part of creating prosperity on the African continent,” Oui Capital said.

“We are excited to partner with this visionary team to change the face of mobility in the Southern African market.”

Charles Rapulu Udoh

How Startups Attract Corporate Investment

January 12, 2020

Joe Procopio is a multi-exit, multi-failure entrepreneur

If you’re thinking about raising money to fund your startup, you need to take a hard look at corporate investment.

More than 95% of all startup exits are by merger and acquisition (M&A) as opposed to initial public offering (IPO). All of those M&A exits came out of relationships that were built way in advance of the exit, including those that started with a single early investment in the startup.

Corporate investment is probably the most under-utilized form of startup capital. Gigantic, usually cash-heavy corporations are sometimes ill-equipped to foster speedy innovation at their size, making them perfect partners for startups aiming to unleash disruption in the same industry or vertical.

When you can’t build innovation, you buy it.

I’ve taken on corporate investment a number of times, most recently at my last startup and my current startup, so this advice is in real time. I’m also advising startups who are using corporate investment as a means to eventually get acquired.

Also, last week I got to sit in a session with John Somorjai, EVP of Salesforce Ventures, at a conference put on by one of my investors. Salesforce’s corporate investment portfolio includes 18 IPOs and 75 more companies acquired, with 13 of those acquired by Salesforce themselves. His advice confirmed a lot of my own experience.

So first, let’s look at the pros and cons.

Why Choose Corporate Investment

There are a number of good reasons to chase and take corporate investment, some obvious and others not so obvious. Here are what I see as the top reasons:

They’ll probably be your biggest initial customer. When you’re just starting out, having a known entity on board is a magnet for other customer prospects, large and small alike. Just make sure that one large customer doesn’t make up too much of your customer base for too long.

They take less equity and get less involved. Because of SEC rules and internal policies, corporations will only take a small percentage of the company, 15% or less. They also usually don’t ask for more than a board observer seat.

You can learn as you go. You’ll get a closer look at the operations of a company that’s 10 to 100 times your size — all the good, the bad, and the ugly.

They bring contacts and resources. Of course, you’ll go into the deal with a lot of restrictions on who your startup can work for and even who you can talk to, but you’ll get access to more than just the restricted list. They’ll also have tools, strategies, and even infrastructure you can lean on to grow.

They make a nice exit. Obviously, when a corporation invests in your startup, it’s a sign that acquisition is on the table. Maybe not today, maybe not ever, but it’s an option, and options are always good.

What To Watch Out For When You Take Corporate Investment

I don’t see a lot of negatives often, especially those that make a material impact on the startup. But if you know the potential traps ahead of time, you’ll be prepared if and when they happen.

They may be a bully. Make no mistake, with their size and your indebtedness, they can pretty much tell you what to do and when. You can say no, but there’s always going to be friction. You’re basically banking on their sense of fairness.

They’ll be looking for exclusivity. Why wouldn’t they? They won’t want your startup working or talking to their competitors, and they’ll even want to put restrictions on working with other companies outside of their industry or vertical. Negotiate this carefully.

They’ll want a lot of custom work. No matter what product or service you bring to the deal, they’ll want it to conform to their established ways of doing business. This means you’ll do a lot of work that can’t be reused.

They’ll keep you industry focused. My last startup, Automated Insights, started as a sports data company, and we turned down an investment from ESPN that would have locked us into sports. That wasn’t part of our plan.

They will move super slow. I don’t mean this in a bad way, but if the corporation could move quickly, they would have done what you’re doing by themselves. Be prepared and be patient. Speed is why you’re there, it’s not what you should expect.

Read also: How Startups Can Partner With Big Corporations In An Era Of Fierce Competition

What Your Startup Needs To Be Corporate Investable

According to Somorjai, 70% of the companies that Salesforce makes an investment in are at the early stage, so their investment is either a series A or B. This validates some unconventional wisdom, that your startup doesn’t need to have a ton of customers or a ton of revenue to be attractive to a corporate investor.

What your startup does need is compatibility with the investor. Somorjai notes that at the time of investment, the startup has either already integrated or is about to integrate with the Salesforce platform. Now, this isn’t as restrictive as it sounds, but it does hammer home the need to be in the same space as the investor. Somorjai stated that Salesforce will indeed pass on investments that don’t align with their company, even if the startup is a great investment.

Automated Insights took strategic investment from the Associated Press, which was a no-brainer for our automated content solution, and Samsung, which wasn’t as obvious a partner, but who had some of the same ideas for the future of automated content as we did.

Once you’re aligned with the corporation’s goals, keep in mind that there will be plenty of due diligence around the investment. Somorjai says, “Have your house in order because you only get one shot. If people find bad things, they won’t come back.”

This means the startup’s product needs to be rock-solid and robust, accounting for and perfectly managing all of those things that keep corporate management up at night. This includes data security, customer privacy, and any other legal or operational risks. Corporations aren’t afraid of competition or spending money, they’re afraid of headlines.

Due diligence also means that the idea behind the product or service needs to be unique. The idea and any processes should be wholly owned by the company and preferably patentable. No investment goes unnoticed, especially one from a public corporation, so there’s a good chance patent trolls will come out of the woodwork at some point between investment and exit.

And finally, the company must have all its investment accounted for neatly in a cap table that doesn’t have any red flags that the SEC might frown upon. Again, this is especially true when the investor is a public corporation, but even if they’re not, it will become an issue when it comes time to exit, and the investor will have this on their mind going into the investment.

While your startup doesn’t need to be in an entrepreneurial hot spot like San Francisco or New York, it will need to be located somewhere that will allow the startup to attract and retain talent. Your home city should be one where people migrate to, get educated in, stick around after graduation, and play in the same place they work.

Last but not least, and this is encouraging, Somorjai said the word “culture” a lot during his Q&A session. Company culture is quickly becoming a big factor in both the corporate investment process and the M&A process and there are couple reasons why.

First, good company culture tends to put to rest a few more of those corporate nightmares of headlines that cause public relations dumpster fires. But more importantly, big companies usually have poor or stagnant company culture, and an investment or acquisition sometimes provides both a strategic and a cultural shot in the arm for the corporation. It’s basically a two-for-one on the innovation front.

Like all outside investment, there are a ton a boxes to check to make your startup is attractive enough to get the attention and then the funding. It’s a hard enough process as it is, so make sure you’re considering all the players, even the ones you might be trying to disrupt.

Joe Procopio is a multi-exit, multi-failure entrepreneur. He has built and sold startups such as Spiffy, Automated Insights, ExitEvent, Intrepid Media.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award winning writer.
He could be contacted at udohrapulu@gmail.com

How to Become a Successful Founder in 2020

January 6, 2020

Rob Walker, Author of The Art of Noticing

A new study by investors debunks conventional wisdom when it comes to the most critical traits required of entrepreneurs.

What traits do you need to succeed as a founder? Usually, we think about the answer as if successful entrepreneurs were quasi-magical beings with skills so extreme and unusual we insist on calling them “superpowers.”

But Basis Set Ventures, a San Francisco-based fund focused on early-stage investments, has spent a year researching this question, and a useful theme emerges from its findings so far: Often, founders succeed not because of a single extreme trait, but rather by achieving a kind of balance. They use the term “nuanced superpowers.”

Okay, that’s a bit of an eye-roller, but the underlying notion is a great one to pursue in 2020: Stop obsessing about the extremes; focus on balance.

The research

Basis Set asked early-stage investors at funds with a cumulative $40 billion in assets under management to “rate 60+ founders on a number of dimensions including demographics, behavioral, and psychological traits, in an effort to understand what makes a successful (that is, IPO, raised substantial capital, large exit) or struggling (that is, shut down, stagnant, small exit) founder.”

This project produced a range of conclusions and assertions — see Basis Set’s fuller breakdown and slide deck here — but the most interesting piece involved an assessment of critical traits in founders. These include confidence, humility, storytelling ability, agile thinking, day-to-day effectiveness, and the like. The surveyed investors were asked to rate founders on each, and the results were used to create six founder “archetypes.”

Some of those archetypes — like the “Humble Operator” — correlate with success. Others, like the “Passionate Outsider,” didn’t. And the fascinating part is that what can separate the successful archetype from the also-ran isn’t the absence of a key trait — but an excess of that trait. Here are three examples of what that looks like.

Storytellers rule — but be careful

‍Basis Set quotes no less an entrepreneurial hero than Steve Jobs: “The most powerful person in the world is the storyteller. The storyteller sets the vision, values, and agenda of an entire generation to come.”

Still, it’s undeniable that some of the great business storytellers do not succeed. (Jobs stan Elizabeth Holmes of Theranos infamy being just one example.) Basis Set found that successful storytellers tended to exhibit not just confidence, but “agile thinking” — basically, an ability and willingness to “test and iterate quickly to incorporate market signals,” even if that meant revising their original vision.

Unlike these “Agile Visionaries,” those in the “Overconfident Storyteller” archetype may be charismatic and seem impressive, but become “too enthralled in their own vision” and “can’t adapt to market needs and often fail to find product-market fit.”

The problem isn’t that they’re not good enough storytellers. It’s that they’re too good for their own good.

The nuance of being stubborn

As Basis Set points out, some of the most celebrated entrepreneurs — Jeff Bezos, for instance — are renowned for their stubbornness: “They run through walls to make an idea work.” So is stubbornness a good trait?

Only (according to the fund’s research) when it’s paired with traits that temper that stubbornness — like results-driven behavior and fast learning and day-to-day effectiveness. A comment from Bezos actually helps clarify the point: “We are stubborn on vision. We are flexible on details.”

When humility is worth bragging about

The general public loves charismatic founders, but investors often prefer a different archetype — a humbler, hard-working, scrappy, and gritty entrepreneur who just gets it done. Basis Set cites some examples of an archetype it calls “Humble Operators” who pulled off successful IPOs in 2019: Eric Yuan of Zoom, and Olivier Pomel and Alexis Lê-Quôc of Datadog. “Working hard, that’s the only thing I know better than my competitor,” Yuan comments. “There are so many more smart people than me here in Silicon Valley.”

Still, we all know that hard work alone isn’t enough. This brings us back to the group that Basis Set called “Passionate Outsiders” — which exhibited similar levels of humility, resourcefulness, and grit. But they fell short of “Humble Operators” in other key areas, most notably “founder-market fit.” That is, a distinct advantage a founder may have in a market, based on experience or other expert knowledge.

The bottom line: Being a humble, hard worker is laudable — but you’ll also need sector-specific expertise to thrive.

What’s missing?

This theme of finding balance is echoed elsewhere in Basis Set’s findings, and there’s one last example worth noting. The report directly addresses a common assertion that the most important trait to look for in your potential co-founder is technical skill.

Turns out investors disagreed. It matters, but that emphasis is just too simplistic. (For a deeper dive on the subject, read Marker’s guide to “The Secret Alchemy of Co-Founders.”) More significantly, the Basis Set survey encourages pairing up co-founders with more generally complementary traits: “The best founders know their strengths and weaknesses and recruit a complementary team that maximizes the company’s chance of success.” It may not be as exciting as hyping your superpower — but it’s sound advice.

Rob Walker is the Author of The Art of Noticing.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

How to Build a Strong Brand for Your Startup

January 4, 2020

A lightweight approach to branding for startups — no expensive agency necessary.

In my first startup, I dreamt of building a powerful brand that would earn its place next to iconic companies such as Apple, Google, and Facebook.

Coach, serial founder, angel investor, speaker

I decided to hire an agency to help us define our brand. We went through a number of classic exercises, like answering the question, ‘If your organisation was a car, what kind of car would it be?’ And at the end of the process, we were given a ‘brand book’ that provided guidelines on how we should use our new logo, and a list of words to include in our product messaging.

The agency also suggested a list of potential campaigns that were supposed to ‘enhance our brand’. On the list were expensive projects such as hiring a celebrity to endorse our app, or holding a launch party that served Veuve Clicquot. When I asked how we’d measure the return on these activities, I was told, ‘You probably won’t get any new customers, but this is an investment in your brand.’

The brand book sat on the shelf. We focused our energies on reaching product-market fit and investing in performance marketing. The campaign suggestions were parked for when we had some spare cash. That day never came.

So, how important is it for early-stage startups to define their brand? And what is a brand in the first place?

A More Useful Definition of Brand

If you equate branding with a pretty logo and some expensive publicity stunts, you’re leaving out the most important part.

In Sasha Strauss’s talk at Google, ‘Branding is the New Normal’, he puts forward a simple recipe for building a powerful, long-term, market-impacting brand. What I love most about his recipe is how simple it is:

‘A brand is a combination of a topic that your audience is curious about, and a belief system that intersects with it.’

Branding is the New Normal, Sasha Strauss

This simplifies the challenge of defining your brand:

Identify an important topic or activity that your customers care deeply about.
Create a belief system around this topic.

Taking the time to clarify these two questions has a lot of benefits. It can help you align your team by providing a framework for decision-making, especially in product and customer experience. It can help you focus your product messaging on what really counts. And it can help you create a deep emotional connection with your customers and employees.

‘The goal is not just to sell to people who need what you have; the goal is to sell to people who believe what you believe. The goal is not just to hire people who need a job; it’s to hire people who believe what you believe.’ Simon Sinek at Ted

How do you apply this at your startup?

1) Define Your Brand’s Topic

The first step is to define the topic your customers are interested in. Your brand topic should be narrow enough for people to have clear opinions, but broad enough that it’s not just about your product.

Consider this list of brands and their topics:

Notice how the brand topic isn’t necessarily the same as the industry. For example, Zappos famously built a brand around customer service — they just happen to sell shoes.

2) Articulate Your Belief System

When it comes to creating philosophies, few people were as good as the ancient Greeks. My favourite philosopher (yes, I have a favourite) was Aristotle. He argued that the role of the state is not to allow people to live, but to allow people to live well. He spent a lot of time thinking about what it means to live a good life.

If Aristotle were a modern entrepreneur, he’d probably build a killer brand. His topic would be ‘living the good life’ and his belief system would carry over into an awesome set of products designed to help customers live better lives.

This provides a useful question for entrepreneurs to reflect upon:

What is the right way to think about [___topic]?

To help tease out your beliefs, it’s often helpful to look at the extremes, both good and bad. You might consider a competitor, and reflect on why their product fails to meet a certain virtue that you believe is important. You might also consider what an unachievable ‘perfect’ solution might look like — and try to uncover ideals that you can strive for in your product.

For example, Zappos believe that the right way to do customer service is to deliver ‘wow’ through service. If you believe this too, you probably want to buy your shoes from Zappos.

When prompted for their beliefs, entrepreneurs often focus on their customer’s problem. But your customer’s problem shouldn’t be something you believe — it should be something real. You should focus on what you believe is the right way to think about your topic . . . not what the problems are.

The Link Between Brand and Product

Traditional marketing encourages us to sell benefits, not features. Brand marketing goes one level deeper and connects with people’s beliefs. However, there are often deep links between benefits and beliefs:

We believe that [___brand belief]. That’s why we built a way to [___feature] so that [___benefit].

When you speak to people on the level of their beliefs, you have an opportunity to connect emotionally — to customers, employees, and even investors.

The key question for you is: what do you believe?

Dave Bailey Coach, serial founder, angel investor, speaker.

Charles Rapulu Udoh

Google’s Powerful Secret to be a Good Manager

December 31, 2019

Senior Vice President of People Operations at Google Laszlo Bock

And a good manager does not need technical skills.

Are managers really necessary?

In 2008, Google undertook a study to answer this question. Google’s Project Oxygen was birthed with a fundamental mission: To build better bosses.

The reasons why Google decided to undertake this humongous exercise were not hard to find.

The tech world is known for its rebellious attitude towards everything that represents the conventional corporation and management is often seen as a bastion of the old workplace hierarchy that just won’t die.

And the group that had the biggest problem with management was the company’s engineers. Engineers have reason to dislike bad management. This field, in particular, fosters creative individuals who have their own personal style of doing things. When someone tries to micromanage this type of worker it results in conflicts and a loss of interest.

As Senior Vice President of People Operations at Google Laszlo Bock explained.

“Engineers generally think managers are at best a necessary evil, but mainly they get in the way, create bureaucracy, and screw things up.”

The Project Oxygen team in Google’s People Innovation Lab spent a whole year data-mining performance appraisals, employee surveys, and nominations for top manager awards and other sources to evaluate the differences between the highest and lowest rated managers. The statisticians gathered more than 10,000 observations about managers — across more than 100 variables.

Once patterns were established, they then interviewed managers to gather more data, and to look for evidence that supported their notions. Finally, researchers coded more than 400 pages of interview notes and data and rolled out the results to employees. Later, these results became the source of various training programs for managers.

And the results were highly unexpected.

In Project Oxygen, they found that successful managers consistently had these eight qualities, in order of importance.

· They’re good coaches.

· They empower their team and don’t micro-manage.

· They express interest in their team members’ success and personal well-being.

· They are productive and results-oriented.

· They’re good communicators and they listen to the team.

· They help employees with career development.

· They have a clear vision and strategy for the team.

· They have key technical skills that help them advise the team.

We can draw two inferences from this study.

· the most important activity for management success is being a good coach. Successful managers know how to coach their teams into success.

· The least important is technical skills. This proves that being a great developer doesn’t necessarily make you a great manager.

As a result, Google changed its feedback surveys to mirror these qualities. Instead of simply measuring how much output a manager achieves, the surveys now focus on how much time they spend coaching their team, whether or not they communicate a clear vision, etc. They also developed new management training programs centered around these skills.

This single-minded focus of developing managers into coaches is the secret behind Google’s successful managers. This approach is what makes them take the №1 spot for the sixth year in a row in Fortune’s ‘100 Best Companies to Work for’ list.

Becoming a great coach, especially in the tech world, is essential. What engineers, developers and everyone under the sun really want is a manager who knows how to distinguish the line between coaching and micromanaging.

To learn where this line lies, think about your employee. Are they an engineer with +5 years of experience? Then what they probably need most is a manager who will help them to set goals and then stand back and allow them to execute them in their own way (as long as this gets results).

On the other hand, new engineers may need more coaching. Here the line may become thinner but the best way to provide guidance while not encroaching on your employee’s freedom is through feedback.

So in a nutshell, what is required is a balance of coaching strategies based on employee experience and temperament to achieve best results.

And here are some coaching techniques which can be used.

Be The Guide

This style is very effective for those team members who are self-motivated and willing to learn but do not have the knowledge. They have a natural zeal and passion to absorb anything like a sponge which needs to be capitalized upon by the leader.

How to be the Guide

· Prepare and help them in building Skills.

· Allow them to make “mistakes” but make them learn from that.

· Provided timely and specific feedback for improvement

· Relax your control as they develop and improve

Be the Empowerer

This style is for “star” performers. They are the go-getters, highly driven and enjoy challenges. They are the future leaders and the backbone of any team.

How to be the Empowerer

· Empower them by giving autonomy. Allow them to make their own “decisions.”

· Define the goal, not the method. Let them find out the best way.

· Do not micromanage them. They get frustrated very easily.

· Protect them from “office bullies” if they are at a lower level.

Be The Director

This style works well with “trouble makers”. They can’t do and also won’t do anything unless plodded. They do not show any desire to learn and improve and tend to escape work.

How to be the Director

· Have a candid “talk” with them and understand the reasons for their behavior.

· Provide clear instructions and set up stringent deadlines for completion.

· Monitor their progress very carefully and take regular status updates.

· Adopt the “Stick” and “Carrot” method initially. If nothing is working, let them go.

Be the Catalyst

This style works great on those team members who have the knowledge and the potential but are too lazy and laid back to do any productive work. Indiscipline and being disorganized is their second nature.

How to be the Catalyst

· Identify reasons for lack of motivation and set up the expectations upfront.

· Address the issue and motivate them. Play to their “strengths”.

· Monitor progress carefully and give them increased “accountability” in their work.

· Assign them to “collaboration” and “team building” activities to improve their organizing skills.

And Lastly, Give Feedback Regularly

Managers’ words have the power to build or destroy. Google understands this sensitivity and teaches its supervisors to be consistent (free from bias) when delivering feedback across their teams, to balance positive (motivational) and negative (developmental) feedback, to be authentic and appreciative, and to state growth opportunities in a clear, compassionate way.

Always make sure your feedback places emphasis on actions and completely avoids personality traits. For example, “I noticed you talked over Sid in the meeting yesterday” rather than “You’re overbearing in meetings.”

Always provide advice on how they can fix the situation and discuss the best solution. More than the actual feedback, the way of communicating the same plays a very important role in the response and the impact. Recent studies have shown that sandwiching negative feedback between dollops of praises is not very effective. Keep the praise and the feedback separate.

And the most important, give real praise. Employees are not dummies. They can easily see through if your praise is genuine or not. Again like the actions, the praise also needs to be specific. Mention specific areas where their work has impressed you and where they are doing a great job.

As Chris Dyer has rightly said.

“Give feedforward not feedback.”

Ravi Rajan is a global IT program manager based out of Mumbai, India.

Charles Rapulu Udoh

How We Built a Startup that Produced 5x the Output

December 28, 2019

We deployed five different product offerings during the same period at less than half the cost of other startups of the same size.

Startups have been in my blood for the past two decades. Most startups failed for various reasons. Not a good product/market fit. Founders were inflexible for pivots. Too many pivots. Mismanagement of funds. Hired too early or built an ineffective core team. All these factors and a combination of others can lead to business closure before establishing a stable revenue stream.

Mistakes will be made along the way, but staying agile and nimble with small and frequent course corrections will allow companies to navigate back to a successful path. With a solid foundation built across the disciplines, handing the keys over to a new owner is redemption of previous failures.

Multiple factors contribute to success but will vary depending on industry and audience and their specific requirements. My focus will be catered around our last SaaS-based business platform and how we managed to get more done in the same period versus other startups.

Vision / Founder(s) / Funding

Ideas are fleeting and not worth the secrecy or paper on which NDAs are written. Ideas without execution fall short of a vision. A vision is what drives founders to risk their time, sweat, tears, and sometimes their money, into a venture.

A solution looking for a problem to solve usually fails to gain traction, whereas identifying and solving for an existing problem has a higher likelihood of pulling in investors for a seed round.

It is possible to raise too much money in any funding round, depending on dilution and projected valuation. You should only raise as much as needed to go to market within 12 to 18 months, with additional rounds following a similar pattern. There is a possibility that an innovative tech-based solution may generate an overabundance of interest with the likelihood of turning away investors.

The visionary founder usually stepped into the CEO or CTO role but wore multiple hats before hiring additional staff and resources. They should look into hiring subject matter veterans as a good foundation for the core team.

The founder(s) should quickly adapt to the tech landscape and welcome risks of emerging technologies which can launch their product to market quicker while being frugal with the funding. They’ll trust the assembled team has the experience and technical merit to transform the vision into a business.

Acceptance of criticism and feedback should balance passion as building blocks toward a stronger base of leadership. A founder should start as an individual contributor to get their hands dirty in the trenches before commanding the troops. Knowing the pain points of each department first-hand is the only way to understand how to fix them.

Our founder had executed on his vision, discovering a problem that plagued most businesses, including the current company he was leading. He decided to carve out some of his time to incubate this idea into something concrete by discussing it with colleagues and shopping around mockups to illustrate his concepts.

He had a voracious appetite for learning quickly, soaking up knowledge from everyone he engaged. With unfamiliar terminology, the next day, he was able to slip it into his sharp cadence of talking points. The context showcased his understanding as if he was the subject matter expert. He had high emotional intelligence and empathy for his colleagues. What he taught me was to identify and promote an individual’s “superpower” while coaching and strengthening their less-flexed muscles.

Working with a founder who can understand the needs of every department, but allowed them to make expert decisions, eased the friction inherent between superiors and subordinates within a traditional corporate structure. It reduced the decision churn and roadblocks, avoiding stalled initiatives.

Mission / Values

For a vision to permeate throughout the company, a mission statement should be written to convey a feeling of solidarity and purpose. Supporting the mission statement should be a set of values that define the qualities governing behaviors critical to the cause.

One of our values that drove high production rates was “Leave your pride/ego at the door.” Regardless of title, tenure, or pedigree, everyone pitched in to get the job done.

We knew building a system from the ground up with modern web technologies would outpace the titans of the human capital market stuck in development molasses.

Fake It / Market Fit

The old cliche used in and around the startup world, “fake it before you make it,” is a practice which allowed early-stage companies to experiment and hone a product. It allowed testing for market fit before a line of code was written. A demo should be built using hi-fidelity or click-thru mockups to garner feedback from friendlies or early-adopter customers. Refinement from test-marketing these early prototypes should be iterated quickly to keep them involved and interested in the process.

The founder(s) should have created a pitch deck or business plan, which includes the problem definition, the solution, value proposition, staff and revenue projections, and ROI strategy. There should be multiple variations of the pitch deck curated to three specific audiences.

The first deck would be catered for investors to convince them to give you money. The second deck would target potential customers to persuade them to buy your product. And the last version would be used to entice future employees to join your company.

Early prototypes were used to sell our vision to sister companies who had similar problems and was searching for a solution. Using the customer-based deck along with mockups returned positive feedback and verbal acknowledgments, exposing an underserved area in the HR space. The anemic area was ripe for a complete solution. Legacy systems, built on old technology, tacked on substandard features simply to tick a checkbox in their offerings.

We knew building a system from the ground up with modern web technologies would outpace the titans of the human capital market stuck in development molasses. This validated our product/market fit and gave us a boost to move forward.

POC / Prototypes

Quick proof of concept (POC) projects and click-thru prototypes set a base for production-ready and user-friendly applications. Having a prototype quickly in front of users helps identify gaps or intices additional suggestions for a tightly-coupled feedback loop.

Fail fast, fail often is also a mantra thrown around startups that should be one of the founding principles woven into the company’s value. Waiting for perfection is a formula that will slow the process; instead, an iterative approach is vital to show progress and perfecting a product.

People / Talent / Structure

A small, focused core group of experienced A-players driven by a determined set of leaders, will out-perform a younger, less experienced team, regardless of their ambition and grit.

A flat structure should be established at first with minimal or no middle managers. A bad hire at an early stage could set back the company months. Multiple bad hires could wreck the company altogether. Establish a quick way to vet and hire candidates with a corresponding willingness to fire them as quickly.

Hiring too early for an idealized corporate structure will cause waste in terms of time, money, and effort. Generalists should be considered for core team members, while specialists can be brought in as needed in later stages.

We had a few missteps in hiring because we wanted to fill positions we thought would move us forward but instead set us back. It was too early. Not only did this cost us stress, money, and time, but it may have interrupted the career paths of those individuals we dismissed.

Vetting for requisite skills and talent overshadowed the need to evaluate a key criterion: the ability to overcome the culture shock of being transplanted from a structured corporate world, with significant support teams, into a startup mentality. We readjusted our hiring strategies to align with shorter-term company goals and accounted for a candidate’s resilience to change.

Our core engineering team of six outstanding members were rockstars who built the foundation and created the initial frameworks based on a progressive trailblazing technology stack. They were prolific coders who left their ego at the office door before coding at their keyboards.

We were able to accomplish feats of astounding progress throughout the years due to our talented server engineer and data architect. During the pioneering days of Node.js, we had to build most mechanisms ourselves. These included an event bus, pub/sub queuing, UI persistence, and caching. All of these homebrewed systems helped us own a unique codebase which can quickly be debugged when an issue was reported.

We were able to hire top engineering talent throughout the years who used their experience to springboard their careers into companies like Google and Amazon. Others branched out to become tech leads or founders of new startups.

As the talent started drying up, we dipped into the code academies’ graduate pool and found great developers looking for an entry into the tech world. This allowed us to enhance the makeup of our diversity. Our engineering team had over 40% of female staff, representing the same percentage company-wide, which was doubled the average in the tech industry.

A stack using the same programming language across all layers with a homogenous transport mechanism sounded like a dream.

Tech Stack / Open Source

Choosing the correct tech stack for building out the solution will affect the production cadence. Being faster to market on innovative features will steer customers to your product, even though larger, more established incumbents exist in the same space.

Some industries will influence the tech stack choice, while others are open to using the latest-and-greatest development language and tools available. The rising popularity of a framework may drive the tech lead’s decision, or it could pivot on the comfort of knowledge towards a specific stack throughout a leader’s career. Rarely does a tech lead deviate from their comfort zone, but those who challenge the status quo may be the one factor that disrupts the space and attracts top talent.

Our choice centered around context switching and fragmentation of languages. It was a conscious effort to reduce both of those factors to increase the speed of development. Even though we would be pioneers using this tech stack, the benefits outweighed the risks. A stack using the same programming language across all layers with a homogenous transport mechanism sounded like a dream.

That dream became a reality when Node.js was introduced to the world. Married to MongoDB, it became the powerhouse which gave us the springboard to outpace our competitors. Adding Google’s Angular.js for a front-end framework was another competitive advantage. Being fully open-sourced was a natural fit towards a lean startup mentality.

The significant advantage gained by using MongoDB was the speed of development. MongoDB is a NoSQL, schemaless storage engine with a rich and robust query language based on the JSON format. Designing a data architecture using documents, without the need for complicated table joins, allowed very fast reads. The mutability of structure added to the quick iteration through design, testing, and release of new features.

With Javascript and the JSON format used across all layers of our application, we transitioned into full-stack developers who were able to cross those boundaries easily. In turn, they shed the cost of context switching and eliminated the dilution of their knowledge with fragmented language concepts.

When we first adopted these new technologies, a Google search for “Node.js” barely returned results. We did not imagine other established companies were on a parallel journey with us, using the same components of this stack. These companies started converting their older platforms to use Node.js within significant systems. Adoption of Node.js by accomplished companies like Netflix, Groupon, Orbitz, Walmart, LinkedIn, Uber, PayPay, and eBay acknowledged our decision was a fit choice. It finally accumulated enough mainstream traction to attain an acronym, coined the MEAN stack.

One former employee adopted our entire tech stack and introduced it as a way to increase their productivity at a major logistics brokerage company. They have built a sizable team around the technology switch and is one of the most innovative companies in their space due to their speed of development.

Today we have continued to promote and use variations of the MEAN stack replacing the front-end framework with React (MERN) or Vue.js (VENoM). It continues to outperform other stacks across multiple criteria: cost of development time, broad community support, increased performance (non-blocking I/O — asynchronous programming), lower memory footprint, lightweight framework, and unparalleled commercial adoption.

Hiring / Onboarding / Training

Most of our early hires were through referrals or known associates. Eventually, our needs grew enough to hire an internal recruiter to churn through hundreds of resumes a week. When a noteworthy candidate was identified, we sent out a small code challenge to further weed out the weaker candidates or imposters.

If a solution to the challenge was returned, it was graded based on several criteria which indicated their level of experience. The candidate is then invited to an in-person office interview, where they will meet other team members and participate in a mock code review of their solution. This will further ferret out candidates if they cannot clearly articulate their thinking process while answering code-review questions.

If the candidate receives a positive consensus, an offer may be extended on the same day, moving them forward to the onboarding process.

Having a defined and quick onboarding process helps with productivity. The goal is to have a new hire up and running by the end of their first day. For engineering staff, they are assigned an onboarding buddy (who happens to be the last hire through the process).

New developers then joined a training team and assigned their first project, which is usually a low-level defect or smallish project. We called this training group, the Strike Team. Their goal, within the first week, should be a submission of their first pull request (PR). Also included should be scheduled 20-minute discussions with each of the engineering leads, product group, and other department heads. Any follow-up discussions should clear remaining questions about the team roles, responsibilities, code-base, and development process.

New hires are also allowed to be recruited by squad/guild leaders for exposure into their realm. By the time they graduate from the Strike Team, they will have an idea of which squad/guild they’d like to join. These guilds included: UI, Server, Data, Mobile, Integrations, QA, and Strike.

Infrastructure / IaaS / PaaS

Going to market fast can’t wait for an infrastructure to be built. Setting up servers, routers, phones, redundancy, security, business continuity (BC), and disaster recovery (DR) requires a substantial amount of resources and time. Reducing or eliminating the use of on-premise equipment refocuses all the efforts of an engineering team towards coding solutions instead of tinkering around with hardware setup.

Moving to a cloud-based infrastructure using combinations of services like Amazon AWS (infrastructure as a service — IaaS) and Heroku (platform as a service — PaaS) eliminated the need of an internal dedicated DevOps member. Both of these services have robust APIs, which allows developing scripts for quick setup, maintenance, deployment, and scaling through an automated process.

A lean startup could not house a big enough DevOps team to match the 24/7 capabilities of entire organizations dedicated to the maintenance, backup, redundancy, disaster recovery, security, and business continuity of your infrastructure. Using an IaaS or PaaS vendor gives you an entire DevOps team at hand to leverage their expertise in what they do best.

Plan an infrastructure for a worst-case scenario where the office has no power or possibly destroyed through fire or natural disasters. The SaaS platform should continue to hum along even if your headquarters have internet issues or leveled by a Category 5 hurricane.

We leveraged AWS S3, AWS CloudFront, AWS CloudTrail, AWS Lambda, and Heroku. Our MongoDB instance was also hosted on cloud-based services. We did not use Docker or Kubernetes because Heroku handled it through building out slugs (Heroku’s version of containers) and supported pipelining between environments. We were able to scale, release, and promote features through simple UI controls.

QA / QC

Once a product hits the Beta milestone, unit-tests will not cover edge cases observed in the wild. A dedicated QA lead and team should be brought in to help ferret out defects. A good ratio of QA staff to developers is three developers to every one QA tech.

As the product grows, automated end-to-end testing should be added. A QA tech should lead the effort, recruiting developers to help write automated tests along with unit tests.

Leverage QA skill to help fix minor defects they find, by setting up QA machines as if they were developers. Train QA members to fix mistakes like typos, language files, and small CSS issues. Have them check those fixes into specific feature branches. This may have the added benefit of defining a career path for a QA tech to move from testing to development.

Let QA dictate the release cadence by allowing them to deploy and promote features. Isolate those feature branches into separate test servers before they are merged and deployed to an integration server. Since QA controlled the last gateway before the code went into production, it was logical to allow them to sign off and merge those feature.

We had multiple testing environments for QA to deploy features in isolation, which allowed them to target only the changed code. Environments for each guild type were also available for teams to deploy and test in a simulated live environment versus locally on their development machines. Exposing the feature opened it for stakeholders to access, verify, and validate it was working as designed.

Our QA leader increased coverage of tests by hiring an out-source company in India to augment our testing. She led an effort to set up a deployment server, allowing the remote QA team to deploy feature branches and test during off-business hours. This doubled the testing coverage across all of our products.

No precedence or articles existed described such a process. Internally we dubbed it zero iteration based development.

Process / Planning / Release

An established software development life cycle (SDLC) and the process around planning defines the cadence of releases to end-users. The agility to alter this cycle and flatten out roadmap speed bumps will increase the velocity of developed and released features.

Releasing features more frequently exposed issues earlier for real-world use and feedback, tightening the iteration loop, and allowing us to polish the product quickly. Development teams were able to push new releases as fast as they were coded, until paying customers started using the platform.

We organically grew into a weekly release cycle, intentionally not aligning with development sprints. QA would control the releases, in coordination with Product and Customer Success teams. QA being able to deploy, merge, and promote features allowed full control of the release cycle, including major, minor, and hot-fix releases. QA worked in a Kanban fashion, where features were cued up and dropped into the release when ready.

Development spans were usually planned into 2-week sprints, with larger projects spread across multiple phases. Deployments were scheduled weekly for Thursdays, during the day, with 100% uptime using the pre-boot feature afforded to us by Heroku. Sprint grooming, planning, and retroactive sessions were held on Friday mornings.

Eventually, when we documented our process, it did not match a traditional agile pattern but was based on time slice iterations. A feature being currently developed would represent the present time slice (T Zero). Developers would be working on the zero iteration. QA would be testing T-1 features, one iteration behind the development team. These were coded and approved pull requests (PR) waiting in a queue.

The Product team would be working on defining and writing specifications for T+1 features, one iteration ahead of development. Designers created mockups and wireframes two iterations ahead of development, working on the T+2 slice. Customer Success and Marketing would work in the T-2 slice, which was features tested and released by QA. Sales worked in two different slices: T+2 and T-2 slices. Sales had to market new upcoming features and promote already existing features.

T-2: Customer Success, Marketing, Sales
T-1: QA, UAT
T Zero: Research, Development
T+1: Product
T+2: Design, Sales

No precedence or articles existed described such a process. Internally we dubbed it zero iteration based development.

Multiple features across a few different squads were being developed in parallel. At any time, there could be five or six projects being engineered at once, one for each squad. When a larger initiative was launched, members of specific squads broke off from their group, swarmed into one large team, and pounded on their keyboards until completion. Once developed, they disbanded and returned to their respective squads.

At one point in our journey, developers were extremely prolific in their coding, which resulted in over 80 pull requests (PRs) slated for testing and deployment. We had to slow down and shifted our attention on helping QA test, merge, and deploy those features out to production. After our QA swarm, we were back down to our typical set of five to ten PRs in the queue.

Product Design / UX

Initial product design and management responsibilities landed on the founders, but eventually, the product grows big enough to demand a full-time product manager. The first product manager (PM) is a crucial hire to be added to the core team. They will evolve into a director of product and lead a team of their own.

The PM should have the ability to take on raw visionary concepts and convert them into wireframes and stories while incorporating their ideas smoothly along with a sense of design. During the early stage of a startup, PMs should seamlessly interact with almost every department in the company, switching hats effortlessly through the same stream of consciousness.

User interaction (UX) and UI design tasks also fell into the PM bucket, until the abundance of planned features starts to spill over. At this juncture, a UX lead should be hired to standardize the design across all products. A consistent look-and-feel and design language spanning the product offerings helped users transition smoothly across applications while flattening any steep learning curves.

Well defined stories and specifications drive efficiencies in development, testing, documentation, and validation by creating a blueprint of reference across all departments. When using the specs as an established reference, a feature moving from concept, through production, release, training, and support rarely gets snagged in a fast-paced assembly line.

Through a sister company, we had a successful introduction to a talented PM who we convinced to start with us, turning down an out-of-state job offer. It was a mutual risk on both sides, which resulted in an incredible hire.

Mobile App

A mobile application or mobile-friendly website helps engage users that are not tied to their desks. Targeting those organizations that are geographically dispersed with an easy interface providing the essential functions of your product is key to high engagement.

We planned to build a mobile app from inception and deployed to both iOS and Android platforms early in our roadmap. Using the same web technologies with a native wrapper allowed us to produce, update, and extend our mobile offering quickly to our users.

A major selling point to our platform was due to the tight parity between our mobile and web apps. With a dedicated internal squad working on mobile, we were way ahead of our competition, while other startups outsourced their mobile production.

Meetings / Standups

During the early stages, a majority of the day was spent in meetings, but as things fleshed out, they subsided. Weekly status meetings held steady, while operational meetings were called as needed.

Bringing Slack into our communications toolbox reduced email churn and eliminated some one-on-one meetings. Most meetings were reduced down to three major concerns: roadblocks, announcements/decisions affecting the participants/company, and show-and-tell. The exceptions were sprint planning, grooming, kickoffs, and retrospectives, which had standard concrete agendas.

Development standups were scheduled daily, 10:30 in the morning, as needed, and should last five to ten minutes. Each squad/guild can run them as they desired with specific agendas, as long as it moves the process forward. A weekly Scrum of Scrums (SOS) was held for significant announcements, shared by each squad/guild to sync on current projects or team building events.

In the end, it propelled us to the top of our space, caused us to grow at a faster pace as we produced our best work in a frenetic sprint of focused passion.

Pivots

When the initial execution of the business does not gain the expected traction, then it’s time to explore the possibility of a pivot. This change may include a reduction in staff, a refocus on a niche audience versus broad-spectrum, or, concentrating on specific types of campaigns.

One of the most successful pivots that have been publicized is how Groupon pivoted from a group activist site to a group purchasing site. Groupon started as a site called “The Point.” It promoted social activist campaigns that had required a specific number of users to sign on until it reached the tipping point for action. In 2008, one of the most famous and outrageous campaigns was to suggest building a dome over Chicago to control the weather, for a mere price of $10 billion. It had pledges of over $100,000 in a few days, but it never reached its tipping point.

The most popular campaigns that The Point promoted where group purchasing campaigns, where it would solicit bargain pricing from local retailers if it garnered enough pledges from users. The rest is history as they changed their name to Groupon, concentrated on discounts purchasing deals, and dominated the market.

Our pivot wasn’t quite as dramatic but organically grew from demand in the market place. Our vision was to cater to an underserved niche in the HR space, where SMBs were neglected. The projected revenue growth in this space gave us our hockey stick graph, but reality did not meet theory or the might of will. The amount of time and effort required to land an SMB account was about the same for Enterprise customers, but with an almost 10 to 20 times return on investment.

This switch affected all departments, but pushed us in the right direction, and forced us to optimize and scale to support a more extensive customer base. We had a staff reduction in the sales department but increased members of the engineering team. Moving from serving 5000-employee SMBs to 100,000-employee enterprises was a shift that taxed us mentally, financially, and physically. Weekend work was the norm until we launched our first enterprise account.

In the end, it propelled us to the top of our space, caused us to grow at a faster pace as we produced our best work in a frenetic sprint of focused passion.

Acquisition / Lather, Rinse and Repeat

If a startup has a foothold in their market and sticks out as a leader in the space, then suitors will be looking to acquire you. We were acquired by a private equity firm which had the resources that can move us to the next level of our growth.

There were many other factors involved with our successful acquisition, but the ones outlined were the most influential, producing the most results in a short span.

These factors interacted and comingled to produce a perfect storm of rapid growth, leading to a successful exit. We were the same size as other startups but were able to deploy five different product offerings during the same period at less than half the operating cost.

The excitement of building something out of an idea is why I continue to stay under the startup umbrella. The combination of talent, process, grit, determination, and the prospect of opportunity and learning pushed us to strive for success that others took for granted. The early days were filled with doubt and the unknown, encouraging a small group of passionate founding members to sacrifice every ounce of energy towards a shared goal.

We became a second family that celebrated the wins and bore the losses; lessons learned to be used as tinder for the next endeavor.